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Amid Health Reform Debate, Prospects for Public Plan Explored

July 28, 2009 at 6:00 PM EDT
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As House Democrats try to round up votes for a health reform plan and a bipartisan group works on a Senate compromise, two bloggers size up the prospects for a public health insurance plan.
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JIM LEHRER: The wrangling over health care reform resumed in earnest today in Congress. There was talk of possible progress on the Senate side, while House Democrats labored again to round up votes on their side.

NewsHour health correspondent Betty Ann Bowser has our lead story report.

BETTY ANN BOWSER, NewsHour Correspondent: The focus in the Senate remained on a bipartisan group of Finance Committee members who’ve worked in secret for weeks.

It was widely reported they’re nearing a compromise that would discard key White House priorities: a government-run public option plan to compete with private insurance companies; and a mandate for large businesses to provide coverage for their employees.

The senators were also said to be talking about including an independent government commission that would have authority to set Medicare reimbursement rates and was considering taxes on so-called high-cost “Cadillac” health insurance plans.

Committee Chairman Max Baucus addressed that point as he headed into another round of talks.

SEN. MAX BAUCUS, D-Mont.: Senators like that, probably because it raises some revenue, but, second, it does bend the growth curve.

BETTY ANN BOWSER: Meanwhile, inside the Capitol, the Democratic caucus met to brief members on the status of negotiations. And at this point, there does not appear to be agreement.

One House Democrat opposing the bill, Michigan’s Bart Stupak, said the logjam remains.

REP. BART STUPAK, D-Mich.: We have no bill.

BETTY ANN BOWSER: But the number-four Democrat in the house, John Larson of Connecticut, said there’s reason for hope.

REP. JOHN LARSON, D-Conn.: I remain confident that we’ll come to agreement and then be out about the business of making sure that we’re able to sell this plan, as well.

BETTY ANN BOWSER: The dissension within Democratic ranks made it less and less likely the House will pass health care reform before the August recess. The Senate has already given up on that goal.

House Republicans argued today the impasse bolsters their claim that the Democrats’ plan will fail because it costs too much.

REP. MIKE PENCE, R-Ind.: House Republicans and a handful of Democrats are on the verge of a historic victory for American taxpayers and for the American health care economy.

BETTY ANN BOWSER: President Obama continued making his case today at an AARP town hall meeting in Washington. He said again health care reform is crucial to Medicare’s survival.

U.S. PRESIDENT BARACK OBAMA: As costs balloon, so does Medicare’s budget. And unless we act within a decade, within a decade, the Medicare trust fund will be in the red.

Now, I want to be clear: I don’t want to do anything that will stop you from getting the care you need, and I won’t. But you know and I know that right now we spend a lot of money in our health care system that doesn’t do a thing to improve people’s health, and that has to stop.

BETTY ANN BOWSER: The president continues his health care campaign with two more town halls, tomorrow in Virginia and North Carolina.

Negotiations in Congress

Ezra Klein
Washington Post
There's as many different public plans as there are bills. Some would be national; some would be run by states; some would be triggered by certain conditions not being met.

JIM LEHRER: Judy Woodruff has more about one of the key questions: whether to include a public plan.

JUDY WOODRUFF: And for that, we turn to two people who've been closely watching this battle and making their case about this issue in their respective health care blogs.

Ezra Klein covers domestic and economic policy for the Washington Post and recently the American Prospect.

And Tevi Troy writes for the "Critical Condition" blog of the National Review. He served as deputy secretary of health and human services during the second Bush administration, and he's now a senior fellow at the Hudson Institute.

It's good to have both of you with us. We appreciate your being here.

Let's start out and just -- we know it's hypothetical. It hasn't come out of Congress. They're still negotiating. But, Ezra Klein, if there were a public plan, who would run it? How would it work? How would it be different from the private insurance many people are used to now?

EZRA KLEIN, Washington Post: Well, I wish I could answer it more clearly. There's as many different public plans as there are bills. Some would be national; some would be run by states; some would be triggered by certain conditions not being met, as if, in one condition, say, private insurers don't hold down costs and then in five years the public plan comes into being.

But the primary issue here would be the public plan would be a private insurer -- not a private insurance plan, an insurance plan run by the government, available only -- and this is important, and people don't know it -- on the health insurance exchanges, so available to those people who are able to buy into these sort of new regulated markets that are at the beginning really only available to the unemployed, small businesses, and the self-employed.

JUDY WOODRUFF: So when we ask who's eligible, you're saying the unemployed and who else?

