Posts Tagged 'Health Care for America Now'

The Democrats don’t want to abolish the private insurance industry. They are capitalists.

“For the Democrats, with the exception of John Conyers and a few others, they simply don’t want to abolish the private insurance industry. They are capitalists and believe in the capitalist system that makes health care a commodity to be bought and sold. For them, health care is not a human right. … One minute HCAN is calling out the insurance industry for the profit-hungry killers they are, then they argue the companies need to stay in business to compete against a public plan honestly in the marketplace.

Counterpunch,  April 23, 2009

Selling Out Single Payer

“As we roll out new products we will continue to price businesses for appropriate margins. We will not sacrifice profitability for membership.”

– Angela Braly, Wellpoint CEO

At the Health Care for America Now (HCAN) and Citizen Action Illinois sponsored rally in Chicago last weekend, single-payer advocates confronted HCAN leadership and Democratic Congresswoman Jan Schakowsky (D-Illinois) who instead of working to pass HR 676, John Conyers single-payer bill titled the United States National Health Insurance Act, are supporting the so called “public option.”

What the public option plan is, no one can exactly say. There are no concrete proposals spelling out what the plan would include, who could join it, how much it would cost, or how it would be funded. But the details don’t matter, they advocated for it anyway.

In a heated exchange with Schakowsky before the rally, she argued HR 676 (she is a cosponsor of the bill, yes that’s right) has no chance of passing and something has to be passed this year. She lied and said there isn’t enough support for single-payer, but there is for a public option. I and other activists challenged Schakowsky on every assertion and demanded she fight to pass HR 676. We said the insurance industry is going to fight just as hard against a public option as it will single-payer so let’s have a smackdown for single-payer. We argued the passage of HR 676 would guarantee an end to the crisis and finally make health care a human right that could never be taken away. She got pissed and complained loudly to her staff as she walked into the building, “Can you believe she is lecturing me?” I yelled after her, “I’m just expressing my opinion, I’m your constituency.”

The rally was a slick “Sell out single-payer and confuse em’ show” from start to finish, replete with retro 70’s song Ain’t no Stoppin’ Us Now blasting into the auditorium.

HCAN staffers, state representatives, Tom Balanoff – President of SEIU Local 1, small business owners, patients, doctors and medical students all took the stage, outlined different aspects of the crisis, and rightfully denounced the insurance and pharmaceutical companies. Their solution: the creation of a public plan to compete against the private insurance industry they despise. Speaker after speaker projected a wish list of health care reforms onto the nonexistent public option plan: benefits must be comprehensive, coverage must be affordable, no denial of care, and equal access to quality care. Who could disagree if a plan like that could actually be enacted? The problem is the United States will never, ever get a plan like that while the private insurance industry is still breathing. HCAN and liberal Democrats have to engage in this “magical thinking” in order to convince a skeptical public that a public option embedded in a for-profit system can work. Only a single-payer system, one that drives a stake through the heart of the insatiably greedy insurance corporations once and for all, can deliver on those promises.

A little history is in order.

The American health insurance system is based on the avoidance of the elderly and sick so insurers didn’t care much when Medicare was created: seniors have complex and costly health care needs that cut into profit margins. Let the government and taxpayers foot the bill for old people. Plus, people aren’t eligible for Medicare until they turn 65 so the vampires would have decades of opportunity to bleed Americans into medical bankruptcy. A similar dynamic was at work with Medicaid: poor people tend to have chronic health problems and that cuts into profit margins. Let the government and the taxpayers take care of them, but the minute they are healthy enough to work, kick ‘em out of the program and into the clutches of the vampires or the ranks of the uninsured. Whose left? Everybody in between. That’s what is driving the insurance industry and Karen Ignagni, the Chief Evil Officer (CEO) of America’s Health Insurance Plans (AHIP), into a frenzy. They fear a public plan will snatch away “their” market: the millions of people who don’t fall into the above categories of old and poor, especially the young and the healthy. It’s the profits, stupid!

Ignagni and the industry are whining that if a new government insurance program is created to compete with them, like Medicare, that’s unfair competition and they’d be driven out of business. Ohhh, don’t you feel sorry for Ignagni and all the other millionaire CEOs?

They think a government health plan would be unfair to them. But they’re exaggerating the effects a public plan would have on their pursuit of profit. Just look at how they have sunk fangs into Medicare.

Doctors Himmelstein and Woolhandler from Physicians for a National Health Program (PNHP) explain:

“A quarter century of experience with public/private competition in the Medicare program demonstrates that the private plans will not allow a level playing field. Despite strict regulation, private insurers have successfully cherry picked healthier seniors, and have exploited regional health spending differences to their advantage. They have progressively undermined the public plan – which started as single-payer for seniors and now has become a funding mechanism for HMOs – and a place to dump the unprofitably ill. A public plan option doesn’t lead toward single-payer, but toward the segregation of patients, with profitable ones in private plans and unprofitable ones in the public one.”

