Senators Put New Twists on Public Plan Option

Several Senators have been working on new iterations on a government-run public plan, hoping to generate a bipartisan compromise. Senator Kent Conrad, the Democrat who chairs the Budget Committee and also serves on the Finance Committee, has proposed a cooperative plan.

The plan would provide government funding to create either state-, regional- or national-based non-profit health plans to be operated by independent boards that would negotiate directly with health care providers for low-cost rates. The plans they offer would be sold, like private plans, through a new web-based exchange. Many questions remain unanswered about how a cooperative plan would work, such as how long government funding would persist and how long a temporary government board would function.

Senator Max Baucus has expressed interest in this idea and stated that President Obama has as well. But after reviewing the summary, Senator Orrin Hatch, ranking health subcommittee member on the Finance Committee and member of the HELP Committee, stated that Democrats may attempt to create a public plan without actually calling it a public plan, but he doesn't see it working.

Senator Olympia Snowe, a centrist who also serves on the Finance Committee, has been working on a compromise as well. She would like to see health care reform legislation include a "fallback public plan" implemented in several years if private insurers do not take steps to make coverage more affordable and accessible. The plan would be modeled on the Medicare prescription drug benefit, under which the government could offer Part D plans if there was not enough private-market competition. Snowe’s plan would include a more aggressive public plan trigger than what was included in the Medicare Modernization Act for Part D. Her trigger would be based on the affordability and accessibility of private plans operating in the exchange.

Furthermore, Senator Chuck Schumer, another Finance Committee member, has been promoting level playing field principles for a government-run public plan for several weeks. These include:

1) The public plan must be self-sustaining. It should pay claims with money raised from premiums and co-payments. It should not receive tax revenue or appropriations from the government.

2) The public plan should pay doctors and hospitals more than what Medicare pays. Medicare rates, set by law and regulation, are often lower than what private insurers pay.

3) The government should not compel doctors and hospitals to participate in a public plan just because they participate in Medicare.

4) To prevent the government from serving as both “player and umpire,” the officials who manage a public plan should be different from those who regulate the insurance market.

5) The public plan should be required to establish a reserve fund, just as private insurers must maintain reserves for the payment of anticipated claims.

6) The public plan should be required to provide the same minimum benefits as private insurers.