Weekly Pulse: Public Health Insurance Option Not Optional

Lindsay E. Beyerstein

During a press conference Tuesday, President Obama voiced support for government-administered health insurance for all who need it as a key component of healthcare reform.

During a press conference Tuesday, President Obama voiced support
for government-administered health insurance for all who need it (aka
the "public option"), as a key component of healthcare reform. Though
Obama stopped short of threatening to veto a bill that didn’t contain
such an option, he said
that a public option is needed to enforce market discipline. If the
system is going to reform, the health insurance companies can’t just
keep selling the same bad coverage with bigger public subsidies for
their monopolies. Essentially, Obama isn’t about to force taxpayers to
buy overpriced insurance from private companies.

"The public plan, I think, is an important tool to discipline
insurance companies," Obama said during yesterday’s White House news
conference. "I think there is going to be some healthy debate about the
shape that this takes." He outlined three options: Get insurance
through your employer, buy insurance on your own, or buy insurance from
a marketplace where public and private insurance providers compete for

In the Washington Monthly, Steve Benen notes the central irony of the standard insurance industry criticism of Obama’s plan:

A public option, critics tell us, would
provide a horrible, bureaucratic service for customers, including
rationing and long waiting times. But here’s the follow-up: if that’s
true, no one would choose the public option and insurance companies
would be just fine for the indefinite future.

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Except, of course, insurance companies and their policymaking allies know better. Which is why they’re panicking.

As Senate Democrats continued to cast about for an elusive
bipartisan compromise on healthcare reform, their colleagues in the
House are pushing ahead on their own. House Democrats are holding
hearings this week on draft legislation and is written without
Republican input. The house bill would require all Americans to have
health insurance and put new restrictions on employers as well. The Uptake is covering the hearings live.

By allowing the proliferation of multiple healthcare bills, the
Obama administration is deliberately avoiding the mistakes that the
Clintons made in 1994, according to Mark Schmitt in the American Prospect.
Instead of submitting its own 1300-page bill to Congress, the Obama
administration is letting the legislative branch hash out the details
while the executive branch hovers above the fray:

The Obama White House has a huge
advantage that the Clinton administration didn’t: The plan is basically
written, and it has a constituency. Everything Clinton spent a year on
is done. All the work to build consensus around fundamental features –
a regulated insurance market, an individual mandate, and a public plan
to provide a competitive benchmark – made up the outlines of every
Democratic presidential candidates’ proposals. They have been further
developed at the think tanks and various "strange bedfellow" coalitions
that have been at work in Washington for at least four years. There are
some questions about details and cost containment, but all the major
alternatives have fallen by the wayside. It’s an extraordinary
accomplishment, and a real testament to the infrastructure that’s been
constructed for progressive policy as well as politics.

The big picture approach gives the administration room to shore up
key allegiances with powerful interest groups. Last week, many feared
the public option was DOA when congressional budget analysts announced
that the proposal would cost more than expected. Mike Madden
explains in Salon that things were looking grim until Obama struck a
deal with Big Pharma to save $80 billion on drugs for seniors:

So the deepest significance of the deal between the government and PhRMA,
the drug lobby, may well have been what it meant politically. Yes, the
announcement means Medicare patients will no longer have to deal with
an odd "doughnut hole" in their drug coverage; before Monday, the
government pays for seniors’ prescriptions if their annual cost is
under $2,700 or more than $6,100, but not if the price is in between.
But more important, the news gave the administration a public relations
victory – the president just saved the government, and seniors, $80
billion – to kick off a week where Obama plans to play offense, not
defense, on healthcare.

Mike Lillis of the Colorado Independent
explains why filling the donut hole isn’t a big sacrifice for the
industry: Drug companies have already profited handsomely from the
prescription drug program. Furthermore, Lillis notes, the companies may
still come out ahead if seniors begin to buy donut hole drugs that they
previously couldn’t afford. Even at half price, Big Pharma still does

Finally, Eleanor Bader of Rewire
brings us the story of how the Women’s Medical Fund helps women who
can’t afford abortions. The Pennsylvania fund was established in 1985
after state Medicaid cut off abortion funding. The Fund is one of over
100 abortion access funds nationwide providing options for poor women
that anti-choicers sought to take away by manipulating healthcare
coverage for political ends.

Healthcare reform, priority one on Obama’s domestic agenda, is
finally getting its moment in the spotlight. Competing healthcare bills
are taking shape and a vigorous public debate is underway. Keep
checking The Pulse for play-by-play coverage of the most important policy battle in a generation.

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