Leader's Edge logo Under the Dome by Joel Wood Tell the Editor
Under the Dome by Joel Wood Unfair Competition

What if you could create a healthcare plan that could undercut competitors’ costs and force them to subsidize your plan? That’s what Congress is considering.

By  Joel Wood

In every industry sector, lobbyists of a certain breed are generally regarded as slackers: the “Just Say No” crowd. Trade associations sometimes succumb to the lowest-common-denominator school of lobbying, which says it’s a lot easier to be against legislation moving on Capitol Hill than it is to figure out what you’re for. Too often, this breed climbs up in the trees, issues press releases and aimlessly shoots down below. Navy Seal sharpshooters popping Somali pirates, these are not.

I don’t like to just say no. In my 17 years as The Council’s lobbyist, our organization has always strived to be pragmatic and constructive in our engagement on the Hill and progressive wherever possible—especially with regard to insurance regulation. We’d rather have 20% of something than 100% of nothing.

But in this year of electrifying change in Washington, one critical issue rises above all others in its impact on The Council’s member agencies and brokerages: whether, as a part of comprehensive health insurance reform, there should be a “public plan option” for all Americans that competes with private health insurance coverage.

Our legislative response to this proposal: No.

Democratic leaders in both congressional chambers consistently voice support for the concept of a Medicare-like public health plan that would offer more “choice” and “competition” and ultimately reduce the burden of health insurance costs. Some support such a choice only for small businesses, individuals and the currently uninsured. Others want to allow “buy-in” to the Medicare program for those under 65. Others want the public plan option available to all Americans. Our response is no to all of them.

As health plan executives recently told congressional leaders, a new government-run plan would thwart the ability of the healthcare sector to implement meaningful reforms, would exacerbate the cost-shifting from public programs to consumers in the private market, and would destabilize the employer-based system.

Cost-shifting is a fact. Private insurers have to pay more (up to 25% in some studies) when government payers fall short of what it costs hospitals and physicians to provide care. Radical expansion of government programs following this model only—a hidden tax on businesses and their employees—will drive more employers away from providing private coverage.

Just because you’re paranoid doesn’t mean that they’re not out to get you, and I think this may be just what some members of Congress have in mind.

We recognize the need for an appropriate federal response to the health insurance cost crisis. There is an appropriate federal role in encouraging pay-for-performance activities, plans that give incentives to employees to use high-performance healthcare networks, and disease management and wellness programs designed to keep people out of hospitals—proposals such as those embraced by the National Business Group on Health. And the health plans themselves, whose main lobby is America’s Health Insurance Plans, have stepped forward with aggressive and positive proposals to stop charging sick people higher rates as part of comprehensive reforms that would require everyone to have insurance.

A political showdown is in the works on the issue of a competing public plan, and the Obama administration is carefully calibrating its response. A New Republic article in March revealed that the president’s advisors have had mixed emotions over how far to go, with economic guru Larry Summers worrying about adding to the government’s financial burden during a time of rising deficits. Summers, like all other economic experts, knows it will take years before better use of information technology, more preventive care, and other reforms start to yield serious savings—even if Congress and the administration do everything right. Obama himself has thrown down the gauntlet for Congress to enact comprehensive reform before this fall, and he successfully passed a $634 billion “down payment” in the economic stimulus bill for reforms that could include a public plan option.

The House will surely pass a bill that includes a public plan.

The action, therefore, is in the Senate. At this writing (in mid-April), no Republican senators have expressed an interest in crossing over the aisle for the sake of a sweeping public alternative. Democrats have threatened to use the “reconciliation” budgetary process to slam through such reforms if Republicans don’t come to the table. (Under reconciliation, a mere majority of 51 votes could pass reform instead of the 60 votes under normal rules that are necessary to bring reforms to final passage.)

This means that all eyes are focused on the chairman and ranking Republican member of the Senate Finance Committee: respectively, Max Baucus of Montana and Charles Grassley of Iowa. They get along well, and both are committed to major health reforms. Grassley won’t budge on the public plan option. The standoff is dramatic. The stakes are high.

There is much to say yes to on health reform and reason to be optimistic that Congress could get it right. But there are few ways to finesse the public plan option. Our message to Congress is: don’t go there; it threatens to do much more harm than good.

Wood is The Council’s senior vp of Government Affairs.


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