Private Medicare Advantage plans cost the government 13 percent more per beneficiary on average in 2008, and overhead for private plans is also much higher, at 13 percent, compared to 2-3 percent in traditional Medicare. Of the 45 million Medicare recipients, 23 percent are in private plans. Most Americans aren’t aware of the extent of privatization of Medicare.

What is the lesson HCAN draws from the privatization of Medicare? On their website an article is posted titled, Will Government Give Public Health Insurance an Unfair Advantage? Experience Tells Us No. Experience shows the government has given an unfair advantage to private insurers when it comes to the Medicare program, which HCAN acknowledges. In twisted logic that is hard to follow, HCAN thinks that’s a good thing, it’s proof the government won’t lower reimbursement rates or impose cost controls on private insurers. Now HCAN is all about reassuring the insurance industry they claim to loathe so much they only want a public plan to compete against them on a level playing field: the goal is not to drive them out of business.

This is the logic that confuses people mightily. One minute HCAN is calling out the insurance industry for the profit-hungry killers they are, then they argue the companies need to stay in business to compete against a public plan honestly in the marketplace – even though they agree they never compete fairly, Medicare being the prime example.

The health care reform proposals advocated by Jacob Hacker from the University of California at Berkeley are suddenly all the rage, but there is nothing new about them. He proposes a national health exchange of private plans with the addition of a public option (essentially Obama’s position.) Hacker, like HCAN, is careful to assuage the fears of the private insurers and says under his scheme, “More Americans have private insurance after reform than do before – either through their employer or through the national exchange.” Smells a bit like Massachusetts where 200,000 people remain uninsured and the costs to subsidize the program have doubled from $630 million to $1.3 billion.
Single-payer advocates oppose the creation of a public plan for a different set of reasons.

  1. It doesn’t make health care a human right that can never be taken away.
  2. It continues to divide, devalue, and define people by their health status.
  3. It can’t address the endemic racial and gender disparities in the system, including the 12 million undocumented.
  4. It leaves the employer based system of health care provision intact. That link has to be broken so workers are free to change jobs, go on strike and not fear loss of coverage.
  5. The system would continue to have multiple payers and therefore the complexity and gaps in coverage that are inevitable when there are numerous bureaucracies to navigate.
  6. Where will the money come from to finance the plan, especially in a time of economic recession, like right now? A public plan is not fiscally sustainable because it’s rooted in a multiple payer system that foregoes at least 84% of administrative savings.

Single-payer on the other hand, would immediately inject 400 billion into the system by eliminating bureaucracy, billing apparatus, administrative waste, advertising, corporate profits, and CEO compensation. That’s enough money to bring everyone into the system with no co-pays or deductibles.

We don’t need any more feasibility studies or examinations of  single-payer in other countries. It’s a proven fact that a single-payer system can cover everyone and control costs. Period, end of discussion.

So the question becomes why don’t the Democrats and HCAN fight to get rid of the parasitic private health insurance industry (the source of the crisis) once and for all instead of constantly and unsuccessfully, decade after decade, trying to rein in, regulate, and do an end run around them?

For the Democrats, with the exception of John Conyers and a few others, they simply don’t want to abolish the private insurance industry. They are capitalists and believe in the capitalist system that makes health care a commodity to be bought and sold. For them, health care is not a human right. And importantly, they don’t want to take on President Obama who is opposed to single-payer. Like the true cowards they are, they will not oppose Obama on health care reform even though they disagree with him.

HCAN thinks it’s impossible to get rid of the insurance companies, they’re too powerful, and they have too much money and influence. They don’t believe a large social movement can be built to take on and win against the insurers and the government. The leadership of HCAN are the ones who would have said under slavery, “We can’t win abolition, so let’s settle for a few reforms that make the lives of slaves more bearable.”

This attitude is astonishing given the sea change in consciousness around health care. A number of events have coalesced to make winning a single-payer system possible. No longer does the invoking of “socialized medicine” scare people, not after the government has socialized billions of dollars of losses in the financial sector. If the government can bail out AIG, why not the health care system? Poll after poll shows the majority of Americans want a government run health care system that guarantees health care. People often express this by saying, “I want what they have in Canada.” Physicians used to be an obstacle to single-payer, now 59% support single-payer.

Employment-based health care is collapsing and employers want to get out of the business of providing health care to workers: it costs too much. Millions of laid off workers now realize tying insurance to employment status is a disaster; lose your job, lose coverage. Those with jobs are paying staggering premium increases for less coverage. Single-payer legislation has been introduced into the House HR 676, and SB 703 in the Senate. There is a grassroots movement, including unions, all over the country organizing and fighting for single-payer. And most significantly, people are ANGRY and want change.

