In Senator Edward Kennedy’s absence, Senate Finance Committee Chairman Max Baucus has emerged as the Senate’s point man on healthcare reform—“prompting concern among some liberal senators,” according to The Hill. Why are they concerned? Because they “remember Baucus’s history of cutting deals with Republicans.”
Friday, Baucus gave a speech at the Campaign for American Progress (CAP) that suggests liberals have reason to be worried. Many consider a public-sector alternative to private health insurance key to reform. As I have argued, Medicare E ((Medicare for Everyone) would provide a standard of excellence for private insurers, and in President Obama’s words “keep them honest.” But at CAP, Senator Baucus suggested that there are several different ways of putting a “public option” into place. Such a system could either allow Americans to buy into Medicare, or, open up the Federal Employee Health Benefits(FEHB) program.
In truth, FEHB is just a menu of private insurance plans that the government offers to its employees. As Jerry Flanagan points out on consumerswatch.org: FEHB is “ a captive of private insurers. . . . program costs are higher than need be due to insurer overhead and profit demands.”
Medicare’s administrative costs are much lower than a for-profit insurer’s because Medicare doesn’t have to advertise, lobby Congress, paying executives exorbitant salaries or deliver profits to shaeholders. “ Medicare E would force private insurers to prove that they can be cost-effective while offering similarly comprehensive coverage,” Flanagan writes.
Moreover, Medicare E, plus Medicare, woudl have the clout needed to negotiate for significant discounts on drugs and devices, something that for-profit insurers haven’t done. Instead, they pay sky-high prices, and pass the costs along in the form of higher premiums. Medicare E also would be likely to cut fees and raise-copays for tests and treatments that are only marginally effective, while raising fees and lowering co-pays for servcies that provide the greatest benefit to the patient. In other words, a government plan would have the public good in mind; for-profit insurers have to put their shareholders’ concerns first. “To benefit from real savings, the ‘public’ in public option must mean ‘public program,’ observes Flanagan..
HealthBeat reader Jim Jaffe, who uses FEHB as his insurer, agrees. “People seem confused about FEHB,” he says. They think it is a governement health plan. In fact, the government has farmed FEHB out to private insuers, just as it farmed out Medicare Advantage—with similar results. Premiums keep rising twice as fast as inflation, and Jaffe reports, the plans are not user-friendly. “It makes no more sense to use FEHB as a template for a public option that it would to use the plan GE offers its employees,” Jaffe adds. Finally, it is important to remember that FEHB offers a range of plans—at arnage of prices. Postal workers and Senators don’t have the same plan. (See Jaffe’s post on FEHB below)
Perhaps it should come as no suprise that Baucus is less than commited to the private-sector option. Last week he signaled that he viewed it as no more than a “chip” in a political poker game. Talking to TIME Magazine’s Karen Tumulty about the public sector plan, “He strongly suggested that its main value, at this point, is as a bargaining chip to get the health insurance companies to agree to other things that reformers want to see.” Tumplty reported. She quoted Baucus:
Of course, most politicians don’t announce their poker strategy in TIME—unless they’re ready to to throw the chip under the bus.
In part 2 of this post, I will talk about what liberal Democrats remember about Baucus past compromises, Kennedy’s absence, why Baucus isn’t willing to protect the health care reform bill from a Republican filibuster, and his status as both the insurance industry’s and the drug industry’s favorite Democrat. Billy Tauzin says this isn’t a problem.