When Is A Public Plan Not A Public Plan
Chuck Schumer has decided to wade into a debate where he's not needed and craft a compromise where no compromise is desired. And this compromise would turn a legitimate public option into a non-profit providing the same crappy insurance everyone's already used to.
In an effort to defuse the most explosive issue in the debate over comprehensive health care legislation, a top Senate Democrat has proposed that any new government-run insurance program comply with all the rules and standards that apply to private insurance.
The proposal was made Monday by Senator Charles E. Schumer of New York, the third-ranking member of the Senate Democratic leadership, in a bid to address fears that a public program would drive private insurers from the market [...]
President Obama campaigned on a promise to create a public plan, in an effort to compete with private insurers and keep them honest. But insurance companies and Republican lawmakers say a government-run plan could drive private insurers out of business and eventually lead to a single-payer system run by the government.
Scorched by Republican opposition to the idea of a new public program like Medicare, Senate Democrats are looking for a middle ground that would address the concerns of political moderates. One way they propose to do that is by requiring the public plan to resemble private insurance as much as possible.
Those aren't fears, they're hopes. And insurance companies and Republican lawmakers should not, in theory, be nearly enough to stop this bill, given that it requires 50 votes through reconciliation. That excuse has left the building along with Arlen Specter. We only have corporate Democrats to blame this time.
When you get to the heart of what Schumer proposes, essentially he's creating a non-profit health insurance option without any bargaining power to lower costs.
¶The public plan must be self-sustaining. It should pay claims with money raised from premiums and co-payments. It should not receive tax revenue or appropriations from the government.
¶The public plan should pay doctors and hospitals more than what Medicare pays. Medicare rates, set by law and regulation, are often lower than what private insurers pay.
¶The government should not compel doctors and hospitals to participate in a public plan just because they participate in Medicare.
¶To prevent the government from serving as both “player and umpire,” the officials who manage a public plan should be different from those who regulate the insurance market.
In addition, Mr. Schumer said, the public plan should be required to establish a reserve fund, just as private insurers must maintain reserves for the payment of anticipated claims. And he said the public plan should be required to provide the same minimum benefits as private insurers.
Agree with 3 & 4, maybe 1 & 5, but #2 is the ballgame. The entire point of a public plan would be to pool resources and lower costs. Heck, that's the entire point of insurance. A "single-payer" plan sets rates through government bargaining power. Schumer here unintentionally proves that single payer is cheaper, but that's a small consolation considering he strangles the public plan that would be an entryway to it.
Wanting a public option but not wanting it to be able to offer anything better than current private insurance make no sense at all. It reminds me of Arlen Specter saying he supports the Wyden-Bennett plan, funded by eliminating the tax deduction for employer-provided health insurance, and then saying he doesn't support that funding. As Matt Yglesias notes, we can go around this maypole all day.
My great fear is that this is how health care reform is going to die. A handful of very conservative members of congress may position themselves as “against” reform. But many people on the center and the right are going to say that they’re all for reform. They’re just going to be against particular things such that reform is impossible. When Barack Obama proposed reducing tax deductions for wealthy taxpayers, that idea died a swift and sudden death on the Hill. And you also don’t see Senators who are eager to start taxing health benefits. Nor do I see Senators who are eager to pay for health reform with steep cuts in defense spending or a new VAT or by raising income tax rates to above their Clinton-era levels. But I’m having trouble thinking of any other possible sources of revenue.
In other words, with all that stuff off the table, health reform dies.
Funding health care is an area where progressives have had little conversation and even less unity. But the Senate is systematically drying up all the options. In the end, we have to pay for this thing.