HCAN and Democrats like Schakowsky are deceiving and leading people down yet another dead end alley of incremental reform. We’ve had decades of incremental reform and now there are 50 million uninsured, 25 million underinsured and between 18,000 to 100,000 people die every year because they lack access to health care. For spineless Democrats like Schakowsky and HCAN, the day will never come when single-payer is “politically feasible,” because if now isn’t the time, when will it be?

The fight to make health care a human right is the new civil rights struggle. We are standing on the shoulders of all the great social movements that have come before us.

The time to win single-payer has never been better. We are going to keep fighting like hell to destroy the corporate killers, not create a faux option that allows them to live another day.

Sí se puede, yes we can!

Helen Redmond is a member of the Chicago Single-Payer Action Network and a Licensed Clinical Social Worker. She works in the emergency room at Cook County Hospital and blogs at http://helenredmond.wordpress.com She can be reached at redmondmadrid@yahoo.com

HCAN and Organizing for America continue the profit-making power of the insurance industry

HCAN and Organizing for America are following in the footsteps of organizations that are created every time health care reform is attempted. They promote incremental changes to the system and the legislation urgently (health reform can’t wait!) and passionately promoted is not designed to solve the crisis, but rather to guarantee the continued existence and profit-making power of the insurance industry.

Counterpunch, November 23, 2009

Health Care’s Historic Flop

I get weekly emails from Levana Layendecker of Health Care for America Now (HCAN) and Mitch Stewart from Organizing for America. In increasingly shrill prose, the two try to convince me to support whatever legislation emerges from Congress. They warn, “IF THE INSURANCE COMPANIES WIN, YOU LOSE.” I agree completely. That is why I won’t support any legislation Congress passes because the insurance companies have already won and we have lost.

We need only look at the check lists of two of the most powerful people in health care reform to see who is benefiting most from the proposed legislation in Congress.

Karen “Killer” Ignagni, President and CEO of America’s Health Insurance Plans (AHIP) won the following:

  • Still in business making billions of profits for Wall Street investors and CEO’s of insurance companies
  • No cost controls that would decrease profits
  • Mandate giving us at least 30 million new customers and fined if they don’t buy coverage
  • Still able to deny doctor recommended care
  • Still able to increase premiums
  • Kill or weaken public option
  • Investment in 3000 lobbyists and 1.4 million a day paid off

Then there is Billy “The Kid” Tauzin, President and CEO of the Pharmaceutical Research and Manufacturers of America  (PhRMA.) He was able to check off everything on his list:

  • Get a meeting with President Obama behind closed doors and make a deal to protect PhRMA profits
  • No drug reimportation from Canada or Mexico
  • Extend protections for lucrative biologic drugs
  • No negotiating drug prices for Medicare Part D
  • U.S. drug market continues to be the most profitable

There was even a big, last minute win for the misogynist Catholic Bishops. For thirty years these disgusting, sexist servants of God have fought to restrict access to abortion. Thanks to the betrayal of Nancy Pelosi and Jan Schakowski, the “ardent” defenders of women’s reproductive rights, the no-choice Stupak Amendment passed. The Democrats position on abortion is “safe, legal and rare” and the Stupak Amendment will make abortion rarer still.

The xenophobes and racists won, too. Millions of undocumented human beings from every corner of the globe who work and pay taxes in the United States are ineligible for Medicaid and subsidies. The message: don’t get sick, but if you do, die quickly and if you don’t, we’ll deport you.

The insurance industry concocted a strategy well in advance of Obama taking office. The crisis they caused could no longer be ignored: 50 million uninsured, millions of medical bankruptcies, employers screaming about rate increases and dropping coverage in record numbers and thousands of health care horror stories in the media. According to Wendell Potter, the former Vice President of Public Relations at Cigna, now a whistleblower, “They [the insurers] knew they had a very big public relations problem, and they knew this day was coming. They knew they had to be perceived as coming to the table with solutions. It was a departure from their previous point of view. But they knew they would be slaughtered if it weren’t.”

And there they were, just as Potter predicted – the Killer and the Kid, not only at the table, but at all the secret, behind closed-door meetings with the late Ted Kennedy and Max Baucus. Ignagni proclaimed, “We want to play. We want to contribute. We want to help pass health reform legislation this year.” And what a player she is. In an article titled, “Insurers poised to reap benefits from healthcare overhaul” Mark Merritt, a lobbyist, keenly observed, “While so many in this town have been playing checkers, Karen has been playing chess.” Checkmate for AHIP.

Senator Baucus has taken more money from the health and insurance industry than any other member of Congress. Elizabeth Fowler, Baucus’s chief health advisor, is a former VP of public policy for the insurance giant Wellpoint. She “helped” write the Senate bill.

