When MSNBC broke the news that the CBO is projecting a $1.8 trillion deficit for 2009, the very first question daytime anchor Tamron Hall asked Washington Post columnist Steven Pearlstein was: will Obama have to scale back his plans to reform the health care system?
HALL: They were talking about what hard decisions the President will have to make in his first term, if he’s obviously not elected to a second one. He wants to tackle health care, he was at that town hall, talking about his bold agenda. Will he have to soon start to perhaps give Americans the tough love that maybe it won’t all be done now?
Pearlstein pushed back the conventional wisdom and pointed out that the best way to get deficits under control is to slow down “the key driver of those long-term deficits,” skyrocketing health care costs.
Therefore, the President’s budget—and CBO in its analysis of the budget—shows no net effect on either revenues or outlays from this set of proposals (that is, revenue reductions related to health care reform are assumed to offset the revenue gains from changing the rate applied to itemized deductions, and outlays for health care reform are assumed to equal the outlay savings from the proposed policy changes).
So to make sure everyone is on the same page we should just call the health care bill what it actually is: a deficit reduction act.
GRASSLEY: At this point, everything is on the table. And you don’t negotiate when everything is not on the table even if there’s something that is on the table, that if it’s on the table at the end you don’t have a deal. So everything’s got to be on the table if you’re negotiating in good faith. But then let me speak to the substance of it because I think this is the most important aspect…you have a government plan and eventually it crowds out it says 118 million people. When you crowd out 118 million people, you want to have a private health insurance choice for people because we promised it to them. It becomes so expensive for the small pool thats left that eventually you end up with a single payer.
Several weeks ago, when Sen. Mitch McConnell (R-KY) wrote a letter to President Obama effectively taking the public option off the table, Grassley signed on. If he’s willing to compromise on the President’s proposal, then a competing public health plan would have to play by the same rules as private insurers.
As Elizabeth Carpenter explained it to me, “what makes the public plan ‘public’ in Len and John’s paper is that it would be operated by politically appointed managers and owned by the government who would also bear the insurance risk, not the private sector. The managers would be evaluated by patient satisfaction, not profits, and the people running the plan would have no incentive to stint on patient care in favor of the bottom line.”
In other words, public and private payers compete on a completely level playing field and follow all of the rules of the marketplace.The public plan would be actuarially sound, would not leverage Medicare to force providers to participate or use Medicare payment rates, and would have to adhere to the same rules regarding reserve funds. Patients who are weary of private providers would likely enroll in the public option.
Costs would be lowered through competition and system-wide reform. “The framework utilizes Medicare as a catalyst to inject value into our health system, but the overall approach to controlling costs is systematic and does not leverage Medicare’s buying power,” Carpenter writes.
The idea is this: if you reform the way Medicare and the public option reimburses for services (move away from fee-for-service and towards bundled payment, primary care, and care coordination) and if those programs become more efficient, the private insurers — who are now competing directly with the new public plan — would also have to adopt more efficient payment practices.
Health Care For America Now has released “a new spot urging Sen. Chuck Grassley to drop his opposition to a public plan for health insurance”: