PNHP

Battle over public option to private insurance plans

Health-Care Battle Set to Focus on Public Plan

By Laura Meckler
The Wall Street Journal
March 24, 2009
Congress is poised for a battle over whether an ambitious health-care overhaul should include a new government-run health plan to compete with private companies in the effort to cover the uninsured.
The matter is likely to come to a head first in the Senate Finance Committee, where Chairman Max Baucus (D., Mont.) has pledged to write a bipartisan bill. His partner, Sen. Charles Grassley of Iowa, the top Republican on the panel, is adamantly opposed to the provision for a public health-care plan. As such, aides in both parties say it’s unlikely a public plan will be included in the legislation now being negotiated.
The House of Representatives, on the other hand, is likely to include the provision in its version of the bill, expected in late spring or early summer, aides say. That suggests the issue would have to be worked out in negotiations between the chambers later this year.
But opponents say a public plan would be an unfair competitor because it could become big enough to drive down reimbursements to doctors and hospitals, much like Medicare does, putting more cost pressure on the private sector. Consumers would then flock to the public plan because its premiums would be cheaper, opponents fear, and ultimately no viable private plans would remain.
Insurance companies, many of which support other aspects of the health-system overhaul, strongly oppose a public plan, said Karen Ignagni, president of America’s Health Insurance Plans, the industry lobby group. “It’s a very short step to a Medicare-like program for all Americans in a single-payer system,” she said.
http://online.wsj.com/article/SB123785156695519283.html

And…

Hearing: Addressing Insurance Market Reform in National Health Reform

U.S Senate Committee on Health, Education, Labor, and Pensions
March 24, 2009
Senator Tom Harkin: I want to ask about a public plan… Can a public plan coexist with private insurance plans? That seems to be a question I’m getting all of the time. Can we have a health reform that has all these private plans, and then have a public plan?
Ronald A. Williams, MS, Chairman and Chief Executive Officer, Aetna Inc.: My opinion is no, it cannot…
Janet Trautwein, Executive Vice President and CEO, National Association of Health Underwriters: I would just add to that, and also I don’t think it is possible for a public and private sector to compete on a level playing field. I don’t see any way that that’s possible…
Karen Pollitz, M.P.P., Research Professor, Health Policy Institute at Georgetown University: Private health insurance and public plans coexist today… …I think it’s absolutely essential.
Karen Ignagni, M.B.A., President and CEO, America’s Health Insurance Plans: …what we have done is propose an aggressive system of government regulation that would supervise private sector competition…
Len Nichols, Ph.D, Director, Health Policy Program at the New America Foundation: …if we just decide to put everybody into Medicare, except for the private plans that would survive for maybe three years… we’re going to end up with a system that is basically going to be run from Washington and Baltimore… think about a public plan model more like what state employees do… …let it compete with the private insurance industry… …a PPO type arrangement… We would suggest even stronger firewalls between the people who run the new marketplace and the people who run the plan…
Katherine Baicker, PhD, Professor of Health Economics, Department of Health Policy and Management at the Harvard School of Public Health: …I worry that in practice one ends up doing more harm than good…
Sandy Praeger, Health Insurance Commissioner, State of Kansas: The public plan… and I’ve read Dr. Nichols’ report… and I think he makes some very good points. …if it’s competing on a level playing field with the private marketplace… If you have equal rules and are treating the public plan the same as the private plan, it can help drive market changes…
http://help.senate.gov/Hearings/2009_03_24/2009_03_24.html

Perhaps the surest sign of trouble for the proposal to offer a public Medicare-like plan to compete with private insurance plans is the commitment of Finance Chairman Max Baucus that reform will be bipartisan along with the adamant opposition of a public option by Ranking Member Charles Grassley. Having discarded other public insurance proposals such as single payer, even before the negotiations began, the competing Medicare-like option is standing alone as the obvious trade-away for achieving political consensus.
The insurance industry contends that a public plan would provide “unfair” competition to the private plans, just as the private Medicare Advantage plans had to be granted large overpayments to counter the “unfair” advantage of the traditional public Medicare program. It is surprising how many others perpetuate this framing that the private insurers should be granted extra tax dollars in order to level the playing field with a more efficient government health financing system. The real unfairness is gifting taxpayer funds to the private insurers.
So what is being proposed as a compromise public insurance option? Let’s have the government set up a private insurance-style PPO, and require it to copy the private sector business model of taking away choice through restricted provider lists, expanding administrative functions including the necessity of marketing its product, competing on benefits and cost-sharing provisions, and engaging in all of the other non-beneficial excesses of the marketplace. Just to be absolutely certain that the public option has all of the flaws of the private health plans, Len Nichols would put up even stronger firewalls between the government administrators and the government’s own public option disguised as a private plan. And this ridiculous effort to “level” the playing field is all for the benefit of… not the patients… but the insurers!
What is sad is that the enemies of reform have already won. They have managed to eliminate comprehensive reform from the national dialogue and have reduced the debate to whether or not we’ll add one more plan, a public plan, to our dysfunctional, fragmented, multi-payer system that costs so much and serves us so poorly. Anyone who believes that the mere additional option of purchasing a public insurance plan is going to transform our health care system is living in La La Land.

