Government-run plan could trip up health overhaul

by Lesley Politi on March 25, 2009

Government-run plan could trip up health overhaul

WASHINGTON (AP) — Giving Americans the option of buying medical coverage through the government — an idea put forth by President Barack Obama — is a potential deal breaker for some Republicans and insurance companies whose support would ease the way for a health care overhaul.

The proposal, which Obama advocated in his presidential campaign, would for the first time offer government-sponsored coverage to middle class families, as an alternative to private health plans. By some estimates, it could reduce premiums by 20 percent or more — making it much more affordable to cover an estimated 48 million people who don’t have health coverage.

But insurers fear competition from a government plan could drive them out of business.

And Republicans worry it would lead to a government takeover of health care.

Liberals, meanwhile, are equally adamant that Americans deserve the choice of government-sponsored health care.

Such a plan could be similar to what seniors have in Medicare, which is government run. Or it might be designed like the federal employee health plan, available to members of Congress, and delivered through private insurers.

Whatever he decides, Obama could find himself trapped between liberals in his own party and conservatives he’s trying to woo in support of a health care overhaul.

Asked about the issue at the White House health care summit this week, the president said he would address the qualms. And while saying he wanted to consider all ideas, he did not abandon the notion of a government plan.

“I’m not going to respond definitively,” Obama said, answering a question from Sen. Charles Grassley, R-Iowa. “The thinking on the public option has been that it gives consumers more choices and it helps … keep the private sector honest, because there’s some competition out there.

“I recognize, though, the fear that if a public option is run through Washington, and there are incentives to try to tamp down costs … that private insurance plans might end up feeling overwhelmed.”

Obama says he is committed to preserving a health care system in which government, employers and individuals share responsibility. Many Americans may not realize the government already picks up nearly half the nation’s $2.4 trillion health care bill, through programs including Medicare and Medicaid.

A public plan for the middle class could give a final nudge that puts the system squarely in government hands.

Obama’s campaign proposal — a foundation for Democrats in Congress — called for setting up a national insurance marketplace through which individuals and small businesses could buy coverage. People could pick private insurance or opt for a public plan that would resemble coverage for federal employees.

But Sen. Mike Enzi, R-Wyo., said that kind of public plan could make it all “a sham.” Enzi’s views carry weight because he is the senior Republican on the Senate health committee, which will help write the bill.

“It’s important that the private market be involved, and not to set up the whole thing so it’s a sham to compete with the government, so the government eventually can be the only supplier,” Enzi said in a recent interview. “We are not going to do an expansion of Medicare. To use that as the model and try to make everybody compete with it, would severely limit the market.”

A recent analysis by the Commonwealth Fund, a nonprofit group that sponsors health care research, is giving supporters of a public plan some ammunition.

The study estimated costs and coverage under a hypothetical health reform plan similar to what Obama proposed in the campaign. It found that a public plan like Medicare could reduce projected health care costs by about $2 trillion over an 11-year period. Premiums in the public plan would be at least 20 percent lower, partly because of reduced administrative costs. Within a decade or so, some 105 million people would be in the public plan, compared to about 107 million with private insurance.

Commonwealth Fund President Karen Davis said the administration has been very interested in the study. “Some of their top economists are on the phone, poring over it,” she said in an interview.

But Robert Zirkelbach, a spokesman for the industry group America’s Health Insurance Plans, said Medicare and Medicaid pay hospitals and doctors below their actual costs. “It would be very difficult to create a level playing field,” he said.

Democrats say they will fight to make sure a public plan stays in the final bill.

“We’re not trying to figure out what represents the interests of private insurers, we’re trying to come up with a plan that makes sure all Americans have health care,” said Rep. Jan Schakowsky, D-Ill., who serves on a House panel that will help write the bill.

Source: www.associatedpress.com

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