BETTY ANN BOWSER, NewsHour Correspondent: House Democrats unveiled their blueprint for reforming the country’s health care system today, capping off a week in which prospects for health care reform were dealt a series of blows.
REP. HENRY WAXMAN, D-CALIF.: The draft is a very practical one, and it’s a uniquely American proposal. It builds on what works and fixes what needs to be fixed
BETTY ANN BOWSER: The proposal is the work of three House committees. It includes: a mandate that all individuals obtain health insurance; a requirement that employers offer health care to workers; and it provides an exemption for small businesses.
Leaders did not give any cost estimates, but said they were considering a number of ways to pay for it, among them: taxing sugary drinks and alcohol; raising income taxes on those earning more than $200,000 a year; and increasing the payroll tax on all U.S. workers.
Perhaps the most contentious aspect of the House draft is the inclusion of a new public health insurance plan.
Today, House Minority Leader John Boehner called the Democratic draft “nothing short of a government takeover of health care.” Last week, he expressed his opposition to any public plan.
REP. JOHN BOEHNER, R-OHIO: House Minority Leader: Listen, if you like going to the DMV and you think they do a great job or you like going to the post office and think it’s the most efficient thing you’ve run into, then you’ll love the government-run health care system that they’re proposing, because that’s basically what you’re going to have.
BETTY ANN BOWSER: But today, House Ways and Means Chair Charles Rangel said having a public plan would bring fairness to the system.
REP. CHARLIE RANGEL, D-N.Y.: I’m anxious to take on those people who are opposing the public option. For those people who are afraid of competition, they shouldn’t be in this business. This is what we’re trying to do: make it an even playing field for all professionals to say they’re getting better than a fair shake.
BETTY ANN BOWSER: Meanwhile, in the Senate this week, legislators were forced to slow down after learning that the Congressional Budget Office put a price tag of $1.6 trillion on the Senate Finance Committee’s initial plan, $600 billion more than was anticipated.
SEN. MAX BAUCUS, D- MONT.: It’s really, at this point, when we’ll be ready. I want to make sure that we have a complete package, but we’re not there yet.
BETTY ANN BOWSER: Details of a revised plan were leaked to reporters last night. It, too, has an individual mandate and expands Medicaid coverage.
The new draft does not call for a government-run public insurance plan. Instead, the Senate Finance Committee is considering creation of a nonprofit co-op, to compete with private insurers.
President Obama says he’s open to all options, but continues to push for a public plan in speaking events.
PRESIDENT BARACK OBAMA: One of these options needs to be a public option that will give people a broader range of choices and inject competition into the health care markets.
Understanding public plan options
BETTY ANN BOWSER: While the debate over a public plan continues, we sat down today with two health care policy experts who've testified before Congress.
Karen Pollitz is a research professor at Georgetown University's Health Policy Institute. And Stuart Butler is vice president for domestic and economic policy at the Heritage Foundation.
I think I'd like to begin by having you help us understand a little bit better what this public option, this public plan idea really is.
KAREN POLLITZ, Georgetown University: Well, it's a health coverage option, a program that the government would run. The government would pay the claims. It could be structured lots of different ways. We have Medicare today, high-risk pools. We have lots of public programs today.
I think it has two purposes. One is related to money and promoting savings and sort of greater competition and cost savings in the insurance market. And the other is really to offer people a choice.
I think, based on their current trust of private health insurance plans, it's the case now and will always be the case that a very small number of people -- about 1 percent of people -- account for a quarter of all health care spending. And there's a strong incentive for insurance companies to compete to avoid those people, enrolling them or taking care of them.
And a public plan -- because it will always be more profitable to do that. And because a public plan doesn't have to make a profit, it doesn't need to do things like that.
BETTY ANN BOWSER: Stuart Butler, what's your idea of what a public plan would be?
STUART BUTLER, Heritage Foundation: Well, I think there are two versions, just building on what Karen has said. Version one is that the government would run directly a health insurance plan. That really would be intended to make sure that prices go down, that costs go down, and really forces the rest of the market to operate in a certain way. So that's a very hands-on, sort of aggressive kind of public plan.
And some people, of course, do see that ultimately as leading to -- that public plan becoming the plan, that it becomes eventually a sort of -- what we call a single-payer system.
Another version is that it's just another alternative that people anywhere would know that there would be one option that would be run by the government, but would be really just like everything else. And that's where you hear ideas like, it should be on the same level playing field, it should have the same rules, and so on.
If it's like the same as everything else and it's supposed to be on the same level playing field, you have to worry about two things. Will it actually save any money if it's charging the same prices? And, secondly, will the government -- and particularly will the Congress -- actually allow it to be separate, just like anything else, or will it actually try to start rigging the playing field to favor its plan?
And that's what scares, I think, a lot of people in the health industry and should scare a lot of Americans.
Differences from Medicare
BETTY ANN BOWSER: Some of the descriptions you hear of the so-called public option or public plan, it sounds like Medicare.
