Why Obama’s ‘Public Option’ May Disappoint


Dan Diamond wrote a piece last week reviewing the Public Option touted by both President Barack Obama and Hillary Clinton over the past week, where both called for a new government-run insurance option, the “public option”. But the “public option”— which some Democrats have been trying to enact since health law negotiations in 2009 — isn’t a panacea for the problems plaguing Obamacare, Harvard expert Katherine Baicker tells POLITICO’s “Pulse Check” podcast.

The President said “Some parts of the country have struggled with limited insurance market competition for many years, which is one reason that, in the original debate over health reform, Congress considered and I supported including a Medicare-like public plan,” Obama wrote in the piece.

A public option would mean a government run health insurance plan.

“Adding a public plan in such areas would strengthen the marketplace approach, giving consumers more affordable options while also creating savings for the federal government,” the president wrote.

Obama’s call comes days after presumptive Democratic nominee Hillary Clinton voiced support for a public option, in a nod to supporters of Bernie Sanders, who wanted the federal government to take over providing health care coverage for all Americans.

Remember our discussion last week- Both supported a public insurance option at the national level but opposition from moderate Democrats prevented that proposal from being included in the health overhaul law.

But Sanders and many of his supporters continue to debunk her commitment to progressive healthcare and social change and belittle her claims of past achievements. They point to her failure in the mid-1990s as field marshal for the Clinton administration’s healthcare reform effort to win passage of universal coverage legislation as proof of her ineffectiveness and timidity in confronting powerful special interest groups.

“What Secretary Clinton is saying is that the United States should continue to be the only major country on earth that doesn’t guarantee healthcare to all of our people,” Sanders said during a debate last month.

“I do believe in universal coverage,” Clinton shot back. “Remember, I fought for it 25 years ago.”

Millennial voters, who have skewed heavily toward Sanders in the Democratic primaries and tend to scoff at Clinton’s record, are too young to know her history. Even Baby Boomers are prone to forgetting it. It seems like a good time to revisit Hillary Clinton’s healthcare story.

Two people with first-hand knowledge of that story are Neera Tanden, CEO of the Center for American Progress, a liberal research and policy group based in Washington, and Fran Visco, executive director of the National Breast Cancer Coalition. Both say the Hillary Clinton they know is nothing like the self-serving politician described by her critics.

Reviewing what I previously reported what Tanden wrote (who served as a senior policy adviser to Clinton when she was first lady, legislative director when Clinton was in the Senate, and policy director when she ran for president in 2008)—she emphasized Clinton’s tireless work as first lady in helping pass and implement the State Children’s Health Insurance Program, which now covers 8 million kids. It’s widely acknowledged that Clinton played a pivotal role in building congressional and White House support for the 1997 passage of that legislation.

She pushed her reluctant husband to support $24 billion in funding for the new program in the Senate bill, rather than the $16 billion approved by the House. “The children’s health program wouldn’t be in existence today if we didn’t have Hillary pushing for it from the other end of Pennsylvania Avenue,” Democratic Sen. Ted Kennedy, who co-authored the CHIP bill with Republican Sen. Orrin Hatch, told the Associated Press in 2007.

Tanden’s account of Clinton’s CHIP implementation efforts squares with her sometimes-mocked image as a detail-oriented policy wonk. Hillary was the person in the Clinton administration most focused on outreach and enrollment for the new children’s insurance program, bringing together private-sector officials from the Ad Council and AT&T to organize advertising and a toll-free line to get information out to the public, Tanden said.

“She recognized this legislation would stand or fall on whether people knew about it and signed up kids,” Tanden says. “She rolled up her sleeves and figured out how to get a high take-up rate. The amount of free advertising we got for CHIP was monumental given that we had no resources.”

Even when she was running for Senate in 2000, Clinton still checked up regularly on the CHIP enrollment rate, just as she closely monitored the progress of the Affordable Care Act legislation—and lobbied Democratic lawmakers to support it—in 2009 when she was secretary of state, Tanden says.

“After the CHIP bill passed, she didn’t just rest, she kept at it,” Tanden said. “Healthcare is very close to her heart.”

The CHIP legislation was just one of several ambitious healthcare initiatives Clinton worked on. In the Senate, she developed comprehensive healthcare quality legislation, which included precursors of accountable care organizations and other payment reform models, though it did not pass. “Very early on, she was talking about the problem that we have a sick care system rather than a system of keeping people healthy,” Tanden said. “She was a leading thinker on a lot of these issues.”

“More competition in insurance markets is a great idea,” Baicker said. “It’s not clear to me that the public option is going to be an effective way to introduce that competition.”

Baicker, a respected economist who served on President George W. Bush’s Council of Economic Advisers, has standing to weigh in: In the JAMA article where Obama laid out his public option earlier this week, no expert was cited more than her.

But Baicker questioned whether the government is well-positioned to launch a new insurance plan, pointing to the failure of Obamacare’s co-ops, which were similarly conceived as a way to inject competition into state insurance markets. Two-thirds of the co-ops have shuttered in the face of heavy losses, many because of operational problems, and the remainders are facing financial problems too. Congressional Republicans also worked to undercut them. This is true but the system has been flawed from the beginning and we still don’t realize this or are we like the “orthodox” Democrats we are ignoring and continue to deny the problems in the face of all the data and therefore the evidence?

