It's Now or Never for a Public Option: Why We Need to Take a Stand Against the Insurance Industry's Greed

Editor's note: It's now or never for the public option. Campaign for America's Future has put together 4 key actions you can take to win back the health care debate. "We absolutely cannot let the far right fringe do the bidding of the insurance and drug lobbies and hijack the debate," they write. "The battle for health care reform has moved to town halls during the August congressional recess. But the wild mobs disrupting events, intimidating lawmakers, and shouting down reform are not just expressing their views, they are doing the dirty work for corporate interests that want to cut the heart out of the Obama health plan."As Joshua Holland explained in a recent article, this fight is about making your health care more affordable, giving you better coverage and helping people who have no coverage under the current system.

Now or never -- Push for the public option:

1. Call your representative and senators to find out when and where August town halls will be in your area, using the main congressional switchboard number: (202) 224-3121. You can also check this calendar.

2. Go to the congressional directory to get the direct phone lines of your representatives' offices.

3. Find out when and where citizen groups will be meeting and organizing throughout August, and find out what's happening in your area at Health Care for America Now.

4. When you're at a town hall, communicate a simple message for your representatives to understand what their constituents want:

  • I support health care reform with a strong public plan option—and most people I know do, too.

  • We sent you to Washington to get health care for all—and we will support you if you work to get that done.

  • Please ignore the right-wing extremists who are attacking health reform—and do what a majority of your constituents want: Vote for health care for all.


It's Now or Never for a Public Option: Why We Need to Take a Stand Against to the Insurance Industry's Greed

by Joshua Holland

The Obama administration took a single-payer solution to America's health care crisis "off the table" at the outset of the debate. Since then it has cut dubious "deals" with Big Pharma and the private hospital industry. And finally, this weekend, officials signaled that the Obama team might be willing to jettison the central progressive plank of reform: the creation of a publicly run insurance program that could compete with private insurers.

On CNN, Health and Human Services Secretary Kathleen Sebelius said the public option wasn't "the essential element" of reform, and at a town hall in Colorado on Saturday, President Barack Obama himself said of the public option: "whether we have it or we don't have it, [it] is not the entirety of health care reform. This is just one sliver of it, one aspect of it."

It may be just one "aspect" of health reform, but without it, the legislation promises to be a massive rip-off; a taxpayer give-away of hundreds of billions of dollars to an unreformed 'disease care' industry.

The industry would get millions of new customers thanks to generous government subsidies and a law requiring that (almost) everyone carry insurance. And that windfall would come without the structural changes needed to bend the medical "cost curve" in years to come -- without any provisions that might endanger the industry's bottom line.

The number of uninsured would plummet -- obviously a good thing -- but with little potential to control costs or come up with innovations in terms of delivering care or controlling overhead, it would achieve only incremental improvements in Americans' health -- and economic -- security overall.

As such, it's a small improvement with a huge price tag. And the drop in the number of uninsured Americans would make more substantial reforms much tougher to bring about down the road.

While some argue that even without a public option, the rest of the reform package is good enough -- with subsidies to help workers buy coverage and new insurance regulations -- the reality is that while it might be an incremental improvement over the current system, it wouldn't be worthy of any significant investment of public money.

So the public-insurance option must be a gleaming red line across which those seeking real reform to the health care system shouldn't be willing to tread.

Late on Sunday, the administration partially walked back the remarks in the face of anger from progressive reformers, saying that "nothing has changed" and reiterating the president's belief that the public option is "the best way" to control costs and expand coverage.

Yet the debate has reached a crucial juncture. According to the Associated Press, White House officials are signaling at least some openness to the idea of replacing a public-insurance option with regional nonprofit insurance "cooperatives" -- organizations that would allow small businesses and individuals to pool their insurance dollars and, in theory, get more bang for the buck. 

The problem with the scheme is that, unlike the public exchanges being debated in Congress, they wouldn't come with an option to purchase a government-administered insurance plan. They would be smaller, regional entities that functioned independently of one another. As such, they would have limited market share and lack the potential to cut costs that comes with a large insurance pool (like Medicare's, for example). Analyst Igor Volsky noted:

A single health insurance plan has limited scope to influence the practices of providers and other insurers. In other words, it lacks the clout of Medicare — which can drive system innovations and payment reforms — Medicare-like administrative efficiencies, or the ability to use Medicare leverage to ensure a large provider network that accepts Medicare prices.

A new cooperative health care plan won't be able to lower costs and drive private insurers to aggressively bargain with providers (and pass the saving on to its beneficiaries in the form of lower premiums).

