Health-Care Battle Set to Focus on Public Plan

Congress is poised for a battle over whether an ambitious health-care overhaul should include a new government-run health plan to compete with private companies in the effort to cover the uninsured.

The proposal for a public health plan inspires passion on both sides, as it gets to the heart of what government's role should be in the health-care system. Democrats typically see more government involvement as a good way to check the private sector and help control costs. Republicans fear the government will have unfair power over the market.

The matter is likely to come to a head first in the Senate Finance Committee, where Chairman Max Baucus (D., Mont.) has pledged to write a bipartisan bill. His partner, Sen. Charles Grassley of Iowa, the top Republican on the panel, is adamantly opposed to the provision for a public health-care plan. As such, aides in both parties say it's unlikely a public plan will be included in the legislation now being negotiated.
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The House of Representatives, on the other hand, is likely to include the provision in its version of the bill, expected in late spring or early summer, aides say. That suggests the issue would have to be worked out in negotiations between the chambers later this year.

The government-run plan isn't the only contentious issue in the health-care debate. Others include whether employers should face penalties if they fail to offer health insurance, and whether individuals should be required to buy coverage.

For liberal Democrats, many of whom would prefer that all Americans join a government-run health system, the inclusion of a public plan among other options for consumers is a fallback position that they are reluctant to give up. But even some supporters privately predict that it may have to go to get a deal done.

This provision "is going to create a lot of political angst," said a Democratic House aide involved in the discussions.

President Barack Obama signaled the same earlier this month at a White House health-care forum where he articulated the pluses and minuses of a public plan. He told Sen. Grassley that the concerns were serious and real and promised to address them "partly because I assume it will be very ... hard to come out of committee" otherwise.

At the heart of the larger health plan being contemplated is a government-organized health-insurance exchange through which individuals and small businesses could purchase coverage. Private companies would compete for business under a new set of rules, such as a ban on rejecting applicants who are already sick. Subsidies would be available to many people based on their incomes.

During his presidential campaign, Mr. Obama proposed that a government-run plan be created to compete with private plans as part of the exchange. Sen. Baucus said last fall he, too, favored a public plan. The chairmen of the relevant House committees all favor it, too.

It could be structured in a variety of ways. Ideas range from creating a Medicare-like system, where government sets the benefits and the prices, to a system managed by a private contractor but in which government assumes the risk, much like large companies do with their insurance benefits.

Proponents say that will give people the choice of a nonprofit plan that will help keep costs low, particularly by controlling administrative costs. The government option will provide needed competition, they say.

"The choice of a public health-insurance plan is an essential part of reform. It's one we're going to fight for through the end," said Richard Kirsch, national campaign manager for the liberal advocacy group Health Care for America Now.

But opponents say a public plan would be an unfair competitor because it could become big enough to drive down reimbursements to doctors and hospitals, much like Medicare does, putting more cost pressure on the private sector. Consumers would then flock to the public plan because its premiums would be cheaper, opponents fear, and ultimately no viable private plans would remain.

Insurance companies, many of which support other aspects of the health-system overhaul, strongly oppose a public plan, said Karen Ignagni, president of America's Health Insurance Plans, the industry lobby group. "It's a very short step to a Medicare-like program for all Americans in a single-payer system," she said.


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