House Health Care Plan

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The key committee chairmen put out an outline today of their approach to health care reform (more in-depth info here), and there’s one thing they want you to know about it: “Uniquely American,” said House Education and Labor Committee Chairman George Miller. Added Energy and Commerce’s Henry Waxman: “Uniquely American.” And what does former Energy and Commerce Chairman John Dingell like so much about it? “An American solution,” he said.

But the insurance industry has a few reservations. Like this one: “We need a uniquely American approach to health care reform,” warns Robert Zirkelbach, a spokesman for the trade lobby America’s Health Insurance Plans.

Anyone who has followed this debate for more than 20 seconds will immediately recognize all this talk of unique Americanism as another way of saying not single payer, which is the government-financed system that just about every other industrialized country uses in one form or another. And all this skittishness about single payer explains the delicacy with which the House drafters have tried to finesse the question of whether their system will have a public plan, something like Medicare, but for people under 65.

The answer is, it will have a public plan, and a strong one–at first.

In the early stage, the public plan would reimburse health care providers at rates that are “similar to those used in Medicare”–that is, significantly lower than most private insurers pay them. This is something that the insurance industry, doctors and hospitals will all hate. “A government-run plan that pays based on Medicare rates – for any period of time – is a recipe for disaster,” Scott P. Serota, president and Chief Executive Officer of the Blue Cross and Blue Shield Association, said in a statement issued by the association. “Already in some parts of the country nearly 30 percent of Medicare enrollees report that they cannot find doctors willing to accept new patients, due to below market rates. Rural hospitals, in particular, are struggling to keep their doors open. These low payment rates would threaten the quality of healthcare and undermine the improvements that we believe reform can bring to communities across the country.”

Advocates would argue, on the other hand, that those lower rates could be a powerful engine to bring down health costs. Which is why they won’t be happy with what happens next. According to the summary, this tie to Medicare rates would be “severed over time as more flexible payment systems are developed.” In other words, this public plan would eventually evolve into something that looks–and competes–more like a private insurance company, albeit one that happens to be run by the government. At the news conference, I asked the committee chairmen precisely what that means–When would that happen? And under what circumstances? They couldn’t tell me, and demurred that this is the kind of thing that still needs to be worked out. Waxman said it would take “a period of time” for the public plan to get started, but that “they will at some point compete.”

The House committee chairmen are trying to have it both ways on the public plan. That might work–or might just end up satisfying no one.

Of course, the biggest thing that needs to be worked out is how they are going to pay for this bill, which they said would ultimately assure that 95% of Americans have health coverage. What they are looking at is a combination of reductions in Medicare and Medicaid spending and taxes. The Associated Press reports: “To pay for it all, House Democrats are considering everything from taxing soda to raising income taxes on people earning more than $200,000 to imposing a federal sales tax.”

Until they figure that part out, all of this other stuff is written in smoke.