Kennedy, Baucus Have Differences on Reform Plan

The battle lines on health care reform are being drawn, not between Republicans (who have no real power) and Democrats, but between Democrats like Sen. Max Baucus who favor a public plan with a small "p," or would even kick that can down the road, and those like Sen. Kennedy who want a powerful public plan that could easily morph into a single-payer system. But ironically, if the latter win the argument, the Republicans might be able to block reform by shouting "socialized medicine!" Meanwhile, the entire debate is diverting attention from the real issues that need to be resolved to achieve sustainable, universal access to good health care.

According to one report, the Kennedy plan, which closely resembles the Massachusetts reform law, includes a provision for opening Medicaid to everyone whose income is under 500 percent of the federal poverty level, or $110,250 for a family of four. If so, that means the majority of people under 65 could receive their health insurance through the government. Another report, however, says that Kennedy would require states to expand Medicaid eligibility only to those with incomes up to 150 percent of FPL, while broadening the Children's Health Insurance Program to encompass everyone up to age 26. Like Sen. Baucus, Kennedy would require all individuals to have health insurance. An employer "pay or play" mandate is said to be part of Kennedy's plan, but Baucus has not endorsed that.

Kennedy also has a different vision for a public plan that would compete with private plans in government-sponsored insurance markets. He would reportedly model it after Medicare and allow it to pay providers 10 percent above Medicare rates. Doctors and hospitals in some areas complain that Medicare pays them less than private insurance, but many would be glad to get 110 percent of Medicare. While private plans could probably meet that competition fairly easily, it would increase the percentage of provider volume subject to government-imposed, non-negotiable payment rates. So it's likely that providers would put pressure on private insurers to pay higher rates if there were a public plan.

The New York Times quoted Sen. Charles Schumer as saying that he would try to get Kennedy and Baucus to compromise on a public plan, using his proposal to level the playing field between public and private insurers. Under Schumer's approach, the public plan would have to abide by the same rules as private plans, would have to be self-sustaining, and would have no access to government funds.

Today (May 30), Baucus and Kennedy issued a joint statement saying they would cooperate on reform and that their committees will craft a single piece of legislation before August.

Regardless of whether a public plan is part of that reform package, cost control remains the key to viable healthcare reform. As health policy guru and consultant Robert Laszewski points out on his blog,

"Real health care reform--would be about crafting unambiguous changes in incentives that drove providers--doctors, hospitals, drug and device makers, and insurers--toward sweating that 30% of the waste out of the system thereby paying for universal care and making the system sustainable."