The Public Health Insurance Option: Trigger-Happy?

by Tim Foley 

New York Times health care policy uber-scribe Robert Pear
has a report today on what’s shaping up not only to be the main fault line in the debate in Congress.  A public health insurance option that would compete directly with private insurance was part of the Obama campaign plan, is strongly supported in the House and even more strongly supported in the details that have circulated of Sen. Kennedy’s plan in the Senate Health, Education, Labor and Pensions Committee.  The Senate Finance Committee is a different story – they’ve gone trigger-happy.

The best quote in the piece is from Sen. Charles Schumer, who says, “It’s pretty certain that Senator Kennedy could not support the Baucus plan, and Senator Baucus could not support the Kennedy plan.”  Such a conflict was going to be inevitable on some detail or other.  The House is considered more progressive than the Senate, but Kennedy’s HELP Committee is traditionally very progressive, reflecting the character of its chairman.  As I wrote earlier this week, the details that leaked from the Kennedy draft, “tilts the emergency health care Congressional consensus away from a watered-down center and decidedly to the left.”  So it was only a matter of time before Kennedy disagreed with Sen. Max Baucus and the Senate Finance Committee.  Much like its chair, the Finance Committee tends to be more moderate and more consensus-focused.  One gets the impression that getting a health care bill with 75 votes -- or even just one that doesn’t tick off ranking Republican Sen. Chuck Grassley -- is just as important to Baucus as getting the best policy.(continued below)

The public health insurance option was devised to compete with private insurance on cost, efficiency, quality, and making its customers healthier, where now the industry only competes on who can attract patients who are healthiest, or who can deny costly medical claims the best to create the biggest profit.  With a new player focused on lower costs, better quality and more transparency, the HMOs will need to either adapt or die.

How do you water down competition that’s specifically designed to address a major flaw in the current marketplace? Now we come to “the fallback plan” or trigger option.  An idea being floated by Sen. Olympia Snow and flat-out embarrassingly supported by Sen. Ron Wyden (who has publicly said he’s open to a public plan) would create a “trigger.”  Health care would happen this year, but the public plan would not.  As Pear explains, “the public plan would be created only if private insurance companies had not made meaningful, affordable coverage available to all Americans within several years.”  All of these terms – “meaningful,” “affordable” and “several years” – are as vague as can be. The trigger may be set up so, in effect, it never happens, similar to the Medicare Part D trigger that would have created a public prescription drug plan – but never did.  The threshold would be low enough that it could be easily, and superficially, met.  Throughout those “several years,” the insurance plans would receive all of the uninsured who enroll through a National Health Exchange, pocketing what we can hope are generous government subsidies, with very few changes to their behavior.    And even if the trigger is met and a public plan created years down the road, private insurance would have serious “status quo bias” on its side.  It’s one thing to be given a choice between public and private when you don’t have anything, something else entirely to actively switch your plan (although it should be noted that 21% of private Medicare Advantage plan holders choose to leave for the safe haven of public Medicare).  So let me get this straight:  for the sake of having a big, feel-good compromise in the Senate Finance Committee, we’d be willing to take the word of an insurance industry that has made record-breaking profits on the basis of cherry-picking, denying care, and setting up tilted, monopolized playing fields such that 94% of the health insurance markets in this country are deemed “non-competitive” that they can clean up a mess that currently makes them rich without a competitor to, in the words of the president, “keep them honest”?

Guns don’t kill good policy – trigger mechanisms in the Finance Committee do.

I sincerely doubt that the public plan will be the only point of disagreement between these two committees.  We haven’t even scratched the surface of controversial issues still waiting to erupt, from physician compensation to employer mandates to tax policy.  This is merely the one that makes the best lead for a news-article, since both pro-reform and anti-reform third parties have made the public competitor the focal point of their respective arguments.

But, as Howard Dean has said about the public plan, “we'll be back fighting for another twenty years before somebody tries again.”

Ed. Note - Photo credit:  Curtis Gregory Perry on Flickr and essay reprinted with the permission of Tim Foley. Originally Published May 30, 2009 at 08:01PM PT at Health Care - ConnecticutMan1

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