AHIP uses lobbyists and campaign contributions to shape legislation, not to kill or oppose it as HCAN and Organizing for America constantly claim. That’s what the 3000 lobbyists are doing every day in Congress – inserting industry friendly, arcane language and loopholes into unfathomable (except to industry lawyers and actuaries) 2000 page bills which the Democrats support. To be sure, insurers don’t like the public option but it’s so not robust, so eviscerated, so devoid of honesty keeping mechanisms it poses no competition or threat to profits as most political commentators now admit. Similarly, Ignagni wants tougher financial penalties for those who don’t purchase health insurance but it’s not a deal breaker, nor is accepting all patients regardless of health status. The industry has already announced premium increases and the added revenue will underwrite health care for those with “pre-existing” conditions.

It’s obvious. THE INSURANCE INDUSTRY IS WINNING AND WE ARE LOSING. There is an inconvenient contradiction that both HCAN and Organizing for America attempt to obscure: President Obama and Congressional leaders are working hand in glove with the very corporate criminals both organizations excoriate. AHIP and PhRMA have unfettered access to politicians and a massive influence on health care legislation. Why? Because the Democratic Party, despite its populist image, is a party of big business, of capitalism, not a party of the people. Notwithstanding the occasional howl about “insurance industry abuses” (to hoodwink us into thinking they are curbing those abuses) current legislation intrenches the industry even further into the core of the health care system and is on the brink of handing them unprecedented billions in taxpayer money and a mandate. This is dangerous not only to our health, but to democracy. Once the spigot to billions in public money is open, the industry will oppose attempts to shut it off. The money will flow back into American politics as campaign donations and kickbacks to happy-to-help, pro-industry politicians of which there are no shortage on either side of the aisle.

THE INSURANCE INDUSTRY IS WINNING AND WE ARE LOSING and anyone who follows the money knows it. Except Levana and Mitch.

The organizations the two represent are the major purveyors of outright lies, lies of omission and half-truths about health care legislation by asserting the following: health insurance will get better, stable and more secure; health insurance will get cheaper; employers will have to offer good, affordable insurance and not shift additional costs onto you; if you lose your job you will always be able to afford insurance, and expenses will be capped. They assert Medicaid and Medicare benefits won’t be cut.

Here’s an inconvenient, honest-to-god truth: the legislation does nothing to solve the health care crisis. It’s estimated up to twenty million people will still be uninsured. There are no effective cost containment mechanisms in either bill because that would reduce profits. There are no controls on the price of premiums and the House bill permits charging twice as much for older people as for younger ones. More profits. Insurers can continue to deny physician recommended medical care and patient claims. Medical-loss ratio in favor of insurers, million dollar salaries for CEO’s and Wall Street investors untouched. The caps on out-of-pocket expenses are $5000 for individuals and $10,000 for families. These amounts result in medical bankruptcy now. Employers must pay 72.5 percent of premiums for individuals and 65 percent for families. That gives companies who currently pay a higher percentage an incentive to shift costs onto employees then dump them into the insurance exchange because it will be cheaper. The plans in the exchange will be high deductible, stripped down, tiered plans much like the ones available through the Commonwealth connector in Massachusetts. There will be an expansion of Medicaid but the history of the program reveals that just as it expands, it contracts. Eligibility criteria and reimbursement rates for Medicaid change with the fiscal fortunes of the states and federal government. It is truly stunning that health care reform will be paid for with billions in “savings” from the health care program for the elderly; Medicare. Why not use “savings” from the bloated 700 billion dollar military budget? The talk about fraud and waste in the Medicare program is a cover to cut benefits and seniors are right to be angry and mistrustful.

Levana and Mitch are playing chess, too. Their deceit is insidious and not without precedence. HCAN and Organizing for America are following in the footsteps of organizations that are created every time health care reform is attempted. They promote incremental changes to the system and the legislation urgently (health reform can’t wait!) and passionately promoted is not designed to solve the crisis, but rather to guarantee the continued existence and profit-making power of the insurance industry. Moreover, their job is to tamp down expectations for fundamental change, like single-payer, and convince the public the legislation, although not perfect, is the best we can get. It’s still “change we can believe in.”

Any bill that passes will be hailed as historic. It will be historic: historic in the sense that it’s yet another sellout in a long history of sellouts of the American people – bankrupt and broken, still desperate and dying for reform that makes health care a human right and where profit has no place.

Helen Redmond, LCSW, is a medical social worker in Chicago. She can be reached at redmondmadrid@yahoo.com. She blogs at http://helenredmond.wordpress.com

Helen Redmond, LCSW, is a medical social worker in Chicago. She can be reached at redmondmadrid@yahoo.com. She blogs at http://helenredmond.wordpress.com

Also be sure to see Helen Redmond’s April 23, 2009 Counterpunch article, “Selling Out Single Payer.”

The Public Option: Bait and Switch

Bait and Switch

by Kip Sullivan

The people who brought us the “public option” began their campaign promising one thing but now promote something entirely different. To make matters worse, they have not told the public they have backpedalled. The campaign for the “public option” resembles the classic bait-and-switch scam: tell your customers you’ve got one thing for sale when in fact you’re selling something very different.

