Kearney Leaderboard

Public option still alive as health care reform advances

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WASHINGTON — A little over a week after the Senate Finance Committee passed a health care reform bill without a public insurance plan, that option appears to be back on the table.

“At the end of the day we will have a public option,” House Speaker Nancy Pelosi told reporters in response to questions about the health care legislation making its way through the House of Representatives. Details of the public plan were still being worked out, Pelosi said.

The idea of a government-run health insurance plan appears to be gaining ground in the Senate as well, although the versions being discussed at press time fall short of nationwide, Medicare-like coverage. One idea is to make the public plan a fallback option, implemented only if other health care reforms in the legislation fail to expand insurance coverage.

Another proposal would create a government plan but let states opt out, while a third would allow states to participate in the federal government’s plan or try out plans of their own.

Congress remains divided on the issue. President Obama contends that a public option would be the best way to ensure that there is competition in the health insurance market.

Many Democrats agree, and they feel their case has been strengthened by a preliminary Congressional Budget Office (CBO) report indicating that a public insurance option with provider payment rates pegged at 5% above Medicare reimbursement rates (known as Medicare Plus 5) would provide greater cost savings than other public option plans and allow the total cost of the health care system overhaul to come in below the president’s target of $900 billion over 10 years.

House Democrats recently expressed confidence that they had enough votes to pass a health care overhaul bill that includes a robust public health insurance option. And some public opinion polls have showed support for a government-run insurance plan.

Yet most Republicans (and some Democrats) are opposed to any public option, arguing that a government-backed plan would have unfair advantages over plans offered by private insurers and would come to dominate the market. Some contend that a public option will also drive up the deficit, without slowing the rise in overall health care costs.

In addition, they cite a recent report that seems to support their position. Conducted for the Office of the Actuary, which handles long-range cost estimates for Medicare, the report said the nation’s health care spending will rise faster with the proposed reform legislation than it would without it.

America currently spends about $2.5 trillion a year on health care. The report says that figure will approach $4.7 trillion a year by 2019 if the legislation does not pass and nearly $4.8 trillion if it does.

The Obama administration called the report out of date, maintaining that it does not reflect the most recent versions of health care legislation that are under consideration.

Meanwhile, the return of the public option to the table caught some by surprise, since the issue had seemed all but dead just a week earlier. The health overhaul measure passed by the Senate Finance Committee on October 13 did not include a public option.

That version of the legislation, backed by Senate Finance Committee chairman Max Baucus, was a 10-year, $829 billion plan that would require nearly all Americans to have health insurance coverage. To make that possible, the plan would expand eligibility for Medicaid and create new tax subsidies for those purchasing coverage on their own.

Though that plan did not include a government-run health insurance option, it would create a network of nonprofit health cooperatives that would compete with private insurers. The CBO estimated that the bill would ensure that 94% of nonelderly Americans are covered by health insurance in 2019, up from 83% in 2010.

The Senate Finance Committee bill was significant in that it attracted one Republican vote, from Sen. Olympia Snowe of Maine. The other nine Republicans on the panel voted against the bill.

Although hardly a model of bipartisanship, the bill’s one Republican vote contrasted with the health legislation that passed every other House and Senate committee, none of which were backed by a single Republican.

The Senate Finance Committee bill won some praise from the Retail Industry Leaders Association (RILA), which counts Walgreen Co. as a member.

“RILA applauds the committee’s inclusion of prevention and wellness incentives in the bill,” said John Emling, senior vice president for government affairs. “These incentives are critical to shifting America’s health care delivery system from the simple treatment of disease toward the prevention of disease.”

The association added that the retail industry’s support for reform was contingent on the reduction of systematic costs, the preservation of the employer-based system, and changes to the proposed enrollment requirements that address the needs of high-turnover industries like retail.


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