In 2000, the Government Accountability Office conducted a study of the impact similar purchasing schemes had had to date. "Despite efforts to negotiate lower premiums," the GAO concluded, "cooperatives have only been able to offer premiums that are comparable to those in the general small-group market. The cooperatives we reviewed typically did not obtain overall premium reductions because: 1) their market share provided insufficient leverage; 2) they could not produce administrative savings for insurers."

The Commonwealth Fund did an analysis of the impacts nonprofit co-ops would have as well (PDF), and its findings were similar. Researchers found that, "with very few exceptions," premiums offered through co-ops "have not been lower than those available to small employers elsewhere" because they "have not been able to reduce administrative costs … they have not had enough market share to bargain for discounts."

Because of their inherent limitations, former Vermont Gov. Howard Dean told me in an interview last month that the co-op scheme is a "fake public option," and "really not [a] serious health reform." He predicted that if they were created, they would "be crushed just like Blue Cross was crushed. Most Blue Cross chapters are now for-profit. They've been taken over by the insurance industry. Any reasonable-sized insurance company can crush a not-for-profit co-op."

A Red Line

Although the proposals put forth during the primaries by presidential candidates Obama and Hillary Rodham Clinton differed in the specifics, both had a public-insurance option at their hearts; it was one of the promises that helped get Democrats elected.

But big insurance has flexed its muscles, and they are some impressive guns. Over the past 10 years, the insurance industry has ranked second in dollars spent lobbying Congress and the White House. The top spot is held by the pharmaceutical-and-health-products industry. Big insurance is one of the most influential lobbies in Washington, and it has trillions of dollars at stake in the health care battle.

As a consequence of the industry's influence, the health care debate began in the center, and now, with the power of the corporate right coming to bear, it's moving toward the industry's preferred policies.

The discussion about health care in America was narrow when it began. Truly socialized medicine -- with a U.K.-like system of state-run clinics and hospitals that provide care directly to everyone who needs it -- has never seriously been "on the table."

Although right-wing commenters love to invoke the specter of "government-run health care," virtually all of the progressive voices in the debate believe that truly socialized medicine is a political non-starter in the U.S.

That's a sad irony: A 2004 Rand Corp. study (PDF) published in the Annals of Internal Medicine found that the relatively small group of Americans who do have socialized health care -- military veterans -- receive significantly better care than the rest of us in terms of overall quality, treatment of chronic diseases and preventive care.

In fact, it scored better than the rest of the system on every measure but emergency care (which is a like a single-payer system in that it's available to everyone whether or not they have coverage or the means to pay).

A 2007 study found that 6 in 10 American physicians favored the establishment of a single-payer system. Also spun -- dishonestly -- as "socialized medicine," a single-payer system just means that the government would pay the bills, not provide the treatment.

A study (PDF) by researchers at Harvard and the Canadian Institute for Health Information concluded that 30 percent of our health dollars go toward administrative overhead rather than actual care, and a good chunk of that is insurance companies fighting over who will pay various bills.

Yet early on in the process, single-payer advocates were removed from a Senate hearing and arrested for disrupting the proceedings. Montana Democrat Max Baucus, chairing the hearing that was supposed to "kick off" the health care debate, set the tone when he invited 15 witnesses to share their views. Ralph Nader noted at the time:

The insurance industry was at the table. The Business Roundtable was at the table. The U.S. Chamber of Commerce was at the table. Blue Cross Blue Shield was at the table. The [corporate-funded] Heritage Foundation was at the table. … But not one person who stood for what the majority of Americans, doctors, nurses and health economists want -- single-payer -- was at the table.

What remains "on the table" today is the public exchange approach. While flawed -- and far from the "robust public option" promised during the 2008 presidential campaign -- legislation working its way through the more progressive congressional committees would go a long way toward fixing some very severe problems in American health care -- it's imperfect but would still serve the greater good.

As such, many progressives, including a good number who had long advocated a single-payer system, have supported it. But while pragmatism has merit in this fight, there must be a line advocates of progressive reform aren't prepared to cross. An expensive boondoggle that would shower billions of tax dollars on the disease-care industry while doing next to nothing to control its long out-of-control cost increases should be where that line lies.

And so we find ourselves at a crucial moment in the health care debate. The Obama administration's conflicting signals this weekend constituted another trial balloon the administration has floated to gauge public reaction to the rightward shift.

That reaction must be swift and decisive -- anyone concerned about the American health care system should strongly oppose this watered-down pabulum posing as reform. Members of the House Progressive Caucus have signaled their intent to kill off any legislation that doesn't have a public-insurance option, and lawmakers need the support of their constituents to take that stand.

Take action: Do your part to fight for better health care and push the Dems and Obama to pass a public option.


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