When the “public option” campaign began, its leaders promoted a huge “Medicare-like” program that would enroll about 130 million people. Such a program would dwarf even Medicare, which, with its 45 million enrollees, is the nation’s largest health insurer, public or private. But today “public option” advocates sing the praises of tiny “public options” contained in congressional legislation sponsored by leading Democrats that bear no resemblance to the original model.

According to the Congressional Budget Office, the “public options” described in the Democrats’ legislation might enroll 10 million people and will have virtually no effect on health care costs, which means the “public options” cannot, by themselves, have any effect on the number of uninsured. But the leaders of the “public option” movement haven’t told the public they have abandoned their original vision. It’s high time they did.

The bait

“Public option” refers to a proposal, as Timothy Noah put it, “dreamed up” by Jacob Hacker when Hacker was still a graduate student working on a degree in political science. In two papers, one published in 2001 and the second in 2007, Hacker, now a professor of political science at Berkeley, proposed that Congress create an enormous “Medicare-like” program that would sell health insurance to the non-elderly in competition with the 1,000 to 1,500 health insurance companies that sell insurance today.

Hacker claimed the program, which he called “Medicare Plus” in 2001 and “Health Care for America Plan” in 2007, would enjoy the advantages that make Medicare so efficient – large size, low provider payment rates and low overhead. (Medicare is the nation’s largest health insurance program, public or private. It pays doctors and hospitals about 20 percent less than the insurance industry does, and its administrative costs account for only 2 percent of its expenditures compared with 20 percent for the insurance industry.)

Hacker predicted that his proposed public program would so closely resemble Medicare that it would be able to set its premiums far below those of other insurance companies and enroll at least half the non-elderly population. These predictions were confirmed by the Lewin Group, a very mainstream consulting firm. In its report on Hacker’s 2001 paper, Lewin concluded Hacker’s “Medicare Plus” program would enroll 113 million people (46 percent of the non-elderly) and cut the number of uninsured to 5 million. In its report on Hacker’s 2007 paper, Lewin concluded Hacker’s “Health Care for America Plan” would enroll 129 million people (50 percent of the nonelderly population) and cut the uninsured to 2 million.

Until last year, Hacker and his allies were not the least bit shy about highlighting the enormous size of Hacker’s proposed public program. For example, in his 2001 paper Hacker stated:

[A]pproximately 50 to 70 percent of the non-elderly population would be enrolled in Medicare Plus…. Put more simply, the plan would be very large…. [C]ritics will resurface whatever the size of the public plan. But this is an area where an intuitive and widely held notion – that displacement of employment-based coverage should be avoided at all costs – is fundamentally at odds with good public policy. A large public plan should be embraced, not avoided. It is, in fact, key to fulfilling the goals of this proposal. (page 17)

In his 2007 paper, Hacker stated:

For millions of Americans who are now uninsured or lack … affordable work place coverage, the Health Care for America Plan would be an extremely attractive option. Through it, roughly half of non-elderly Americans would have access to a good public insurance plan…. A single national insurance pool covering nearly half the population would create huge administrative efficiencies. (page 5)

Hacker’s papers and the Lewin Group’s analyses of them have been cited by numerous “public option” advocates. For example, when Hacker released his 2007 paper, Campaign for America’s Future (CAF) published a press release praising it and drawing attention to the large size of Hacker’s proposed public program. The release, entitled “Activists and experts hail Health Care for America plan,” stated:

Detailed micro-simulation estimates suggest that roughly half of non-elderly Americans would remain in workplace health insurance, with the other half enrolled in Health Care for America…. A single national insurance pool covering nearly half the population would create huge administrative efficiencies…. Because Medicare and Health Care for America would bargain jointly for lower prices …, they would have enormous combined leverage to hold down costs.

When the Lewin Group released its 2008 analysis of Hacker’s 2007 paper, CAF’s Roger Hickey wrote in the Huffington Post, “efficiencies achievable … through Hacker’s public health insurance program” would save so much money that the US could “cover everyone” for no more than we spend now.

The switch

Now let’s compare the “single national health insurance pool covering nearly half the population” that Hacker and other “public option” advocates enthusiastically championed with the “public option” proposed by Democrats in Congress, and then let’s inquire what Hacker and company said about it.

As readers of this blog no doubt know, the Senate Health, Education, Labor, and Pensions (HELP) Committee, and three House committee chairman working jointly, published draft health care “reform” bills in June. (The third committee with bill-writing authority, the Senate Finance Committee, has yet to produce a bill.) According to the Congressional Budget Office, the “public option” proposed in the House “tri-committee” bill might insure 10 million people and would leave 16 to 17 million people uninsured. The “public option” proposed by the Senate HELP committee, again according to the Congressional Budget Office, is unlikely to insure anyone and would hence leave 33 to 34 million uninsured. The CBO said its estimate of 10 million for the House bill was highly uncertain, which is not surprising given how vaguely the House legislation describes the “public option.”

