Pivot from Public Option to Insurance Co-Op

It appears the context of the health reform debate has changed from single payer, to public option and now to a health insurance co-op. The administration has signaled it's open to the idea of a non-profit health insurance cooperative that would provide competition in the marketplace.

HHS Secretary Kathleen Sebelius minimized a public option for health insurance, saying it “is not the essential element” of a reform package. “What is important is choice and competition, and I am convinced at the end of the day, the plan will have both of those, but it is not the essential element,” she said on CNN’s "State of the Union."



On "Meet the Press" Sen. Tom Coburn, M.D. (R-OK); Fmr. Senate Majority Leader Tom Daschle (D-SD); and Bruce Josten, Executive Vice President of the Chamber of Commerce, had a lively discussion (I have included the transcript of the relevant portion below) in which they discussed a public option among other topics.

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MR. GREGORY: Let me bring in Bruce Josten. He’s the executive vice president of the Chamber of Commerce. They have a perspective on this.
Sir, your, your organization, the Chamber, has been buying ads opposing a public option. The CBO, the Congressional Budget Office, has done a study indicating that, in fact, the number of those in private health plans would go up if there was a public option. They also say that about 11 million people would choose a public option, which is far fewer than opponents say would be the case.

MR. BRUCE JOSTEN: Thank you, David. We do oppose a public option because—in part because of what you just touched on earlier. We have a long history of both Medicare and Medicaid under reimbursing doctors and hospitals, 70 to 78 percent of what private payers do. Those under reimbursements ultimately then are cost-shifted back to the premium payers, which are the companies in America that you’ve pointed out in your show are providing healthcare coverage to the vast majority of Americans, over 160 million of them.
Now, with respect to the need for insure—insurance reform and healthcare reform, the business community is one of the strongest proponents and we have been for several years. We ran, in fact, ads last year calling for reform and more choices and bending the cost curve on health care. But when you under reimburse and it gets cost-shifted and you’ve got doctors practicing defensive medicine out of fear of liability, we’re corrupting the system. So if we’re going to have a level playing field, a public plan is an uneven playing field. It’ll destabilize private insurance. And independent researchers in the healthcare analytical area, as well as CBO, have expressed concerns that many employees could migrate away from employer-sponsored cover because of that competitive cost advantage initially with federal government backstopping.

MR. GREGORY: All right, Mr. Josten, thank you very much. Senator Daschle:

SEN. DASCHLE: Well, David, I guess the, the basic question is, are we building this new system for the American people or for the insurance companies? I mean, that’s really the key question. How will they be better served? We have a public option for Medicare Part D today, 6 percent of the people participate. I mean, there is a very small percentage of people that for all kinds of reasons have chosen the public plan when it comes to drugs. I think the argument is kind of interesting. It is that, well, this is going to be so popular that people are going to leave the private sector and go to the public sector. Well, that’s what choice is all about. But I think what we’ve got to do is to ensure that we’re going to level the playing field. We’re going to make sure that the competition is fair. But you’ve got a choice; either you’ve got to have the competition, or you’re going to have a regulatory framework, within which the private insurance industry is going to have to work.

MR. GREGORY: Is it significant, Senator...

SEN. COBURN: But there’s a big difference in what he said, though, on Medicare Part D. You allowed nationwide competition of insurance.

SEN. DASCHLE: That’s what we’re doing with this.

SEN. COBURN: It—No, no, you’re not. You’re, you’re regionalizing it. Look at the House bill, look at the Senate bill. You’re regionalize—you’re making it a state base. The difference is, is in New Jersey the same thing that costs $600 in Missouri costs 9,000. It’s because of mandates. And what we need—and we all agree, we need more competition among the insurance industry. But the way to get it is to open up.

MR. GREGORY: All right, let me—I want to ask you about a point of news, though, here today. If the president is willing to accept reform without a public plan, without a public option, if he, if he can live with strong, you know, cooperatives that allow some choice for consumers, can that attract more bipartisan support? Will Republicans sign on?

SEN. COBURN: Well, I think, I think that there is potential for that. I think the other thing that we need to remember is inside the House bill and inside the Senate bill is 87 new government programs requiring well over 150,000 new federal employees. We can’t accept that, because that is government management of health care and not individual management.
I want to make one other point on, on the comparative effectiveness. The problem with comparative effectiveness is it divides the loyalty of the physician away from the patient. It takes what is important for you as my patient, and all of a sudden I’m looking over here because somebody here’s telling me what I can do rather than what I know...