Will the Public Plan Make or Break Health Reform?

Will the Public Plan Make or Break Health Reform?

To the leaders of the Republican Party, a public health-care insurance option is a “non-starter,” the first step on a slippery slope to socialized medicine; in the eyes of the American Medical Association , it could “restrict patient choice”; and for President Barack Obama, as he put it Monday during his speech to the AMA in Chicago, it’s an essential part of any health care reform package that will “put affordable health care within reach for millions of Americans.”

With all the hand wringing over a public plan, you could be excused for thinking there is already a specific plan on the table. There is not. But that hasn’t stopped House and Senate leaders on both sides of the aisle from turning a public plan into one of the most contentious issues being debated inside the Beltway, one that could potentially make or break the passage of landmark health care reform this year.

The central idea behind a public plan is that it would provide health insurance for many of the nearly 50 million Americans who are currently uninsured, or those unhappy with their private insurance options. In his much anticipated address to the AMA on Monday, Obama stressed that he does not view a public insurance option as a pathway to dismantling the private insurance industry or creating a single-payer government system like the one that exists in Canada.

“There are countries where a single-payer system may be working,” admitted Obama, “But I believe — and I’ve even taken some flak from members of my own party for this belief — that it is important for us to build on our traditions here in the United States. So, when you hear the naysayers claim that I’m trying to bring about government-run health care, know this — they are not telling the truth.”

Contrary to those who say a public plan is a prelude to a single-payer system, Obama insists it will actually make sure the competitive free market thrives by “keep[ing] the insurance companies honest.” This would be most apparent in parts of the country where some private insurers have virtual monopolies in the individual and small group market.

“Insurers have consolidated,” says Linda Blumberg, an economist and health care expert at the Urban Institute.

“Similar things have happened in the provider community. In a lot of areas, insurers will tell you they have no negotiating power with providers and they’re held over a barrel. [A public plan] would force insurers and providers to negotiate with each other, which they aren’t doing today.”

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