A public plan is a nonstarter. So why is the president pushing it? For leverage.
If Republicans and moderate Democrats in Congress aren't careful, the only health care reform issue they'll influence this summer will be whether or not the government sets up a Medicare-style public plan to compete with private plans.
The Obama administration's emphasis on a public plan option is almost certainly part of a strategy to limit the discussion. The president set a tight timetable for health care reform, and he knows that every minute spent debating the public plan is a minute that can't be spent scrutinizing other policy details. And it's working. These days, nearly every newspaper commentary critical of Obama's approach focuses on the public plan and ignores all other possible issues.
It's hard to believe the administration's emphasis on the public plan springs from a belief that it remains a viable policy option. In this political climate, a Medicare-style public plan stands no chance of passing. The American Medical Association opposes it. The insurance industry opposes it. More important, most moderate Democrats oppose it. Sen. Ben Nelson, D-Neb., called it a deal-breaker. Two coalitions of moderate Democrats -- the Blue Dog Coalition and the New Democrat Coalition -- expressed serious concern over any public plan and separately outlined principles that clearly rule out a Medicare-style plan. Making passage even more difficult, the arguments favoring a public plan are remarkably weak. Obama tells us that we need it to compete with private health plans to keep them honest. But everyone understands that UPS and FedEx exist to keep the U.S. Postal Service honest. It never works the ther way.
Despite these impossible hurdles, there is one more strategic reason to keep promoting the public plan: The substantial airtime devoted to it inflates its value as a bargaining chip. With so much attention paid to the public plan, the inevitable "compromise" will appear to be a big giveaway, which the Obama administration and Democratic congressional leaders hope will give them leverage on other key issues.
In the best-case scenario for these liberal Democrats, policymakers to their right will be so exhausted by the time the public plan is taken off the table that they will consider success to be anything but a public plan. This is the end game if opponents of government-run health care underestimate America's new president.
However, eliminate the public plan option and opponents of government-run health care still suffer defeat. The fact is, the health care reform left on the table would still give the federal government all the control it needs to take over America's health care system. Decisions between patients and doctors would transfer to government bureaucrats. New federal regulators would dictate health plan design and cost-sharing limits. New reporting requirements would weaken the only recent alternative proven both to cut costs and engage patients, consumer-driven health plans. This scale of government involvement would suffocate the innovation and entrepreneurism that drives life-saving health care advances.
Moreover, at a time of ballooning deficits, it would be both costly and ineffective. The Congressional Budget Office scored the Senate HELP Committee bill -- the Kennedy-Dodd proposal -- at $1 trillion over 10 years. After all that spending, the CBO estimates the reform would insure only 16 million more people and continue to leave 36 million without insurance by 2017.
To avoid that, moderates and conservatives must focus on other key issues while holding the line against a public plan.
By now, attentive Americans have heard about health insurance exchanges, insurance subsidies, individual mandates, employer mandates, preexisting condition restrictions, electronic medical records, prevention and wellness, comparative effectiveness research, paying for value, tax parity and taxing employer-sponsored health benefits, a minimum health benefits set, Medicare payment reductions, and provider liability reform.
That list represents most of the core reform ideas. It's beyond overwhelming to anyone hoping to sort it all out, which is exactly why we need a comprehensive review, rather than hasty, undiscerning implementation of whatever the administration suggests.
Peter Nelson is a policy fellow at the Center of the American Experiment in Minneapolis.
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