EZRA KLEIN: Small businesses. Certainly, in the first couple of years, businesses under 10 or 20 people, the self-employed. But I work at the Washington Post. We're a large business. We get health care. I could not buy into the public plan, because I could not get into the health insurance exchange.

JUDY WOODRUFF: But eventually the idea would be to enlarge it? Is that right?

EZRA KLEIN: Some people have that idea, and others don't. I mean, it is not built into the bills that that would happen.

JUDY WOODRUFF: All right. Well, let me turn to you, Tevi Troy. How do you see -- what's your understanding of what a public plan would be?

TEVI TROY, National Review: Well, I agree with a lot of what Ezra said, especially that it's vague. We're not really clear on what it is. I also agree with Ezra that there would be limitations at first, but then it would expand. And I think long term you would see government taking over more and more of the system.

JUDY WOODRUFF: As in Medicare? Is that what you're saying or...

TEVI TROY: I think a Medicare model is likely. I think that something where you have the government as the payer, setting the rules, determining who's in and who's out, determining what coverage is available, and what products get covered, and I think that's an important point.

Ezra has said in the past that one of the biggest problems with the public plan is what it does to innovation. It could stifle innovation if government chooses what products make it forward and which don't.

Objections to the plan

Tevi Troy
National Review
When you have people looking at the system, and they're in the private insurance plans, and they start to bleed into the public plans, and the public plan gets larger and larger.

JUDY WOODRUFF: Ezra Klein, do the proponents of the plan agree that it's what Tevi Troy just described?

EZRA KLEIN: No. I also haven't said what he just ascribed to me, so, putting that aside for a minute, there are a couple different theories of what the plan would be, but at the outset, the plan actually under consideration is one insurance option that will compete among many.

Tevi is correct that there are people out there who would like to see it grow, but it's very important to be clear about the mechanism here. The way a public plan would grow to be larger, grow to be like Medicare, which would be an incredible leap in growth, would be that it turns out to be cheaper and have higher quality than competing private insurance plans and people choose it.

The whole idea behind the public plan is that you can choose it and that, if it works well, it will either be a good choice for people or will force private insurers to compete more efficiently and more effectively for consumer dollars.

JUDY WOODRUFF: If the idea is that it's available to more people and one can choose it, then, Tevi Troy, tell me, what are the opponents -- what is it that they object to about the plan?

TEVI TROY: Well, of course, again, at first, perhaps people can choose it. And they are going to delimit it in certain ways at first, is the idea.

But my concern is that there's this issue of crowd out. When you have people looking at the system, and they're in the private insurance plans, and they start to bleed into the public plans, and the public plan gets larger and larger. CBO has estimated...

JUDY WOODRUFF: What do you mean "bleed into"? You mean because it's more attractive in terms of rates?

TEVI TROY: They find it more attractive because the government limits the costs and because it subsidizes it. So people bleed into the system. They switch from the private coverage to the public option, and more and more people enter the government plan. CBO has found something like 80 million people would engage in this crowd-out-type behavior.

JUDY WOODRUFF: All right, so now that we've heard some of the pluses and the minuses of what it might entail, Ezra Klein, who is in favor of it? And why are they in favor of it?

EZRA KLEIN: You know, The people you generally see pushing for it are not only Democrats, but consumer groups, folks who fundamentally believe that private insurance hasn't worked very well, that it's done too much to limit coverage, too much to price people out, too much to take health care away from people who needed it, too much to deny people who, you know, came in and had a pre-existing condition, people who fundamentally believe the system we have isn't working.

And one of the important things -- it was interesting seeing what the Senate Finance Committee may put out here, the employer mandate and the public plan, because, along with the employer mandate, the public plan is a wildly popular part of health care reform. People really like the idea of having one more insurance option among many, because in recent years you've had incredible insurance consolidation and most people just don't get much of a choice.

JUDY WOODRUFF: Well, let me -- I want to ask you about that in a minute.

But, Tevi Troy, the opponents, what do they not like about it?

Prospects for a public plan

Ezra Klein
Washington Post
I don't think it's anywhere near off the table. In some ways, I'd be surprised if you don't have something called a public plan in the final legislation.

TEVI TROY: Well, first of all, I'm not sure it's wildly popular, because on Capitol Hill a public plan does not appear to have the votes either in the Senate or the House to pass. So there are some questions about its popularity.

The opponents don't like the fact that it would be a government plan that is like Medicare, which is going to go bankrupt, as President Obama said in the set piece beforehand, in about 10 years. So it's extremely expensive. It could limit coverage.