Creating co-ops “was a great idea,” Baicker said, but “they were ill-equipped to manage the complicated contracting necessary to operate effectively on an exchange.” A public option would likely face the same political and operational complications, if not more, she said.

Baicker is familiar with how politics and policy can collide: She’s one of the leaders of the Oregon Health Insurance Experiment, a groundbreaking study to test the effects of expanding health coverage. The team’s ongoing research was thrust into the spotlight after the Supreme Court ruled in 2012 that states had the choice to expand Medicaid under the Affordable Care Act. And while Baicker’s team found that Medicaid expansion led to better access to health care, improved finances and self-reported measures of health, they also concluded that patients’ utilization of health care went up significantly, boosting state spending.

“It would have been nice if all those benefits came for free. But they don’t,” Baicker said. “People got health care, and that’s great — but it costs money.”

The study’s findings have been wildly interpreted across the political spectrum. Proponents of the Affordable Care Act say it’s proof that Medicaid expansion is a necessary fix to improve Americans’ health, while opponents argue that it shows the benefits are small and the costs are significant.

One key battleground has been over emergency room visits, which surged by about 40 percent per person who received coverage in Oregon. That was a surprise to many advocates of Obamacare, who maintained that expanding health coverage would allow previously uninsured patients to find regular doctors and stop relying on emergency services. Baicker says the evidence needs more scrutiny: “The next set of questions we’re going to answer [will] dig into emergency department use,” she said.

Having seen the fight over her own research, Baicker warned that lawmakers and beltway pundits continue to distort health research findings when making health policy, often focusing on anecdotes while ignoring bigger, structural problems. For instance, she believes that lawmakers are overdue for a reckoning with public spending, like whether Medicare should pay for certain high-end cancer treatments that only benefit a few patients. Spending so much on health care is crowding out other public sector priorities, Baicker said.

“It’s hard to talk about resource allocation in health care in a rational dispassionate way without sounding like a big jerk,” Baicker said. “People say you can’t put a price on your health.”

“Well, yes you can, and you probably should.”

But as my friend Kate Tillman so rightly stated, “we have seen the proposed plans and wonder what they are thinking (or not) in the wake of so many changes, regulations, chaos with O’s (Obama’s) public option push. Also, there appears to be a deeper divide between policy makers and the patients.  I think we have to build on what we have or we will all be in the poor house. Who has that answer in this changing world?

They still don’t “know what’s in it” as P (Pelosi) said, so the carping for control by both sides seems mute. The lack of HHS/CMS/FDA transparency is a very real obstacle.  Sort of like terrorists, we have to define the problem before we can address solutions.

Obama made several other recommendations for improving Obamacare. He called on the 19 states who have not expanded Medicaid to do so and on Congress to increase financial assistance to make Obamacare coverage more affordable. And he said Congress should help reduce the cost of prescription drugs by requiring drug makers to disclose their production and development costs, increasing the rebates manufacturers must give for drugs prescribed to certain Medicare and Medicaid beneficiaries, and allowing the federal government to negotiate prices for certain high-cost medications. Again, all great ideas, especially those addressed at the pharmaceutical companies, but do you know who is going to foot the eventual bill to pay for all the costs….we tax payers, in one form or another!!

Three years after Obamacare’s exchanges opened for business, the program is still facing challenges.

Many insurers found enrollees have higher health care needs than expected, forcing them to hike rates. A recent Kaiser study found the benchmark silver plan premiums are projected to rise 10% for 2017, on average, for a 40-year-old consumer in 14 major cities. That’s double the 5% increase for 2016 policies, but it could change since state regulators often reduce insurers’ rate requests. If you look across the country, most of the insurers are about to increase the cost of insurance premiums by double digits and also the deductibles, making the cost of coverage to the average person more out of touch with reality or their pocketbooks

Without politicizing the whole discussion we continue to ignore the unique parts of the equation in our country- the cost of educating the physicians, the cost of malpractice insurance, which every physician must have to practice but the costs are still out of control. And how do we, our country or the government pay for the money that both Clinton and President Obama want to “throw” at the program? Remember, we now have a national debt of $20 trillion. The cost of the public option or future eventual program, the universal health program will cost anywhere from a minimum of $40 billion to $1.5 trillion per year. Do we keep on borrowing money to financially support these programs, increase our taxes, whether income taxes or a national sales tax or value added tax? And remember our history of how a healthcare system run by our government takes care of their patients. Look at the VA health care system and appreciate how just throwing money at the system just didn’t work, Go back to my discussion of the VA system and the lack of improvement in my Veteran’s Day post.

I beg each and every potential patient the educate themselves so that the can demand a health care system that will care for all, but one that is financially sustainable. Eventually, it will be your and my purse and pocketbook who will pay for all the “give a ways” that have been promised!!

Next week I am going to point out a very real problem that we are seeing in a number of cities and may become a real impact on the care of the patient. See you next week and stay cool and well hydrated!



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