KAREN POLLITZ: Well, and I think some versions of the public plan might be more like Medicare. There's a notion that the federal government might establish a program that's similar to Medicare. It might borrow Medicare's payment system for doctors and hospitals.
But, you know, it might be different. As Stuart said, there are a lot of different ways that you could design a public program option. So it doesn't necessarily need to be an extension of Medicare.
But whatever else a public plan would be, it would be designed to work always in favor of the consumers, always -- particularly in favor of people when they're sick.
STUART BUTLER: The idea of Medicare or the Medicare system as being the basis of a public plan does have a lot of implications. It means that the federal government would be paying less to doctors and hospitals in that plan. You've then got to worry about, well, will doctors want to be in that plan?
So that's why a lot of people then say, if you have that kind of system, doctors would be required to take patients in that plan. They couldn't opt out, because otherwise they could avoid getting lower prices.
You've also got to wonder about whether employers would then say, "Well, if we have this cheaper alternative, are we just going to move our employees into that plan, like a lot of companies did in the 1990s into managed-care plans, to save money?" If that happens, then a lot of people who today are comfortable and satisfied with their employer-based coverage may find themselves dumped into that less expensive alternative.
KAREN POLLITZ: Let me just comment on the managed care thing. Most people who are enrolled in Medicare today are not in managed-care plans. And most doctors do participate, hospitals do participate. Medicare has the biggest provider network in the whole country, so people have probably wider choice and wider access to doctors and hospitals under Medicare than they do under any private plan today.
BETTY ANN BOWSER: Insurance companies say that this will, this public plan, could potentially drive them out of business. Is that a realistic notion?
KAREN POLLITZ: They do say that, and there are certainly inherent efficiencies in a public program. I mean, there just are. A public program doesn't need to make a profit. It doesn't need to build that into its prices.
The administrative costs of Medicare are far less than the cost of any private health insurance plan. Maybe 2 percent of the whole cost of the program is for administrative costs under Medicare. Under job-based plans that employers sponsor, it's more like 8 percent or 10 percent. And for policies that we buy on our own today, it can be 30 percent, 40 percent of our premium goes to administrative costs.
So a government plan is sort of easier to run. You just have one system that, you know, works for everybody. You don't have to keep reinventing the wheel the way a lot of private plans do.
Whether it's going to sort of compete against other insurers in a way to drive them out of business, I think, is really a matter of how the system is designed, how the subsidies are designed, how eligibility rules are set up. But it's important for the public plan to introduce a measure of competition into the marketplace that we don't have today.
The competition issue
BETTY ANN BOWSER: How about competition, Stuart Butler?
STUART BUTLER: Well, because I'm in favor of competition, but let's be clear that we're talking about a competition that could very much be rigged.
And let's be clear about some things about Medicare, too. One of the complaints about Medicare is, in fact, that it isn't well organized. We don't have very tight networks and so on. That's part of the cost problem that does exist within Medicare.
Let's also remember, Medicare has a huge unfunded financing system. You know, we just promise benefits to people. And over the long haul, it's over $30 trillion out of balance. And so, yes, you can set up something that says it's low prices and low overhead, but if you don't care about how much debt you're building up in the future, then you can run it, but the problem is, if you're competing with somebody who's got to balance their books over time -- and this public option doesn't have to do that -- you're not likely to see a fair competition.
Remember, also, the Congress would be setting the rules of this competition. So it's got its plan, like Medicare. People are continuing to lobby them for more things and so on and for doing this. And they're setting this -- they're the umpire for the whole system, but they run one of the teams. I think in a game like that, you have to be very careful about -- think about what the outcome is going to be.
BETTY ANN BOWSER: How much traction does the public plan really have on Capitol Hill?
STUART BUTLER: I think it's getting less and less traction, which is precisely why people are looking at these kinds of alternatives. Sen. Daschle, President Obama's first nominee for HHS secretary, who was a big proponent of public plans, has said, you know, really, this is something which is like a minefield, that we are never going to get broad, bipartisan support if we have this government-run public option. So he, just in this week, these last few days, has said we ought to just abandon that.
And I think he's right. Politically, I don't think there's any chance of getting serious bipartisan agreement if there's an insistence on having this government-sponsored, so-called competitor.
KAREN POLLITZ: I wouldn't count it out just yet. People want, I think, health security, and the money is going to be important, too. The CBO has said that a public program can score significant savings.
BETTY ANN BOWSER: The Congressional Budget Office.
KAREN POLLITZ: I'm sorry, the Congressional Budget Office, possibly a couple hundred billion dollars over the 10-year period. And we're going to have to find a way to pay for health care reform. And finding ways to get some savings out of the system by promoting the kinds of efficiencies that a public plan option could bring to the market I think are going to stay on the table.
BETTY ANN BOWSER: Stuart Butler, Karen Pollitz, thank you very much for being with us.
KAREN POLLITZ: Thank you.