“Public Plan” Still Big Part of Obama Healthcare Reform Agenda.

Nancy-Ann DeParle, director of the White House health reform office, is certainly getting her share of press today as healthcare writers try to unwind what she had to say during a forty minute discussion with reporters that was sponsored yesterday by the Kaiser Family Foundation.

President Barack Obama’s top health care adviser said that work on healthcare reform has been quietly continuing on Capitol Hill despite the Easter recess. She said that she has been spending 60% to 75% of her time there talking with congressional members and staff who appear far more receptive to a reform package than they did more than 15 years ago. She also says that many other healthcare stakeholders are more open to reform efforts, including healthcare providers, employers, and business groups.

When the event was opened up for questions, several reporters asked DeParle about the so called “public plan” which has been a part of the Obama administration’s health reform plan since the Presidential campaign.

Offering the option of government coverage to workers and their families has become one of the most contentious issues in the debate about overhauling health care to cover the uninsured and curb costs. Obama has proposed a public plan, and liberals insist it be part of any final deal. Conservatives and businesses fear that could open the door for a government takeover of the system. Some republicans have said that a public plan is a deal breaker when it comes to health care reform legislation.

When asked about her definition of a “public plan,” DeParle said it would be a plan sponsored by the government with very low administration costs, paying no commissions to brokers and creating no profits for insurers.

DeParle repeatedly told the group that the Obama administration was open to any plan that would achieve the lower costs that would lead to the ability to cover more people.

“There are ways to get around policy concerns. That is why we think we can reach agreement,” she said. But, she noted that ideological objections to government’s role would be hard to overcome.

Also yesterday in the Wall Street Journal, Kerry Weems and Benjamin Sasse brought attention to the public plan by writing that the comparison between public and private plans is a false comparison.

They wrote that, “Private insurance and public benefits are not the same business. For all its warts, private insurance tries to manage care. Medicare is mostly about paying the bills presented to it.”

The two went on to list four reasons why the administrative expenses of private insurance plans represent money well spent for their members. They are:

  1. Provider networks that can include high-value providers and exclude low-quality providers while Medicare is forbidden from excluding poor quality providers.
  2. Private insurers must negotiate rates instead of just fixing prices using a statutorily.
  3. Private insurers must combat fraud — or go out of business. The two wrote that the total amount of Medicare fraud is unknown. “The government does not measure or estimate fraud in its programs; instead, it measures payments made ‘in error.’ According to Medicare’s own most recent data, payments made in error amount to over $10 billion annually. (Medicaid’s payment errors in 2007 equaled a whopping $32.7 billion, according to a report by the Department of Health and Human Services.)”
  4. Private insurers must incur the administrative cost of marketing. They point out that a public plan competing with other alternatives would also have to market itself to the public, and this means tax dollars used to advertise against private plans. Or the public plan could ‘compete’ by using heavily subsidized marketing channels not available to private insurers, such as Social Security mailings, welfare offices, unemployment check stuffers, and the constellation of government-funded “advocacy organizations.”

As Weems and Sasse concluded in their WSJ piece there should be an honest discussion of administrative costs and their value. Those who believe that health care should have no profit should be open with their views and not hide behind the false economy of Medicare.

To view a web cast of Nancy-Ann DeParle’s remarks, click here.

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