Weekly Pulse: Public Health Insurance Option Not Optional
by Lindsay E. Beyerstein, The Media Consortium
June 25, 2009 - 7:00am (Print)
During a press conference Tuesday, President Obama voiced support for government-administered health insurance for all who need it (aka the "public option"), as a key component of healthcare reform. Though Obama stopped short of threatening to veto a bill that didn't contain such an option, he said that a public option is needed to enforce market discipline. If the system is going to reform, the health insurance companies can't just keep selling the same bad coverage with bigger public subsidies for their monopolies. Essentially, Obama isn't about to force taxpayers to buy overpriced insurance from private companies.
"The public plan, I think, is an important tool to discipline insurance companies," Obama said during yesterday's White House news conference. "I think there is going to be some healthy debate about the shape that this takes." He outlined three options: Get insurance through your employer, buy insurance on your own, or buy insurance from a marketplace where public and private insurance providers compete for business.
In the Washington Monthly, Steve Benen notes the central irony of the standard insurance industry criticism of Obama's plan:
A public option, critics tell us, would provide a horrible, bureaucratic service for customers, including rationing and long waiting times. But here's the follow-up: if that's true, no one would choose the public option and insurance companies would be just fine for the indefinite future.
Except, of course, insurance companies and their policymaking allies know better. Which is why they're panicking.
As Senate Democrats continued to cast about for an elusive bipartisan compromise on healthcare reform, their colleagues in the House are pushing ahead on their own. House Democrats are holding hearings this week on draft legislation and is written without Republican input. The house bill would require all Americans to have health insurance and put new restrictions on employers as well. The Uptake is covering the hearings live.
By allowing the proliferation of multiple healthcare bills, the Obama administration is deliberately avoiding the mistakes that the Clintons made in 1994, according to Mark Schmitt in the American Prospect. Instead of submitting its own 1300-page bill to Congress, the Obama administration is letting the legislative branch hash out the details while the executive branch hovers above the fray:
The Obama White House has a huge advantage that the Clinton administration didn't: The plan is basically written, and it has a constituency. Everything Clinton spent a year on is done. All the work to build consensus around fundamental features - a regulated insurance market, an individual mandate, and a public plan to provide a competitive benchmark - made up the outlines of every Democratic presidential candidates' proposals. They have been further developed at the think tanks and various "strange bedfellow" coalitions that have been at work in Washington for at least four years. There are some questions about details and cost containment, but all the major alternatives have fallen by the wayside. It's an extraordinary accomplishment, and a real testament to the infrastructure that's been constructed for progressive policy as well as politics.
The big picture approach gives the administration room to shore up key allegiances with powerful interest groups. Last week, many feared the public option was DOA when congressional budget analysts announced that the proposal would cost more than expected. Mike Madden explains in Salon that things were looking grim until Obama struck a deal with Big Pharma to save $80 billion on drugs for seniors:
So the deepest significance of the deal between the government and PhRMA, the drug lobby, may well have been what it meant politically. Yes, the announcement means Medicare patients will no longer have to deal with an odd "doughnut hole" in their drug coverage; before Monday, the government pays for seniors' prescriptions if their annual cost is under $2,700 or more than $6,100, but not if the price is in between. But more important, the news gave the administration a public relations victory - the president just saved the government, and seniors, $80 billion - to kick off a week where Obama plans to play offense, not defense, on healthcare.
Mike Lillis of the Colorado Independent explains why filling the donut hole isn't a big sacrifice for the industry: Drug companies have already profited handsomely from the prescription drug program. Furthermore, Lillis notes, the companies may still come out ahead if seniors begin to buy donut hole drugs that they previously couldn't afford. Even at half price, Big Pharma still does okay.
Finally, Eleanor Bader of RH Reality Check brings us the story of how the Women's Medical Fund helps women who can't afford abortions. The Pennsylvania fund was established in 1985 after state Medicaid cut off abortion funding. The Fund is one of over 100 abortion access funds nationwide providing options for poor women that anti-choicers sought to take away by manipulating healthcare coverage for political ends.