Battle over public option to private insurance plans

Health-Care Battle Set to Focus on Public Plan

By Laura Meckler
The Wall Street Journal
March 24, 2009

Congress is poised for a battle over whether an ambitious health-care overhaul should include a new government-run health plan to compete with private companies in the effort to cover the uninsured.

The matter is likely to come to a head first in the Senate Finance Committee, where Chairman Max Baucus (D., Mont.) has pledged to write a bipartisan bill. His partner, Sen. Charles Grassley of Iowa, the top Republican on the panel, is adamantly opposed to the provision for a public health-care plan. As such, aides in both parties say it’s unlikely a public plan will be included in the legislation now being negotiated.

The House of Representatives, on the other hand, is likely to include the provision in its version of the bill, expected in late spring or early summer, aides say. That suggests the issue would have to be worked out in negotiations between the chambers later this year.

But opponents say a public plan would be an unfair competitor because it could become big enough to drive down reimbursements to doctors and hospitals, much like Medicare does, putting more cost pressure on the private sector. Consumers would then flock to the public plan because its premiums would be cheaper, opponents fear, and ultimately no viable private plans would remain.

Insurance companies, many of which support other aspects of the health-system overhaul, strongly oppose a public plan, said Karen Ignagni, president of America’s Health Insurance Plans, the industry lobby group. “It’s a very short step to a Medicare-like program for all Americans in a single-payer system,” she said.

http://online.wsj.com/article/SB123785156695519283.html

And…

Hearing: Addressing Insurance Market Reform in National Health Reform

U.S Senate Committee on Health, Education, Labor, and Pensions
March 24, 2009

Senator Tom Harkin: I want to ask about a public plan… Can a public plan coexist with private insurance plans? That seems to be a question I’m getting all of the time. Can we have a health reform that has all these private plans, and then have a public plan?

Ronald A. Williams, MS, Chairman and Chief Executive Officer, Aetna Inc.: My opinion is no, it cannot…

Janet Trautwein, Executive Vice President and CEO, National Association of Health Underwriters: I would just add to that, and also I don’t think it is possible for a public and private sector to compete on a level playing field. I don’t see any way that that’s possible…

Karen Pollitz, M.P.P., Research Professor, Health Policy Institute at Georgetown University: Private health insurance and public plans coexist today… …I think it’s absolutely essential.

Karen Ignagni, M.B.A., President and CEO, America’s Health Insurance Plans: …what we have done is propose an aggressive system of government regulation that would supervise private sector competition…

Len Nichols, Ph.D, Director, Health Policy Program at the New America Foundation: …if we just decide to put everybody into Medicare, except for the private plans that would survive for maybe three years… we’re going to end up with a system that is basically going to be run from Washington and Baltimore… think about a public plan model more like what state employees do… …let it compete with the private insurance industry… …a PPO type arrangement… We would suggest even stronger firewalls between the people who run the new marketplace and the people who run the plan…

Katherine Baicker, PhD, Professor of Health Economics, Department of Health Policy and Management at the Harvard School of Public Health: …I worry that in practice one ends up doing more harm than good…

Sandy Praeger, Health Insurance Commissioner, State of Kansas: The public plan… and I’ve read Dr. Nichols’ report… and I think he makes some very good points. …if it’s competing on a level playing field with the private marketplace… If you have equal rules and are treating the public plan the same as the private plan, it can help drive market changes…

http://help.senate.gov/Hearings/2009_03_24/2009_03_24.html

Comment:

By Don McCanne, MD

Perhaps the surest sign of trouble for the proposal to offer a public Medicare-like plan to compete with private insurance plans is the commitment of Finance Chairman Max Baucus that reform will be bipartisan along with the adamant opposition of a public option by Ranking Member Charles Grassley. Having discarded other public insurance proposals such as single payer, even before the negotiations began, the competing Medicare-like option is standing alone as the obvious trade-away for achieving political consensus.

The insurance industry contends that a public plan would provide “unfair” competition to the private plans, just as the private Medicare Advantage plans had to be granted large overpayments to counter the “unfair” advantage of the traditional public Medicare program. It is surprising how many others perpetuate this framing that the private insurers should be granted extra tax dollars in order to level the playing field with a more efficient government health financing system. The real unfairness is gifting taxpayer funds to the private insurers.

So what is being proposed as a compromise public insurance option? Let’s have the government set up a private insurance-style PPO, and require it to copy the private sector business model of taking away choice through restricted provider lists, expanding administrative functions including the necessity of marketing its product, competing on benefits and cost-sharing provisions, and engaging in all of the other non-beneficial excesses of the marketplace. Just to be absolutely certain that the public option has all of the flaws of the private health plans, Len Nichols would put up even stronger firewalls between the government administrators and the government’s own public option disguised as a private plan. And this ridiculous effort to “level” the playing field is all for the benefit of… not the patients… but the insurers!

What is sad is that the enemies of reform have already won. They have managed to eliminate comprehensive reform from the national dialogue and have reduced the debate to whether or not we’ll add one more plan, a public plan, to our dysfunctional, fragmented, multi-payer system that costs so much and serves us so poorly. Anyone who believes that the mere additional option of purchasing a public insurance plan is going to transform our health care system is living in La La Land.