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Obama Defends the Public Plan

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At the press conference that finished up a few minutes ago, President Obama fielded a slew of questions on health care in general and the public plan in particular. For supporters of the initiative, his answers were encouraging.

There were two ways he could have responded to the press corps' queries. The first would be a procedural reply: "All ideas are on the table," or something of that nature. But that wasn't his approach. Instead, he defended the plan's substantive merits. His answer was, in other words, an effort at persuasion rather than diversion. The implication was that he, at the least, is genuinely convinced by the case for a public insurer. Check it out:

OBAMA: Now, the public plan, I think, is an important tool to discipline insurance companies. What we've said is, under our proposal, let's have a system, the same way that federal employees do, same way that members of Congress do, where we call it an exchange, but you can call it a marketplace, where, essentially, you've got a whole bunch of different plans....As one of those options, for us to be able to say, here's a public option that's not profit-driven, that can keep down administrative costs, and that provides you good, quality care for a reasonable price as one of the options for you to choose, I think that makes sense.

QUESTION: Wouldn't that drive private insurance out of business?

OBAMA: Why would it drive private insurance out of business? If private insurers say that the marketplace provides the best quality health care; if they tell us that they're offering a good deal, then why is it that the government, which they say can't run anything, suddenly is going to drive them out of business? That's not logical.

Now, the -- I think that there's going to be some healthy debates in Congress about the shape that this takes. I think there can be some legitimate concerns on the part of private insurers that if any public plan is simply being subsidized by taxpayers endlessly that over time they can't compete with the government just printing money, so there are going to be some I think legitimate debates to be had about how this private plan takes shape.

But just conceptually, the notion that all these insurance companies who say they're giving consumers the best possible deal, if they can't compete against a public plan as one option, with consumers making the decision what's the best deal, that defies logic, which is why I think you've seen in the polling data overwhelming support for a public plan.

Photo credit: Evan Vucci -- Associated Press Photo.

By Ezra Klein  |  June 23, 2009; 2:10 PM ET
Categories:  Health Reform  
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Comments

What's all this bellyaching for private insurers? So what if they go out of business? They gouge us in the form of excessive premiums, they include unreasonable loopholes to their benefit in the policies, they routinely rescind coverage after collecting premiums but before paying claims, they routinely deny covered claims, and their calculations for "reasonable and customary" charges are a joke. If they can’t compete, then I say good riddance.

Posted by: cjo30080 | June 23, 2009 2:21 PM | Report abuse

Personally I just don't see any way for the government to run a self sustaining public plan that doesn't get ongoing subsidies. There is going to be all sorts of pressure to make sure what is offered is fair regardless of what is economical. I don't see how the public plan can ever hold the line on spending. But if we can do a 1 time cost of even 10 billion dollars and have it be self sustaining then I'm all for seeing people try.

Posted by: spotatl | June 23, 2009 2:36 PM | Report abuse

"if they tell us that they're offering a good deal, then why is it that the government, which they say can't run anything, suddenly is going to drive them out of business? That's not logical."

Nicely put.

Posted by: jeirvine | June 23, 2009 2:38 PM | Report abuse

Of course the insurance industry is anti-free market. In a true free market they would have to play fair.

Posted by: fishermansblues | June 23, 2009 2:52 PM | Report abuse

"So what if they go out of business? "

Someone elseblog described it as a 'f*** it' moment in terms of the public's contempt for private insurers. You might not have had a run-in with your insurer over coverage, but you know other people who have, and it's there but for the grace of God go I. People are at a point where they're thinking 'f*** it, let's try something else, it can't be any worse than how things are'.

I do think that private insurers are looking at their statewide hegemonies, which often extends to management of the state employees' plans. If there's no reason for the state government to go through BCBS, that cuts a big chunk out of their business.

Posted by: pseudonymousinnc | June 23, 2009 3:22 PM | Report abuse

I still don't understand how President Obama and Mr. Klein can be arguing this point when the public plan has huge advantages that private competitors cannot legally take advantage of. First, under Kennedy-Dodd small employers are required to pay into the public plan. Second, under Kennedy-Dodd the federal government funds the public plan and the payback structure is never defined. Third, the public plan does not have to comply with burdensome and costly state by state mandates.