Healthcare reform, priority one on Obama's domestic agenda, is finally getting its moment in the spotlight. Competing healthcare bills are taking shape and a vigorous public debate is underway. Keep checking The Pulse for play-by-play coverage of the most important policy battle in a generation.
I am a health insurance agent in Utah. I sit on the board of the Utah health underwriters as webmaster for http://www.bcbstx.info/ and http://www.utahinsuranceexchange.info/. I was heavily involved in designed a web connector to help Utah residents by pulling private and state sponsored insurance mechanisms together. It had a low budget of around $150k that virtually guaranteed health insurance coverage through either the private or state programs. Better yet all the local carriers agreed to split the costs. Our state insurance task force committee rejected the idea. They elected to go for a Massachusetts type connector program that isn't working well when you actually dig deep and check facts of where they are now. Our state approved H.B. 188 with a zero fiscal note attachment! My point is, I have been a fly on the wall in countless legislative meetings, insurance board meetings, hospital board meetings, the list goes on. The problem is conflict with the market demanding profit in all sectors of the system. Tough order to fill and keep costs down? You are absolutely right when you claim that healthcare is now unsustainable. I have been crying that a long time. Nobody listens.
I am an independent health insurance broker in Virginia, Maryland and the District of Columbia. Currently insurance is regulated by the states with different rules in each jurisdiction. Believe it or not I favor a public option. However I'm concerned that as long as there are private options I think my role as an agent and advisor is crucial to help people navigate the insurance marketplace. I certainly welcome the elimination of the underwriting process that cherry picks the best risks while rating up or declining people with preexisting conditions. The underwriting departments of insurance companies are made up of highly knowledgeable medical professionals who could be more usefully employed as diagnosticians or medical transcribers rather than simply serving to guard the bottom line of insurance companies. At the same time their elimination would reduce the overhead expense of insurance companies.
Another reform that I feel should be addressed is the tax treatment of HSAs (Health Savings Accounts). The current structure unduly rewards those in the higher tax brackets. Congressional investigators revealed that the adjusted gross income for enrollees in HSAs was about $139,000, compared with $57,000 for all other tax filers. The inequity of HSA’s comes from the structure of allowing contributions to be deducted from taxable income. Thus the greatest advantage accrues to the highest tax bracket. It would be more equitable if a given percentage, perhaps 20% or 25% of HSA contributions were applied as a tax credit. I’ll leave it to budget analysts to find a revenue neutral percentage. This would make it a fairer incentive for everyone to save for their initial health expenses and look to insurance only to cover catastrophic health costs. After all isn’t that what insurance is supposed to do.
The vast majority of health insurance plans are forms of managed care, HMOs or PPOs where participating physicians, clinics and hospitals have agreed to a discounted negotiated fee schedule. But each insurance company has it's own network making it confusing and inconvenient to change insurance companies. I would propose that these networks be unified both for private insurers and the public option. This would level the playing field at the same time simplifying the claims process and eliminating unnecessary paperwork. Those champions of free enterprise who fear that the public option will be operating with an unfair advantage would have their fears assuaged. Doctors who so choose could opt out if their services are sufficiently in demand that they don't need to discount their fees.
There is one more area that could greatly reduce healthcare costs. I have been informed that on average 75% of lifetime medical expenses are incurred in the last 90 days of life. This is the result of expenses associated with what are termed heroic efforts involving such interventions as running heart lung function machines for comatose or even brain dead patients. There should be an effort to educate people to file advance medical directives to avoid this needless type of expense.
I don't pretend to have all the answers. We need more primary care physicians and nurses in the healthcare delivery system. There needs to be malpractice reform to transform preventative medicine to preventing disease rather than lawsuits. I believe my proposals are simple and affordable. They would help reduce costs and be equitable for both consumers and insurers.
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