Here is what the CBO had to say about the HELP committee bill:

The new draft also includes provisions regarding a “public plan,” but those provisions did not have a substantial effect on the cost or enrollment projections, largely because the public plan would pay providers of health care at rates comparable to privately negotiated rates – and thus was not projected to have premiums lower than those charged by private insurance plans. (page 3)

Obviously the “public option” in the Senate HELP committee bill (zero enrollees; 17 million people left uninsured) and the “public option” in the House bill (10 million enrollees (maybe!); 34 million people left uninsured) are a far cry from the “public option” originally proposed by Professor Hacker (129 million enrollees; 2 million people left uninsured). Have we heard the Democrats in Congress who drafted these provisions utter a word about how different their “public options” are from the large Medicare-like program that Hacker proposed and his allies publicized? What have Professor Hacker and his allies had to say?

In public comments about the Democrats’ “public option” provisions, the leading lights of the “public option” movement imply that Hacker’s model is what Congress is debating.

Sometimes they come right out and praise the Democrats’ version as “robust” and “strong.” But I cannot find a single example of a a statement by a “public option” advocate warning the public of the vast difference between Hacker’s original elephantine, “Medicare-like” program and the Democrats’ mouse version.

For example, on June 23, Hacker testified before the House Education and Labor Committee that “the draft legislation prepared by [the] special tri-committee promises enormous progress.” He went on to enumerate all the benefits of a “public option.” Yet the House tri-committee proposal bore no resemblance to the public plan he described in his papers and that the Lewin Group analyzed. Later, when Kaiser Health News asked Hacker in a July 6 interview why “your signature idea – a public plan – has become central to the health care reform debate,” Hacker again praised his “public plan” proposal and offered no hint that the “public option” so “central to the debate” was very different from the one he originally proposed.

Ditto for Hacker’s allies. Representatives of Health Care for America Now (HCAN), the organization most responsible for popularizing the “public option,” repeatedly describe the House and Senate HELP committee bills as “strong” or “robust,” always without any justification for this claim, and have repeatedly failed to warn the public that the “public options” they promote today are mere shadows of the “public options” they endorsed in the past. On July 15, the day the HELP committee passed its bill, Jason Rosenbaum blogged for HCAN:

The Senate HELP Committee has just referred a bill to the floor of the Senate with a strong public option.

Searching the websites of the organizations that serve on HCAN’s steering committee – AFSCME, Democracy for America, Moveon.org and SEIU, for example – one will find not a shred of information that would help the reader comprehend how small and ineffective the “public options” proposed in the Democrats’ bills are, nor how different these are from the one Hacker originally proposed. Yet these groups continue to urge their members and the public to “tell Congress to support a public option.”

Hacker’s original model compared with the Democrats’ mouse model

It has become fashionable among advocates of a “public option” to trash the expertise and the motives of the Congressional Budget Office. But the CBO’s characterization of the “public option” proposed in the Democrats’ legislation is entirely reasonable. This becomes apparent the moment we compare Hacker’s blueprint for his original “Medicare Plus” and “Health Care for America” programs with the “blueprints” (if tabula rasas can be called “blueprints”) contained in the Senate HELP Committee and House bills.

Hacker’s papers laid out these five criteria that he and the Lewin Group said were critical to the success of the “public option”:

• The PO had to be pre-populated with tens of millions of people, that is, it had to begin like Medicare did representing a large pool of people the day it commenced operations (Hacker proposed shifting all or most uninsured people as well as Medicaid and SCHIP enrollees into his public program);

• Subsidies to individuals to buy insurance would be substantial, and only PO enrollees could get subsidies (people who chose to buy insurance from insurance companies could not get subsidies);

• The PO and its subsidies had to be available to all nonelderly Americans (not just the uninsured and employees of small employers);

• The PO had to be given authority to use Medicare’s provider reimbursement rates; and

• The insurance industry had to be required to offer the same minimum level of benefits the PO had to offer.

Hacker predicted, and both of the Lewin Group reports concluded, that if these specifications were met Hacker’s plan would enjoy all three of Medicare’s advantages – it would be huge, it would have low overhead costs, and it would pay providers less than the insurance industry did. As a result, the “public option” would be able to set its premiums below those of the insurance industry and seize nearly half the non-elderly market from the insurance industry. According to the Lewin Group’s 2008 report, Hacker’s version of the “public option” would, as of 2007:

• Enroll 129 million enrollees (or 50 percent of the non-elderly);
• Have overhead costs equal to 3 percent of expenditures;
• Pay hospitals 26 percent less and doctors 17 percent less than the insurance industry (but these discounts would be offset to some degree by increases in payments to providers treating former Medicaid enrollees); and,
• Set its premiums 23 below those of the average insurance company.

