Health Care Reform Update: Does Chuck Schumer Have the Solution to Iowa’s Chuck Grassley’s Concerns About a Public Plan Option?

Posted on May 12, 2009 by altapricehome

Health Care Reform Update: Does Chuck Schumer Have the Solution to Iowa's Chuck Grassley’s Concerns About a Public Plan Option?

by Alta Price, M.D.

Last week I wrote about the positions of my Congressional delegation on the public plan option. Representative Bruce Braley and Senator Tom Harkin are in favor, while Senator Chuck Grassley has some serious concerns. And I do agree with Senator Grassley that a public plan could have unintended consequences. We need to define exactly what we mean by a government-run option to private insurance.

I’ll quote again from the email I got from Senator Grassley’s office on the issue:

“That is why I’m concerned about creating a public plan. The U.S. government is a proven unfair competitor because it always ends up running the market it [sic] which it competes. By having the government set lower payment rates to hospitals, doctors and other providers, a government-run public plan would drive up the cost of private health insurance by shifting as many as 118 million Americans from private coverage to the government-run plan. These costs shifts already happen in Medicare and Medicaid and, as a result, we know how they hurt doctors, hospitals and private providers. Providers end up being reimbursed at much lower rates by the public programs, and they have to try to make up the difference by charging patients with private insurance more. If a public plan option was created, the number of private payers would shrink and doctors would be left to charge more and more, be reimbursed less and less, or even stop seeing Medicare, Medicaid and public plan patients entirely. Employers would be forced to put workers on the government plan in order to avoid the higher cost of private insurance. Eventually, a public plan option would lead to a de-facto single-payer health care system because it would be the only viable option.”


In an article in the New York Times, Senator Chuck Schumer (D-NY) describes what a public plan option could look like. I think he gets it right, and I think it directly speaks to Senator Grassley’s points. I’ll list the four main points of Schumer’s proposal here:

The public plan must be self-sustaining. It should pay claims with money raised from premiums and co-payments. It should not receive tax revenue or appropriations from the government.

The public plan should pay doctors and hospitals more than what Medicare pays. Medicare rates, set by law and regulation, are often lower than what private insurers pay.

The government should not compel doctors and hospitals to participate in a public plan just because they participate in Medicare.

To prevent the government from serving as both “player and umpire,” the officials who manage a public plan should be different from those who regulate the insurance market.


Basically, the public insurance plan would be treated no differently than a private insurance plan. People would buy a public plan policy, just as they would buy a private plan policy. Subsidies would help consumers purchase their plan if they couldn’t afford it, and the consumer gets to choose between the government-run plan and a private plan (presumably many different private plans). The government-run plan would not be able to use the power of the government to dictate low payments to providers (for example, by requiring providers to accept patients with the public plan insurance or lose their ability to treat Medicare patients), which would have given the government-run plan an unfair advantage over the private insurance industry plans.

The public plan would still have some advantages – no CEO making $1.6 billion dollars a year and no shareholder dividends. But the private insurance companies would also have some advantages – more flexibility, more options, extended coverage, and slick advertising, to name a few.

If the United States Postal Service doesn’t drive Fed Ex and UPS out of business, why would a government-run plan competing on a level playing field spell the end of the private insurance industry?

An excellent discussion of the Schumer proposal can be found at Health Care for America Now!   Check it out if you want more details.

Alta
Price is a physician practicing Pathology in Davenport, Iowa. One of
the original Deaniacs, she stays involved with Democracy for America,
Iowa, and the Quad Cities. She advocates for quality, affordable health
care for all, primarily as a volunteer with Progressive Action for the
Common Good (Health Care Reform Issue Forum).  Watch for Dr. Price's Health Care Reform Update every Tuesday here on Blog for Iowa.  E-Mail Dr. Alta Price

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