Truth in Advertising Is The Only Path to Real Reform

Last Updated Jun 8, 2009 6:10 PM EDT

It's crunch time for healthcare reform, and a group of influential GOP senators have told President Obama that a "public plan" option is a nonstarter. They argue that one form of that public plan, modeled after Medicare, could drive private insurance companies out of business. Meanwhile, Administration officials and Congressional proponents maintain that some kind of public plan is needed to increase competition and reduce the excessive profits of private insurers.

Well, let's have a little truth in advertising. If the public plan has government financial backing, uses Medicare's infrastructure, and pays providers at Medicare or near-Medicare rates, it will be able to undercut the premiums charged by many private insurers, even if they take less off the top. That could result in the insurers losing much of their business. If the public plan has no government support, has to depend purely on premiums, and competes with the private plans on a level playing field, as Sen. Charles Schumer and a group of "Blue Dog" Democrats in the House want, there's no reason to suppose that it would operate any differently than any private insurer. Just look at the similarities between for-profit and not-for-profit insurers: for the most part, they behave exactly the same way because they're competing in the same market. So, except for providing additional competition--which could be beneficial in some markets--the public plan "lite" would have little impact on insurance costs.

What this analysis makes clear is that Congressional Democrats are not advertising their proposal truthfully. Those who favor the public plan "lite" seem to be doing so for political reasons, without acknowledging that the only effect their solution would have is to stoke Republican opposition. Sen. Ted Kennedy, who has long been a staunch advocate of "Medicare For All," has not admitted that his Medicare-like public plan is a stalking horse for single payer. But most of the 80 members of the Congressional Progressive Caucus who support a public plan like Kennedy's are cosponsors of Rep. John Conyers' single-payer bill (H.R. 676). President Obama, meanwhile, is bowing to the majority of his party. He supported a public-plan option during the election campaign, when he was fending off Hillary Clinton and John Edwards, and he's sticking to his story.

The problem with that story is that Republicans solidly oppose a public plan, and even some Democrats might object, depending on what form it takes. Absent a public plan, Senators Max Baucus and Charles Grassley, the leaders of the Senate Finance Committee, have a better-than-even chance of coming up with a bipartisan solution that would avoid the need for a last-ditch budget reconciliation maneuver to pass healthcare reform. But with a public plan included, many other worthy components of healthcare reform might be cast aside in a desperate effort to get a bill passed. In other words, the Democrats are fighting an ideological war of choice--like George W. Bush's "preemptive" invasion of Iraq--that could doom the best chance of achieving healthcare reform in a century.

  • Ken Terry

    Ken Terry, a former senior editor at Medical Economics Magazine, is the author of the book Rx For Health Care Reform.