Health care issues: The public insurance plan

THE ISSUE: Should Americans have the option of getting health insurance from a government plan that competes with private companies?

THE POLITICS: Many Democrats want to do away with private insurance and replace it with something resembling Medicare coverage for all, but that's not politically feasible. Offering the choice of a government insurance plan was a compromise within the Democratic Party. Liberals' preferred approach was to make the plan as cheap as possible for consumers and the government by tying payments to doctors, hospitals and other providers to the rates Medicare pays. But moderates feared that would result in ruinously low rates for providers, particularly in rural districts. They prevailed in the House, where the public insurance plan in the bill passed Saturday allows the Health and Human Services secretary to negotiate payment rates with providers, like private insurers do. In the Senate, Majority Leader Harry Reid, D-Nev., settled on a government insurance plan that states can opt out of. It's not clear the proposal commands enough votes to survive, and it could be replaced by a standby system pushed by moderates that would not go into effect until it was clear individual states were experiencing a lack of competition among private companies. Despite the compromises, insurers, employer groups and Republicans remained opposed, fearing that while a government plan might start out modestly, Congress could change the rules later, opening it up to all people and setting take-it-or-leave payments for hospitals and medical providers, instead of negotiating, as the House bill calls for. Unions strongly support the public option, and so does a majority of the public in opinion polls.

WHAT IT MEANS: Democrats hoped a public plan could expand coverage at a lower cost to taxpayers, but the Congressional Budget Office estimated that about 6 million people would sign up for the public option in 2019, when the House bill is fully phased in. That represents about 2 percent of a total of 282 million Americans under age 65. (Older people are covered through Medicare.) The overwhelming majority of the population would remain in private health insurance plans sponsored by employers. Others, mainly low-income people, would be covered through an expanded Medicaid program.

—Ricardo Alonso-Zaldivar

___

Nov 10, 2009 - 10:56 a.m. EDT

Copyright 2009, The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.