Posted by: Dellis2 | June 23, 2009 3:25 PM | Report abuse

I have a question about that. If private insurers would wilt in the face of a public option, then isn't there a very real sense in which the private insurers are receiving a de facto subsidy from the government when the government chooses to stay out of the industry? If you think about it, I think it makes sense. The private insurers lobby against the existence of an additional option that would benefit the insured, which would also render their offerings uncompetitive.... the choice not to have the government have an option is an admission that private insurance would not win in the marketplace and is not really an option tested by the market.

Posted by: wovenstrap | June 23, 2009 3:28 PM | Report abuse

Who cares if the greedy private insurers go out of business? Good riddance to them. The President was not forceful enough on the public insurance option. Where was the veto threat if legislation reaches his desk without a public plan included? Most of us would prefer a single payer system. But as a compromise, we're willing to accept a strong government-run public insurance option. Unfortunately, the President doesn't seem willing to draw a line in the sand over this. And that is disappointing. This is a golden opportunity for real, substantive (if not radical) healthcare reform. I fear we may get a wet oatmeal version instead.

Posted by: ram1161 | June 23, 2009 3:46 PM | Report abuse

I can't think of any public figure in the 20/21 century, including the POTUSes, that can stand on his feet and speak with more clarity and reason than Obama. It is almost magical - and without any teleprompters that the wingnuts seem to think is his oratical prop holding up an empty vessel.

The only part of his presentation that I don't quite get is how funding for the low/no wage part of the citizenshipry is paid for. Are the premiums of others set to pay these costs, or is/should be this be budgeted for and paid as part of the overall social safety net?

As to the insurance companies: Obama mentioned (but I don't think the public still understands) that the private insurance for seniors available under the name "Medicare Advantage" is subsidized by a public taxpayer percentage increase over the cost of basic Medicare Part A/B. I think the percentage of subsididy is 25% above. This was added under GW Bush at the insistence of the insurers. It is an outrage. They have admitted they can't perform in competition with Medicare on a cost basis. Obama says he will eliminate this subsidy in order to pay part of the cost of his plan (I think he said it costs 187 billion currently). So, no wonder the insurers don't want a public plan. Their high admin costs (cherry picking isn't cheap, and fighting to not pay the insurered costs money too), profits (well above 10% net), executive salaries that might best be compared to Goldman Sachs executives, and other non-productive costs (advertising, congressional payoffs -called campaign donations, etc_.

Posted by: JimPortlandOR | June 23, 2009 5:17 PM | Report abuse

"What we've said is, under our proposal, let's have a system, the same way that federal employees do, same way that members of Congress do, where we call it an exchange, but you can call it a marketplace, where, essentially, you've got a whole bunch of different plans...."

Oh fer God's sake, don't any of you realize (including Mr. Klein?) that federal employees and members of Congress get HEALTH INSURANCE COVERAGE through the Federal Employees Health Benefit Program? FEHBP is NOT, I repeat, NOT a public plan. It's employer-sponsored health insurance just like employer-sponsored health insurance in the private sector. The only difference may be is that the federal government, in its great largesse, probably provides more of a contribution to premiums than do private employers.

Under FEHBP, federal employees can choose from a number of different health insurance plans, including those offered by Blue Cross Blue Shield plans. If you don't believe me, take a gander at this website, folks: http://www.opm.gov/INSURE/HEALTH/

If the President really intends to extend FEHBP for all -- well, he's sadly misinformed that that is establishment of a "public plan."

It would be nice if commenters here were at least somewhat informed on the issue. It would be even better if the President were.

Posted by: Policywonk14 | June 23, 2009 5:20 PM | Report abuse

@Policywonk14: if you read President Obama's statement again with a bit more care, you will see that he is referring to FEHBP as a model not for the public plan itself but rather for a health insurance exchange on which the public plan would be one option. Hence he says, "As one of those options, let's be able to say, here's a public option."

Posted by: khasle | June 23, 2009 5:27 PM | Report abuse

someone in washington is coming to their senses...finally. thanks prez...keep on believin cause we do believe in you....change we can believe in just started in earnest today. public option or bust. we in montana support you. now, please give our senator max baucus the word...

Posted by: problembear | June 23, 2009 11:36 PM | Report abuse

"Why would it drive private insurance out of business? If private insurers say that the marketplace provides the best quality health care..."

The health care provided is the same in either case. The difference is in how much it costs.

Posted by: debb1 | June 24, 2009 3:47 AM | Report abuse

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