by Kip Sullivan

It has become obvious that the Democratic leadership in Congress will not fight for a large “Medicare-like” program or “public option,” to use the lingo adopted early in 2009 by advocates of this idea. As I reported in an article posted on this blog on July 20, “public option” advocates originally claimed they stood for a “Medicare-like” program that would enroll 130 million non-elderly Americans, but somewhere along the line they got comfortable selling the “public options” proposed in legislation introduced by Senate and House Democrats a few weeks ago that will, at best, enroll 10 million people.

A “public option” that small will have no effect on the cost of health care in the U.S., which means it cannot bring us closer to universal health insurance. I noted in my July 20 article that neither the original proponents of the “public option,” nor Democrats in Congress, have warned the public that the “public options” contained in the Democrats’ legislation are tiny and powerless compared with the original model.

It is difficult to understand why “public option” advocates outside Congress would conceal this from the public. It is even more difficult to comprehend why members of Congress – people who actually have something tangible to lose (namely, power and a livelihood) if the “public option” turns out to be a joke – have remained silent about the degradation of the “public option.”

If you were asked to think of one group of Congress members who should be leading the campaign to warn America that the “public option” in the Democrats’ legislation is not what it’s been cracked up to be, you would think of the Congressional Progressive Caucus (CPC).

With 82 members (according to CPC’s latest count), representing the most progressive members of the House of Representatives, the Congressional Progressive Caucus is the largest caucus. The CPC has said not a word about the incredible shrinkage of the “public option” that occurred between the time the concept was originally proposed by Jacob Hacker (the man “who is credited with developing the public-plan idea”) and the time it was written into the Democrats’ bills. This omission might be justifiable if the “public option” were a small afterthought in the Democrats’“reform” legislation. But it is not. According to its proponents, it is “the heart” of the Democrats’ proposal and an essential plank in the Democrats’ cost-containment platform.

Nevertheless, the CPC has been silent about the remarkable transformation the “public option” has suffered during the course of the campaign that propelled it to center stage. What explains this behavior? To answer that question, it helps to take a close look at the statements the CPC has made about the “public option” in recent months.

The CPC’s endorsement of the “public option”

Between early April and early June of this year, the CPC aggressively promoted the “public option” in the same vague terms many of the groups associated with Health Care for America Now have promoted it – as if it were a slogan on a bumper-sticker unaccompanied by position papers and data one could turn to find out what it meant. On April 2, long before either house had drafted “public option” provisions, the Progressive Caucus sent a letter to Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi stating:

Regarding the upcoming health care reform debate, we believe it is important for you to know that virtually the entire 77-Member Congressional Progressive Caucus (CPC) prefers a single-payer approach to health care reform. Therefore, it will come as no surprise as you work to craft comprehensive health care reform legislation, that we urge the inclusion of a public plan option, at a minimum, in the final legislation. We have polled CPC Members and a strong majority will not support legislation that does not include a public plan option that is supported on a level playing field with private health insurance plans.

In an April 28 press release, the CPC again expressed its strong support for a “public option” and threatened a no vote on the entire “reform” bill if a “public option” was not in the final bill:

[O]ur support for enacting legislation this year to guarantee affordable health care for all firmly hinges on the inclusion of a robust public health insurance plan like Medicare.

Although the CPC’s press release placed the word “robust” before “public option,” they did not define what that term meant to them. Is it not odd for any legislator, much less dozens, to “hinge” their support for an entire (and very important) bill on the inclusion in that bill of an entity they have not defined?

The CPC’s criteria for a “public option”

It was not till early June that the CPC got around to identifying criteria that had to be met in order for the CPC to define a “public option” as “robust.” In a June 5 letter to House Speaker Nancy Pelosi, which laid out these criteria, CPC’s co-chairs, Reps. Raul Grijalva and Lynn Woolsey, warned the Speaker that these criteria “must be included” in the final bill in order to win CPC support.

The CPC’s list of criteria includes about a dozen “principles.” The principles are an odd mix. Although the letter to Speaker Pelosi repeated the “public option” proponents’ mantra that the “public option” should be “robust … like Medicare,” the criteria enunciated in the letter were far weaker than the criteria Jacob Hacker originally proposed for his version of the “public option,” a version which would have enrolled 130 million people. The CPC’s criteria refer to only one of the features of the “Medicare-like” program that Hacker called for, namely, the one calling for giving all non-elderly Americans access to the public program (as opposed to limiting access to uninsured people and employees of small businesses). Missing from the CPC list of criteria are these four features of Hacker’s original proposal:

• the public program must be pre-populated with tens of millions of
• subsidies must go only to Americans who enroll in the public program;
• the program must be authorized to use Medicare’s payment rates; and
• the insurance industry must be required to offer the same benefits
the public program is required to offer.

One CPC criterion would actually reverse one of Hacker’s: The Progressive Caucus insists on paying the insurance industry the same subsidies the public program gets.

