Public Insurance Concept May Prove Sticking Point in Health Care Reform

insurance industry and some Republicans — such as Sen. Charles Grassley of
Iowa — have already suggested that a public insurance option could be a
“deal-breaker.” But one of President Barack Obama’s top health care
advisers told reporters Wednesday she believes it’s still viable and said the
president wants it to be a part of any health care deal in an effort to keep
the private sector “honest.”

actually very hopeful we’ll be able to reach an agreement on that,” Nancy-Ann
DeParle, the head of the White House Office of Health Reform, said at a
briefing at the Kaiser Family Foundation in Washington. “It is part of the
president’s plan … and the reason it’s included is he wanted a mechanism to
lower costs and to keep the private sector honest by having a competitive
public plan in there.”

There are
no specific details on how a public insurance model would be crafted to help
cover some of the nation’s estimated 46 million uninsured people. But a number
of health care experts have previously suggested it could bear at least some
resemblance to Medicare by allowing the government to negotiate lower prices
from doctors, hospitals and providers and thereby lower the cost of premiums to

That has
alarmed private insurers who say they simply could not compete on a level
playing field and would lose too many customers to the government.

DeParle and
Kathleen Sebelius, who’s been nominated to head the Department of Health and
Human Services, are among the officials charged with leading the Obama
administration’s efforts to pass a broad new health care reform package. On
Wednesday, DeParle was careful to avoid drawing hard lines in the sand over the
public insurance option.

she suggested the contours of a possible compromise that could keep the concept
in the mix.

She said a
government plan “could operate by some payment rules that are similar to

But she also said it also could borrow elements from state
employee plans. In that model, the government could sponsor a public option
that is operated by private insurers and has the government paying rates
comparable to the private market. But the government would still save money
through lower administrative costs.

there are different breeds of public plans that could be part of this,”
DeParle said. The goal is, “how do we make sure … that people who are
shopping for a health insurance plan and are looking at things that are
low-cost and that are competitive and have some choices. That I think is what
we’re looking for.”

president of the insurance industry’s trade group said she was encouraged by
DeParle’s remarks.

“I do
think Nancy-Ann’s comments this morning were very thoughtful in reflecting some
growing understanding that a (public insurance) plan using Medicare rates could
be harmful,” Karen Ignani, the CEO of America’s Health Insurance Plans,
told the NewsHour. “It’s a recognition that there’s a lot of thinking
going on around this.”

Ignani also
maintained that a plan that too closely matched Medicare’s payment rates would
hurt too many private insurers.

now, there is subsidization going in the private sector for underpayment on the
Medicare side,” Ignani said. “If government uses Medicare rates, a
(recent Commonwealth Fund) study found that 120 million people will leave the
private system and go to the public sector in less than three years.”

For her part, DeParle, who meets regularly with
members of Congress on Capitol Hill, suggested some Republicans may not be as
opposed to a public insurance option as has been advertised. While some are
clearly opposed on philosophical grounds, DeParle said others are more
concerned about the mechanics of how it would work.

been interesting to talk to people who say ‘Oh, I don’t like a public plan.’
When you actually start talking to them about what it might look like, you
realize you’re talking about two different things.”

also acknowledged that the White House and Congress are just beginning to
negotiate how to pay for a health reform measure that could cost more than $1
trillion over 10 years. But she said tax revenues weren’t the only way to fill
the hole.

are plenty of scoreable savings in the budget and in providing smarter
care,” she said, adding that the administration is looking for “the
right mix of savings and revenue.”

who has worked at the state and federal level and served as a board member of
numerous private companies, also told reporters she believed the pace of work
on health care reform is far better than it was 15 years ago.

“By the late summer or early fall of `93, there were
probably a dozen or more bills in the Congress,” said DeParle, who served
in the Clinton administration. “But there wasn’t really the kind of
engagement that we see this year on the part of committee chairs or staff
working on a bill. You may think this is a congressional recess. We’re meeting
with them virtually every day … This is very active work that’s going on.”