I question some of Hacker’s and the Lewin Group’s assumptions, including their assumption that any public program that has to sell health insurance in competition with insurance companies could keep its overhead costs anywhere near those of Medicare (Medicare is a single-payer program that has no competition), especially during the early years when the public program will be scrambling to sign up enrollees. A public program will have to hire a sales force and advertise. It will have to open offices. It will have to negotiate rates, and perhaps contracts, with thousands of hospitals and hundreds of thousands of clinics, chemical treatment facilities, rehab units, home health agencies, etc. Or it will have to contract with someone to do all that. But I have little doubt that if a public program were to open with a large enough customer base, and it had the advantage of a law requiring that only its customers receive substantial subsidies, it could do what the Lewin Group said it could do.

Now let us compare Hacker’s original model with the mousey “public options” proposed by the Senate HELP Committee and the House. Of Hacker’s five criteria, only one is met by these bills! Both proposals require the insurance industry to cover the same benefits the “public option” must cover. None of the other four criteria are met. The “public option” is not pre-populated, the subsidies to employers and to individuals go to the “public option” and the insurance industry, employees of large employers cannot buy insurance from the “public option” in the first few years after the plan opens for business and maybe never (that decision will be made by whoever is President around 2015), and the “public option” is not authorized to use Medicare’s provider payment rates. (The House bill comes the closest to authorizing use of Medicare’s rates; it authorizes Medicare’s rates plus 5 percent).

Is it any wonder the CBO concluded the Democrats’ “public option” will be a tiny little creature incapable of doing much of anything? More curious is that CBO gave the House “public option” any credit at all (you will recall CBO said it would enroll maybe 10 million people). The CBO should have asked, Can the “public option” – as presented in either bill – survive?

Put yourself in the “public option” director’s shoes

To see why the “public option” proposed by congressional Democrats remains at great risk of stillbirth, let’s engage in a frustrating thought experiment. Let’s imagine Congress has enacted the House version (it is not quite as weak as the HELP Committee model and thus gives us the greatest opportunity in our thought experiment to imagine a scenario in which the “public option” actually survives its start-up phase). Let us imagine furthermore that you have been foolish enough to apply for the job of executive director of the new “public option,” and the Secretary of the Department of Health and Human Services (the federal agency within which the program will be housed) decided to hire you. It’s your first day on the job.

You know the House bill did not create a ready-made pool of enrollees for you to work with the way the 1965 Medicare law created a ready-made pool of seniors prior to the day Medicare commenced operations. You realize, in other words, that you represent not a single soul, much less tens of millions of enrollees. You will have to build a pool of enrollees from scratch. You also know the House bill authorized some start-up money for you, so you’ll be able to hire some staff, including sales people if you choose. You can also open offices around the country, and advertise if you think it necessary. But you know you can’t pay out too much money getting the “public option” started because the House bill requires that you pay back whatever start-up costs you incur within ten years. In other words, you may hire enough people and open enough offices and buy enough advertising to create a critical mass of enrollees nationwide, but you must do it quickly so that your start-up costs don’t sink the “public option” during its first decade.

The only other feature in the House bill that appears to give you any advantage over the insurance industry is the provision requiring you to use Medicare’s rates plus 5 percent, which essentially means you are authorized to pay providers 15 percent less than the insurance industry pays on average. But the House bill also says providers are free to refuse to participate in the plan you run.

So what do you do? Let’s say you open offices in dozens or hundreds of cities, you hire a sales force to fan out across the country to sign up customers, you advertise on radio and TV to get potential customers (employers and individuals) to call your new sales force to inquire about the new “public option” insurance policy. What happens when potential customers ask your salespeople two obvious questions: what will the premium be and which doctors they can see? What do your employees say? They can’t say anything. They haven’t talked to any clinics or hospitals about participating at the 15-percent-below-industry-average payment rate, so they have no idea which providers if any will agree to participate. They also have no idea what the “public option” premium will be because they don’t know whether providers will accept the low rates the plan is authorized to pay. And they have no idea about several other factors that will affect the premiums, including how much overhead the “public option” will rack up before it reaches a state of viability, or who the “public option” will be insuring – healthy people, sick people, or people of average health status.

So, let’s say you redeploy your sales force. Now instead of talking to potential customers, you direct them to focus on providers first. But when your salespeople call on doctors and hospital administrators and ask them if they’ll agree to take enrollees at below-average payment rates, providers ask how many people the “public option” will enroll in their area. Providers explain to your salespeople that they are already giving huge discounts, some as high as 30 to 40 percent off their customary charge, to the largest insurers in their area and they are not eager to do that for the “public option” unless the plan will have such a large share of the market in their area that it will deliver many patients to them. If the “public option” cannot do that, providers tell your salespeople, they will not agree to accept below-average payment rates.

In other words, you find that the “public option” is at the mercy of the private insurance market, not the other way around.

