Today, in testimony before the Democratic Steering and Policy Committee Forum on Health Insurance Reform, health care whistle blower Wendell Potter reminded Congress why a public option is essential to reform. If Congress fails to create “a public health insurance option to compete with private insurers, the bill it sends to the President might as well be called, ‘The Insurance Industry Profit Protection And Enhancement Act,’” Potter said.

At the end of the hearing, House Speaker Nancy Pelosi (D-CA) agreed with Potter. “You cited a public option as one way for it to reach its achieve its goal,” she told him. “We will be passing the ‘Private Insurance Profit Perpetuation Act.’ We have no intention of doing that”:

Mr. Potter, you said it well when you said if we do a plan that doesn’t really achieve its goal, and you cited a public option as one way for it to reach its goal, we will be passing the ‘Private Insurance Profit Perpetuation Act.’ We have no intention of doing that. We want the private sector to thrive — we don’t want our members to go into an exchange where they only have one choice, where there’s sole sourcing. But that the public option provides that competition.

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Potter has harshly criticized Sen. Max Buacus’ (D-MT) proposed framework for reform, calling the bill “an absolute gift to the industry.”

“A public option must be created to provide true choice to consumers or reform will fail to fix the root of the severe problems that have been caused in large part by the greedy demands of Wall Street. By creating a strong public option and restricting the insurance companies’ ability to enrich executives and investors at the expense of taxpayers and consumers, HR 3200 [the House health bill] will truly benefit Americans,” Potter said in his opening statement. “The Baucus plan, on the other hand, would create a government subsidized monopoly for the purchase of bare bones high deductible policies that would truly benefit big insurance. In other words, insurers would win, your constituents would lose.”

On the eve of the Senate Finance Committee’s release of its much anticipated health care plan, Wendell Potter – the insurance industry whistle blower and former communications director of health insurance giant Cigna – called the Baucus framework “an absolute gift to the industry.” “And if that is what we see in the legislation, [America’s Health Insurance Plans chief] Karen Ignagni will surely get a huge bonus,” Potter said at a briefing for reporters.

The bill establishes a new regulated health insurance exchange and compels every American to purchase qualified health insurance coverage by 2013. Americans with employer-sponsored insurance can stay in their existing plans, while the uninsured would have to enroll in an expanded Medicaid program, a new plan in the Exchange or the now-regulated individual health insurance market. According to a report released by the Congressional Budget Office, the bill would cover 94% of Americans and cost $880 billion over 10 years.

Potter argued that the lax employer requirements would shift the cost and risk of coverage onto the individual and maintained that the bill’s ‘network of cooperatives‘ would be unable to compete in today’s concentrated health insurance markets. “The co-ops won’t stand a chance,” he concluded.

Reform must also do more to regulate insurers, who have agreed to accept applicants with pre-existing conditions but are insisting on benefit and rate flexibility. Potter argued that the benefit package standards in the Exchange and the high deductible option for younger beneficiaries would allow insures to design almost anything that they can sell in the health market place and push the country towards consumer driven health care.

Under the Baucus legislation, private insurers could also charge older individuals up to five times more for coverage. “You’re just using age as a proxy for health status,” Uwe Reinhardt, an economics professor at Princeton University told the New York Times. Reinhardt estimates that “Senator Baucus’s age-rating plan would allow insurers to cover roughly 70 percent of the additional risk they’d take on by being required to accept all comers, regardless of health.”