The CPC document containing these criteria does not explain why the CPC adopted them, nor why the CPC thinks their criteria are sufficient to guarantee the “public option” will survive and have any influence on the insurance industry and the number of uninsured and underinsured. Of the CPC’s “criteria,” only two would have a direct, positive influence on the public program’s ability to set its premiums below those of the insurance industry. They require the “public option” to:

• Consist of one entity, operated by the federal government, which sets policies and bears the risk for paying medical claims to keep administrative costs low and provide a higher standard of care.

• Be available to all individuals and employers across the nation without limitation.

Significantly, the CPC would prohibit the “public option” from attempting to “compete” with private insurers by limiting patient choice of provider. This standard reads: “Allow patients to have access to their choice of doctors and other providers ….”

For two reasons this criterion will almost certainly make it harder for the “public option” to undersell the insurance industry (or even keep its premiums from being above those of the industry).

First, people in poor health are more likely to value freedom to choose their own doctor and hospital. If the “public option” is the only insurer in a multiple-insurer setting that is not limiting choice of provider, the “public option” is likely to suffer “adverse selection,” which means it winds up enrolling a disproportionate number of sick people. “Public option” premiums would go up and premiums of the insurance industry would go down.

Secondly, if the “public option” is not allowed to channel patients to a small network of providers, it will be more difficult for the “public option” to extract discounts from those providers, let alone match the big discounts large insurers typically get. Again, that would drive “public option” premiums up vis a vis those of the industry.

But as weak as the Congressional Progressive Caucus criteria are, they are better than nothing. But to be better than nothing, weak criteria have to be enforced. What has the CPC done?

The CPC avoids its first test

The first test of how seriously the Progressive Caucus would take its own weak principles arose on June 19. On that day, the House leadership unveiled a “reform” bill, a bill they would introduce a month later as HR 3200. The “public option” in this bill failed to meet all but one of Hacker’s criteria and nearly all of the important CPC criteria.

The CPC’s initial statement included a promise to evaluate the “public option” provisions in the bill. But even at this date (more than a month later), the CPC’s website contains no evidence that the CPC has published an evaluation of HR 3200’s “public option” provisions. The CPC has apparently endorsed those provisions anyway.

Here is what the CPC said in a press release published the same day (June 19) as the House draft bill was published:

We welcome the draft [bill] and will evaluate the language in the upcoming days. In our evaluation, we will pay close attention to the language outlining the public option. The Congressional Progressive Caucus has already submitted principles for a public plan that provides a guarantee of healthcare coverage … and which lowers costs for all consumers…. As we work with our colleagues toward a final bill, the CPC will be vigilant in ensuring that the bill’s public option is robust and is linked to the existing infrastructure of Medicare, in order to maintain transparency and provide consumer protection in its administration…..

The statement closed with this plaintive remark:

[W]e hope that our evaluation of the language in this draft bill upholds our principles.

The CPC dodges its second test

When HR 3200, America’s Affordable Health Choices Act, was formally introduced on July 14 (with “public option” language virtually identical to the draft language), the Congressional Budget Office released a copy of its “preliminary” assessment of the bill. The CBO said the “public option” might enroll 9 to 10 million people and would leave 16 to 17 million uninsured. This was a very different assessment from that promised by Hacker and the “public option” movement – 130 million enrolled in the public program and only 2 million people left uninsured. The CBO’s report should have been an immense red flag for the CPC. If it was, the CPC didn’t let on. The Progressive Caucus
press release, issued the same day (July 14), consisted of a short, cryptic remark. Here is the entire text:

The Co-Chairs of the Congressional Progressive (CPC), Reps. Lynn Woolsey (D-CA) and Raúl M. Grijalva (D-AZ), issued the following statement in response to the release of the introduction of America’s Affordable Health Choices Act: The public option is central to our support of health care reform. The Congressional Progressive Caucus is confident that the final legislation will retain a robust public option linked to Medicare that will cut costs, promote quality care and offer coverage to all.

There was no reference in this statement to the CPC’s “principles,” no indication whether the CPC had performed the “evaluation” of the bill’s “public option” provisions promised a month earlier, nor any indication whether an evaluation would be forthcoming.

On July 22, by which time HR 3200 had cleared the Ways and Means Committee and the Education and Labor Committee, the CPC sent a letter to President Obama in which they seemed to say that, yes, after all, they were endorsing HR 3200’s “public option.” The letter read:

As the health care proposal continues to move forward in the House and Senate, we ask that you continue your commitment to the inclusion of a strong public option and do not weaken the language that has already passed through two committees. Let us be clear: A strong public option is already a compromise for the CPC. Many of us strongly supported a single-payer approach. We will not support a weakened public option.… [emphasis added]

What does “a weakened public option” mean? Compared to what? Where were the CPC’s “principles”? Where was the evaluation of the bill’s “public option” provisions promised a month earlier?

The CPC released a similar statement two days later in the form of a letter to Nancy Pelosi. In it, the CPC objected for the first time to an actual provision in HR 3200, in this case, to the provision allowing providers to opt out of the “public option.” (As I noted in my July 20 article, this provision in HR 3200 inflicts a crippling injury on the “public option’s” ability to get started.) The CPC’s letter to the House Speaker stated:

We want to assure you that for our continued support, the public option …. must be on a level playing field …. And, it must be connected to the Medicare infrastructure, including the provider and payment system. Allowing providers to opt out of the public option has already created a loss of $91 billion in savings. We cannot tolerate further weakening of the public option.

What does “further weakening” mean? Compared to what? To Hacker’s criteria? To the CPC’s “principles”? When the long-awaited evaluation of HR 3200’s “public option” is published, will it answer these questions?

HR 3200’s “public option” does not meet the CPC’s criteria

If the CPC ever gets around to conducting an evaluation of HR 3200, they will have to report that the “public option” section fails to meet several of the CPC’s more important criteria. To begin with, there is nothing in HR 3200 that requires or guarantees that the “public option” will be “robust … like Medicare.” Medicare enrolls 45 million Americans, and pays about 20 percent of all U.S. health care costs. According to the Congressional Budget Office July 14 report, HR 3200’s “public option” might enroll 10 million non-elderly people, which means, it will pay 1 or 2 percent of the entire U.S. health care bill.

One reason the CBO concluded the “public option” would be so small is that HR 3200 bars the vast majority of Americans from buying insurance from it and from getting the subsidies that would make buying health insurance from any source financially feasible for most Americans. HR 3200 thus clearly violates another CPC criterion, the one requiring the public program to be “available to all individuals and employers across the nation without limitation.”

Finally, there is nothing in the bill requiring the “public option” to permit enrollees to use any clinic or hospital they want. How could it be otherwise when this bill explicitly states that providers don’t have to participate in the “public option”? In fact, the bill states the “public option” is subject to the same rules the insurance industry is subject to, including “provider network requirements.” How can enrollees in the “public option” have complete freedom of choice of provider if the “public option” is setting up “provider networks”?

The CPC must take a principled stand immediately

Two of the three health care “reform” bills that will be introduced in this Congress by Democrats have now been introduced. They are HR 3200 and the bill written by the Senate Health, Education, Labor and Pensions (HELP) Committee. As debilitated as HR 3200’s “public option” is, it is not as degraded as the one called for in the Senate HELP Committee bill.

The “public option” in the HELP Committee bill is weaker for two reasons. First, it calls for “community health insurance options,” and then defines these things as “health insurance coverage” which can vary by state. That implies there will be no single national “Medicare-like” program, but rather dozens, perhaps hundreds, of insurance companies sponsored by the federal government, each of which will be called “a community health insurance option.” Second, the bill does not authorize these “options” to pay providers rates below those paid by insurance companies as HR 3200 does. It was mainly for this latter reason that the CBO reported to Congress that the “options” in the HELP Committee bill would be unable to keep their premiums below those of the insurance industry.

The third bill – the one being written in the Senate Finance Committee – promises to be even worse than the Senate HELP Committee bill. It may not include provisions for a “public option,” or if it does, it will not call for a federal program like Medicare, but instead will probably call for the establishment of small, privately run cooperatives. Slinging little insurance co-ops into the insurance market will be like dumping a bucket of minnows in a shark tank.

So unless something changes, the Democrats’ bill writers have set in motion a process that will inevitably result in either no “public option” or a very weak one. And a very weak “public option” means nearly all of the $1 trillion in payments to insurers projected for the next decade will go to the insurance industry and very little will go to the “public option.” Is that what the CPC wants?

If an intervention within Congress is going to occur, one might expect it to come from the CPC. But so far the CPC’s strategy appears to be to do nothing to strengthen the puny “public option” in HR 3200. The CPC appears to have adopted a strategy of (a) insisting that the final bill contain a “public option”, and (b) begging other Democrats not to let anyone degrade HR 3200’s “public option” any further. If this observation is accurate, and if the Senate Finance Committee bill turns out to be as bad as everyone expects it to be, then it is safe to say the bill Congress sends to Obama will contain either no “public option” or a very, very weak “public option.” And if that’s the case, the bill will be a pure, or 99-percent pure, health insurance industry bailout.

The CPC needs to remind itself that the goal of most of its members is comprehensive, universal health insurance under a single-payer system. CPC members need to ask themselves whether their current strategy is moving America toward or away from that goal. They should take immediate steps to compare the “public option” in HR 3200 with their own principles, or better yet Hacker’s original principles, and then issue a report telling the public what they found. To facilitate this report, I propose to the CPC that it adopt the following resolution:

Proposed resolution for the Congressional Progressive Caucus

WHEREAS the Congressional Progressive Caucus has evaluated the “public option” in HR 3200;

WHEREAS the CPC has determined that the “public option” in HR 3200 is not “robust”;

WHEREAS HR 3200, therefore, is just another Massachusetts-style bailout for the health insurance industry;

WHEREAS a Massachusetts-style debacle on a national scale will set back the movement for universal coverage under a single-payer system;

WHEREAS the CPC has repeatedly put Democratic leaders on notice that they intend to vote against legislation with a weak “public option”; therefore be it

RESOLVED that the Congressional Progressive Caucus members will instead support an amendment to HR 3200 that replaces HR 3200’s language with that in HR 676, The United States National Health Care Act.

Kip Sullivan belongs to the steering committee of the Minnesota chapter of Physicians for a National Health Program.