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    Democrats Insist: Public Health Plan as an Alternative to Private Insurance


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    April 1, 2009


    Democrats Agree on a Health Plan; Now Comes the Hard Part



    WASHINGTON -- Efforts to overhaul the health care system have moved ahead rapidly, with the insurance industry making several major concessions and the chairmen of five Congressional committees reaching a consensus on the main ingredients of legislation.

    The chairmen, all Democrats, agree that everyone must carry insurance and that employers should be required to help pay for it. They also agree that the government should offer a public health insurance plan as an alternative to private insurance.

    But members of Congress are just now turning to the most explosive issues, which could delay or derail the process.

    They have yet to tackle the question of how to pay for coverage of the uninsured.

    They have not wrestled with vehement Republican objections to the idea of a new government-run insurance plan, competing directly with private insurers.

    And they have not figured out the role of state insurance regulators, who enforce hundreds of state laws mandating coverage of a myriad of items, including infertility treatments, prostate cancer screening and acupuncture.

    "There's too much happy talk," said Senator John D. Rockefeller IV, Democrat of West Virginia. "It's time to start thrashing out decisions on the tough issues."

    The White House, displaying a surprisingly light touch, has encouraged Democrats in Congress to make the hard decisions while the administration holds forums around the country to hear suggestions from ordinary citizens.

    Congressional leaders have set an ambitious timetable, under which the House and the Senate would vote on separate bills by the end of July. Senator Edward M. Kennedy, Democrat of Massachusetts, has kept the heat on negotiators.

    President Obama's pick for secretary of health and human services, Gov. Kathleen Sebelius of Kansas, told senators at a hearing on Tuesday that "health reform would be my mission" if the Senate confirmed her nomination. Ms. Sebelius backed Mr. Obama's call for giving Americans the option of a government health plan as an alternative to private coverage -- "a public option, side by side with private insurers," she said.

    Nancy-Ann DeParle, director of the White House Office for Health Reform, who is on Capitol Hill almost every day, said, "In my view, there's been a steady progression toward getting a health care reform bill done this year, as the president has urged and requested."

    Asked if she had recommended any specific policy options to Congress, Ms. DeParle said, "That has not come up yet."

    Since last fall, Senate Democrats have been meeting regularly with consumer advocates and lobbyists for the health care, insurance and pharmaceutical industries. The talks have narrowed the differences.

    In November, two weeks after the presidential election, the health insurance industry said it would accept all applicants, regardless of illness or disability, if Congress required everyone to have coverage. The industry went a step further last week, offering to end the practice of charging higher premiums to sick people in the individual insurance market.

    But each point of agreement raises a host of questions. The government cannot require people to have insurance if they cannot afford it, so lawmakers must decide: Who would get subsidies? How much? And if the government subsidizes insurance, should it also prescribe the items and services that must be covered -- the specific benefits or their overall value?

    Leading the effort on Capitol Hill are the five committee chairmen, Representatives George Miller and Henry A. Waxman of California and Charles B. Rangel of New York, Senator Max Baucus of Montana and Mr. Kennedy.

    The serious negotiations are being conducted in a secretive process that looks a little like the one that President Bill Clinton and the first lady, Hillary Rodham Clinton, used to devise their ill-fated plan for universal health insurance in 1993.

    To be sure, the players are different this year. Congress, rather than the White House, has taken the lead in drafting a proposal to reorder one-sixth of the nation's economy. Ms. DeParle, the White House official, said: "My job is to work with members of Congress. They are the ones doing the hard work. We are providing technical assistance. We help them with the nuts and bolts."

    And whereas the Clintons attacked special interests and excluded them from policy-making deliberations, Kennedy aides have welcomed them to twice-weekly meetings of stakeholders, known as the "workhorse group."

    Still, including the lobbyists in the negotiations does not guarantee that they will support whatever emerges. "The lobbyists talk more gently," Mr. Rockefeller said, "but could be just as lethal to health care reform as they were 15 years ago."

    Mr. Baucus, the chairman of the Senate Finance Committee, periodically summons senators to his office for meetings of the "board of directors," a group of six Democrats and five Republicans mulling ways to steer health legislation through the Senate.

    Democrats insist that consumers should have a choice between private insurance and a government health plan. Private insurers will hold down costs and improve care if they have to compete with a public plan, said the House Democratic leader, Representative Steny H. Hoyer of Maryland.

    But Republicans say a government plan would have unfair advantages and could drive private insurers from the market.

    Lobbyists and Congressional aides have discussed a possible compromise: Congress would authorize a new government-run insurance program, but it would come into existence only if certain conditions were met -- if, for example, private insurers failed to rein in health costs by a certain amount after several years. Such a condition would serve as a strong incentive for insurers to ratchet down payments to doctors and hospitals.

    Representative Roy Blunt of Missouri, the chairman of a 21-member group that is shaping health policy for House Republicans, said he saw the Medicare prescription drug benefit as a model, "a good pattern of how a competitive marketplace works."

    The drug benefit is delivered entirely by private insurers under contract with the federal government, which supervises their activities. Costs have been far lower than originally expected.

    The 2003 Medicare law allowed the government to establish a prescription drug plan in any geographic area with fewer than two private plans. But insurers, seeing a lucrative business opportunity, rushed into the market, and the government never had to establish a plan of its own.

    The cost of universal coverage is likely to be one of the most difficult issues. Democrats readily concede that their proposals will be expensive.

    In his budget, Mr. Obama showed he was serious when he asked Congress to set aside more than $600 billion as a down payment on efforts to remake the health care system over the next 10 years, partly by limiting the income tax deductions that the most affluent taxpayers claim.

    Neither the House nor the Senate has accepted Mr. Obama's specific proposals. Both chambers are expected to vote later this week on spending plans that would allow Congress to move forward on health legislation, provided it does not increase the deficit.

    The leading Democratic proposals would not only subsidize the purchase of private insurance, but also expand Medicaid, to cover more poor people, and Medicare, to eliminate a two-year waiting period for people with severe disabilities.

    The White House and Democrats in Congress are operating on two optimistic assumptions.

    One is that if everyone had health insurance, it would be easier to control health costs.

    The other premise is that the nation could sharply reduce the growth of health care spending if doctors made less use of aggressive treatments that raise costs but do not result in better outcomes.

    But no combination of tax increases and Medicare savings comes near to covering the full cost of the proposals, which Democrats say could easily top $1 trillion over 10 years.

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