It could lead to rationing. I mean, you can ration -- when you have limited resources, you can ration in only a certain number of ways. You can ration by line, which they do in Canada. You can ration by limiting products and availabilities, like they do in England. Or you can ration by price, which is for the most part what we do in the U.S.

JUDY WOODRUFF: Having said that, how confident are you that it's completely off the table? I mean, there are reports today that it's off the table, the negotiators aren't looking at it anymore, at least in the Senate.

TEVI TROY: I'll say this: I'm confident that it's not going to pass before the August recess, a public plan, so...

JUDY WOODRUFF: And what are you hearing about it, Ezra Klein, in terms of where it stands?

EZRA KLEIN: Well, the Senate Finance negotiators aren't looking at it. It does exist in the Senate HELP plan, which was already passed out of committee, and it exists in the House bill, which has come out of two committees so far and is still working its way through Energy and Commerce.

So I don't think it's anywhere near off the table. In some ways, I'd be surprised if you don't have something called a public plan in the final legislation.

JUDY WOODRUFF: And in terms of the political state of play, where's the balance now? I mean, is it the Blue Dog Democrats? The more fiscally conservative Democrats, as we just heard in Betty Ann Bowser's report, have not been for this, but they might be willing to go along with it.

EZRA KLEIN: You know, they might. I met with Nancy Pelosi last week for an interview, and she said she feels the Blue Dog Democrats accept that it will be part of the final bill and are, you know, trying to work their way through what the final form should be.

So it's going to be very complicated to see. And one of the key questions that you have to ask right now is, who's going to have more votes and more power at the end of it? And many liberal Democrats, both in the House and the Senate, have sworn they will not vote for a plan that does not include a public plan.

Well, I've actually not heard any sort of similar categorical denials from either centrist Democrats or Blue Dogs. So people generally expect that at the end the moderates will make the compromise, but you could really see dissension in liberal ranks on this.

Cooperative agreement?

Tevi Troy
National Review
Well, the thing about the cooperative is that they're vague enough that it can be whatever people want it to be or people can see what they want in the co-op.

JUDY WOODRUFF: How do you size up the political prospects among the conservative -- well, among the Blue Dog Democrats and the Republicans?

TEVI TROY: Well, I certainly agree with Ezra that there's going to be a huge push from the left for a public plan. In fact, Harry Reid said something like whether you call it a co-op or a public plan, we're going to have some kind of government-run option in there. So there's definitely an insistence on the left that that be in there.

That said, I think the Blue Dogs are very uncomfortable with it and they've made it clear. I've done a lot of talk radio recently, and one talk radio host said that he in 50 years of broadcasting has never heard as much public anger as about this public plan. So I know there is some groundswell of opposition out there, as well.

JUDY WOODRUFF: You said a minute ago whether it were a co-op. This is the nonprofit cooperative agreement. Are you saying that the conservatives would oppose it even if it were structured that way?

TEVI TROY: Well, the thing about the cooperative is that they're vague enough that it can be whatever people want it to be or people can see what they want in the co-op. So I think there's a chance that a co-op can pass and could bring some Blue Dogs on board. However, it could in the end be very much like a government-run option, if government sets the rates, if government picks the people who lead it, and government provides the seed capital for it.

JUDY WOODRUFF: Recognizing we're still throwing terms around here that a lot of us, including me, don't completely understand, at this point, Ezra Klein, what do you think the prospects are? And, Tevi Troy, how do you see the prospects?

TEVI TROY: Well, I think that -- I don't think they're going to make it through before the August recess.

JUDY WOODRUFF: Well, what about the fall?

TEVI TROY: I think what happens in those five weeks in the August recess is going to be crucial, because if congressmen go back and basically have to wear flak jackets in their districts because of opposition to the public plan, then they might rethink this.

However, you know, there might be a push the other way, so I think it's up in the air right now. My bet, at the end of the day, is no public plan, but something does pass.

EZRA KLEIN: I think you're going to see something pass. I think you'll probably see it have a public plan. I think, at the end of the day, you know, health care reform ends up being something strong. And both Democrats, you remember, from 1994, when they lost on it, they lost big in the following elections, and that was true for the sort of Democrats that we associate with the Blue Dogs and true, as well, for liberals.

So I don't think you're going to see in any situation nothing go through. And at the end of the day, I think the public plan is popular enough that you'll see it embedded in the legislation.

JUDY WOODRUFF: In one form or another?

EZRA KLEIN: In one form or another.

JUDY WOODRUFF: Ezra Klein, Tevi Troy, thank you very much.