The Wonk Room

Obama’s Health Care Czar Leaves Door Open To Dropping Public Plan Option

Today, during a roundtable at the Kaiser Family Foundation, Health Care Czar NancyAnn DeParle remained optimistic that health care reform would include a public health plan option, but suggested that the President would be open to exploring other ways of controlling health care costs:

It could operate by the same rules that all the other plans do. It could have payment rates that are very similar. Or it could have payment rates that are the same as Medicare — that’s one idea that has been used. So there are various ways of looking at it…[Obama] wanted to make sure that he could keep costs low — the public plan is one way of doing that — and he wanted to make sure that there was competition and choice for consumers, and that you have a way of keeping the private plans honest. But as he said, if there are others ways of doing that, he’d be open to talking about it.

Watch it:

DeParle stressed that the public health care plan remains ill-defined and suggested that policy disagreements (like how much a public plan pays providers) could be bridged during negotiations. DeParle echoed Gov. Kathleen Sebelius’ suggestion that the new plan could be modeled on publicly-owned health insurance plans for state employees, but did not address critics who claim that these plans have not successfully controlled health care spending.

Republicans strongly oppose a new public health care plan and some Democrats are already distancing themselves from the option. During an appearance on Fox News Sunday, Sen. Evan Bayh (D-IN) said that he was “agnostic” about having a public plan as part of health care reform and Senate Finance Committee Chairman Max Baucus (D-MT) recently told the Wonk Room that he believes health care reform can be accomplished “without” a public option.

Transcript:

You have to sort of get on the same page of what a pubic plan is when you’re talking about it. It’s been interesting to talk to people who say, “Oh, I don’t like the idea of a public plan” —when you actually start talking to them about what it might look like, you realize you’re talking about two different things. So I’m actually very hopefully that we’ll able to reach an agreement on that.

It could operate by the same rules that all the other plans do. It could have payment rates that are very similar. Or it could have payment rates that are the same as Medicare — that’s one idea that has been used. So there are various ways of looking at it. And if you look at the marketplace right now, there are a number of examples. There are state employee plans out there that some people would regard as public plans. They’re sponsored by the government, but they have lower administrative costs, so they tend to be less expensive, but they’re also operated by private plans.

We sit down and talk to people and they say, “You know, one thing I have a problem with is I don’t think I like this public plan idea.” My response is, “What don’t you like?” One thing that comes back a couple times is, “Well, it’ll be based on Medicare payment rates, and those are too low for providers now.” Or even if they don’t think they are too low, they’re concerned that if more people choose a public plan, there’ll be so many people in it, and if the payment rates are Medicare rates, that it would shift cost to the private sector. So it has to do with how you price the providers if there’s a public plan. Well if that’s an issue, there are various ways of doing that. You don’t have to use Medicare prices, you can use something else.

I think they’re responding to — there’s some analysis out there that just because this is all beginning, they’re making assumptions about what the payment rates would be and making assumptions about how many people would go into a public plan, and depending on which assumptions you use, you can decide, “Gee, I don’t like this.” But these are policy disagreements. Now if it’s a philosophical disagreement of I just don’t want the government offering a plan, that’s’ a diff thing –t hat may be something that’s harder to bridge. But I think if it’s a policy disagreement, there are ways of bridging that gap.

Again, I’d answer this the way the President did, which is he has a couple of goals when he put the public plan in his plan when he was running for president. He wanted to make sure that he could keep costs low — the public plan is one way of doing that — and he wanted to make sure that there was competition and choice for consumers, and that you have a way of keeping the private plans honest. But as he said, if there are others ways of doing that, he’d be open to talking about it.