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
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
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
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
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
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
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