This thought experiment illustrates for you the mind-numbing chicken-and-egg problem created by any “public option” project that does not meet Hacker’s criteria, most notably, the criterion requiring pre-population of the “public option.” If the pre-population criterion isn’t met, the poor chump who has to create the “public option” is essentially being asked to solve a problem that is as difficult as describing the sound of one hand clapping. You need both hands to clap.

How did the mouse replace the elephant?

How did the “Medicare Plus” proposal of 2001 (when Hacker first proposed it) get transformed into the tiny “public options” contained in the Democrats’ 2009 legislation? The answer is that somewhere along the line it became obvious that the Hacker model was too difficult to enact and had to be stripped down to something more mouse-like in order to pass. Did the leading “public option” advocates realize this early in the campaign? Or midway through the campaign when the insurance industry began to attack the “public option”? Or late in the campaign when they found it difficult to persuade members of Congress to support Hacker’s original model? Whatever the answer, will they find it in their hearts to tell their followers their original strategy was wrong?

I suspect the answer is different for different actors within the “public option” movement. Hacker surely knew what was in his original proposal and surely knows now that the Democrats’ bills don’t reflect his original proposal. Hacker and others familiar with his original proposal were probably betrayed by the process. As the “public option” concept became famous and edged its way toward the centers of power, they couldn’t find the courage to resist the transformation of the original proposal into the mouse model.

For other actors within the “public option” movement, ignorance of Hacker’s original proposal and of health policy in general may have led them to rely on more knowledgeable leaders in the movement. Their error, in other words, was to trust the wrong people and, as the “public option” came under attack, to cave in to group think. This error was facilitated by the “public option” movement’s decision to avoid mentioning any details of the “public option” whenever possible.

What next?

Those of us in the American single-payer movement must continue to educate Congress and the public on the need for a single-payer system. We must also convince advocates of the “public option” that they have made two serious mistakes and, if they learn quickly from these mistakes, that real reform is still possible.

The first mistake was to think that a “public option” that merely took over a large chunk of the non-elderly market (as opposed to one that took over the entire market) could substantially reduce health care costs and thereby make universal coverage politically feasible. Any proposal that leaves in place a multiple-payer system — even a multiple-payer system with a large government-run program in the middle of it — is going to save very little money. Even if Hacker’s original Health Care for America Plan had taken over half the non-elderly market and then reached homeostasis (something Hacker swore up and down it would do), the savings would have been relatively small. The reason for that is twofold. First, any insurance program, public or private, that has to compete with other insurers is going to have overhead costs substantially higher than Medicare’s. (It is precisely because Medicare is a single-payer program that its overhead costs are low.) Second, the multiple-payer system Hacker would leave in place would continue to impose unnecessarily large overhead costs on providers.

The second mistake the “public option” movement made was to think the insurance industry and the right wing would treat a “public option” more gently than a single-payer. Conservatives have a long history of treating small incremental proposals such as “comparative effectiveness research” as the equivalent of “a government takeover of the health care system.” It should have been no surprise to anyone that conservatives would shriek “socialism!” at the sight of the “public option,” even the mouse model proposed by the Democrats.

The bait-and-switch strategy adopted by the “public option” movement has put the Democrats in a terrible quandary. Seduced by the false advertising about the potency of the “public option” to lower costs, Democrats have raised public expectations for reform to unprecedented levels. Failing to meet those expectations during the 2009 session of Congress, which is inevitable if the Democrats continue to promote legislation like the bills released in June, is going to have unpleasant consequences. Is there no way out of this quandary?

Conventional wisdom holds that if the Democrats don’t pass a health care reform bill by December, they will have to wait till 2013 to try again. But if the “public option” movement were to join forces with the single-payer movement, the two movements could prove the conventional wisdom wrong. This won’t happen, obviously, if the “public option” movement fails to perceive the reasons it failed.

It is conceivable the “public option” movement could decide the bait-and-switch strategy was wrong and that their only error was not to stick with Hacker’s original model. It should be obvious now that that would also be a tactical blunder. We have plenty of evidence now that conservatives will react to the mousey version of the “public option” as if it were “a stalking horse for single-payer.” We can predict with complete certainty they will treat Hacker’s original version as something even closer to single-payer. If a proposal is going to be abused as if it were single-payer, why not actually propose a single-payer? At least then, when a particular session of Congress comes and goes and we haven’t enacted a single-payer system, we will have educated the public about the benefits of a single-payer and have further strengthened the single-payer movement.

To sum up, “public option” advocates must choose between continuing to promote the “public option” and seeing their hopes for cost containment and universal coverage go up in smoke for another four years, and throwing their considerable influence behind single-payer legislation. At this late date in the 2009 session, it is unlikely that a single-payer bill could be passed even if unity within the universal coverage movement could be achieved. But if the “public option” wing and the single-payer wing join together to demand that Congress enact a single-payer system, December 2009 need not constitute a deadline.

Kip Sullivan belongs to the steering committee of the Minnesota chapter of Physicians for a National Health Program.


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