Hi. This is encyclopedic in length, but also in substance and importance.
Watching President Obama's discourse on health care, I was struck by
the absence (or near absence), of mention of the public health option.
More directly, when describing his own plan and that of our congress,
he spoke of having INSURANCE, rather than their totally free health care
directly provided by the public, then repeatedly using "health insurance"
throughout the hour in describing what's at stake for the rest of us. Bait
and switch, indeed. And no mention that a fraction of the ever-rising,
never-ending, purposeless war budget would dwarf the cost of totally
free health care for all. This should be put on your electronic shelf and
consulted as the critical struggle for American health continues.
Sadly apropos, Irene Wolt had died of cancer at age 63. She was a good
friend, an Ash Grove board member and keeper of its website. Also the
co-author with Robert Gotlieb of the seminal book on the LA. Times,
"Inventing Los Angeles."
Here is the announcement of today's funeral, which I just received. -Ed
Dear Friends of Irene Wolt
I am sad to inform you that Irene - a passionate advocate for peace and
social justice - died Tuesday at the age of 63.
Born and raised in the New York area, she received her B.A. degree in
psychology and liberal arts from Antioch University in Ohio. Irene spent her
entire adult life as an activist and chronicler of civil rights movements
that flourished in the 1960s and beyond, first in New York and later in
Santa Monica and Los Angeles. She worked with several printing collectives,
including Peace Press, and was an activist in the anti-war movement, the
feminist movement, and the gay and lesbian rights movement. She was also a
writer, teacher, and media specialist. Her personal collection of posters
(itself a gold mine of activist history) will reside in the Center for the
Study of Political Graphics in Los Angeles.
She is survived by her 95-year old father and many friends.
A funeral ceremony will be held at 3 p.m. Friday, July 24 at Hillside
Memorial Park, 6001 Centinela Ave., Los Angeles.
***
From: http://www.truthout.org/072309E
http://www.pnhp.org/blog/2009/07/20/bait-and-switch-how-the-"public-option"-was-sold/
Bait and switch: How the "public option" was sold
Posted by Andrew Coates, MD on Monday, Jul 20, 2009
by Kip Sullivan
Kip Sullivan belongs to the steering committee of the Minnesota chapter of
Physicians for a National Health Program.
The people who brought us the "public option" began their campaign promising
one thing but now promote something entirely different. To make matters
worse, they have not told the public they have backpedalled. The campaign
for the "public option" resembles the classic bait-and-switch scam: tell
your customers you've got one thing for sale when in fact you're selling
something very different.
When the "public option" campaign began, its leaders promoted a huge
"Medicare-like" program that would enroll about 130 million people. Such a
program would dwarf even Medicare, which, with its 45 million enrollees, is
the nation's largest health insurer, public or private. But today "public
option" advocates sing the praises of tiny "public options" contained in
congressional legislation sponsored by leading Democrats that bear no
resemblance to the original model.
According to the Congressional Budget Office, the "public options" described
in the Democrats' legislation might enroll 10 million people and will have
virtually no effect on health care costs, which means the "public options"
cannot, by themselves, have any effect on the number of uninsured. But the
leaders of the "public option" movement haven't told the public they have
abandoned their original vision. It's high time they did.
The bait
"Public option" refers to a proposal, as Timothy Noah put it, "dreamed up"
by Jacob Hacker when Hacker was still a graduate student working on a degree
in political science. In two papers, one published in 2001 and the second in
2007, Hacker, now a professor of political science at Berkeley, proposed
that Congress create an enormous "Medicare-like" program that would sell
health insurance to the non-elderly in competition with the 1,000 to 1,500
health insurance companies that sell insurance today.
Hacker claimed the program, which he called "Medicare Plus" in 2001 and
"Health Care for America Plan" in 2007, would enjoy the advantages that make
Medicare so efficient - large size, low provider payment rates and low
overhead. (Medicare is the nation's largest health insurance program, public
or private. It pays doctors and hospitals about 20 percent less than the
insurance industry does, and its administrative costs account for only 2
percent of its expenditures compared with 20 percent for the insurance
industry.)
Hacker predicted that his proposed public program would so closely resemble
Medicare that it would be able to set its premiums far below those of other
insurance companies and enroll at least half the non-elderly population.
These predictions were confirmed by the Lewin Group, a very mainstream
consulting firm. In its report on Hacker's 2001 paper, Lewin concluded
Hacker's "Medicare Plus" program would enroll 113 million people (46 percent
of the non-elderly) and cut the number of uninsured to 5 million. In its
report on Hacker's 2007 paper, Lewin concluded Hacker's "Health Care for
America Plan" would enroll 129 million people (50 percent of the nonelderly
population) and cut the uninsured to 2 million.
Until last year, Hacker and his allies were not the least bit shy about
highlighting the enormous size of Hacker's proposed public program. For
example, in his 2001 paper Hacker stated:
[A]pproximately 50 to 70 percent of the non-elderly population would be
enrolled in Medicare Plus.. Put more simply, the plan would be very large..
[C]ritics will resurface whatever the size of the public plan. But this is
an area where an intuitive and widely held notion - that displacement of
employment-based coverage should be avoided at all costs - is fundamentally
at odds with good public policy. A large public plan should be embraced, not
avoided. It is, in fact, key to fulfilling the goals of this proposal. (page
17)
In his 2007 paper, Hacker stated:
For millions of Americans who are now uninsured or lack . affordable work
place coverage, the Health Care for America Plan would be an extremely
attractive option. Through it, roughly half of non-elderly Americans would
have access to a good public insurance plan.. A single national insurance
pool covering nearly half the population would create huge administrative
efficiencies. (page 5)
Hacker's papers and the Lewin Group's analyses of them have been cited by
numerous "public option" advocates. For example, when Hacker released his
2007 paper, Campaign for America's Future (CAF) published a press release
praising it and drawing attention to the large size of Hacker's proposed
public program. The release, entitled "Activists and experts hail Health
Care for America plan," stated:
Detailed micro-simulation estimates suggest that roughly half of
non-elderly Americans would remain in workplace health insurance, with the
other half enrolled in Health Care for America.. A single national insurance
pool covering nearly half the population would create huge administrative
efficiencies.. Because Medicare and Health Care for America would bargain
jointly for lower prices ., they would have enormous combined leverage to
hold down costs.
When the Lewin Group released its 2008 analysis of Hacker's 2007 paper,
CAF's
Roger Hickey wrote in the Huffington Post, "efficiencies achievable .
through Hacker's public health insurance program" would save so much money
that the US could "cover everyone" for no more than we spend now.
The switch
Now let's compare the "single national health insurance pool covering nearly
half the population" that Hacker and other "public option" advocates
enthusiastically championed with the "public option" proposed by Democrats
in Congress, and then let's inquire what Hacker and company said about it.
As readers of this blog no doubt know, the Senate Health, Education, Labor,
and Pensions (HELP) Committee, and three House committee chairman working
jointly, published draft health care "reform" bills in June. (The third
committee with bill-writing authority, the Senate Finance Committee, has yet
to produce a bill.) According to the Congressional Budget Office, the
"public option" proposed in the House "tri-committee" bill might insure 10
million people and would leave 16 to 17 million people uninsured. The
"public option" proposed by the Senate HELP committee, again according to
the Congressional Budget Office, is unlikely to insure anyone and would
hence leave 33 to 34 million uninsured. The CBO said its estimate of 10
million for the House bill was highly uncertain, which is not surprising
given how vaguely the House legislation describes the "public option."
Here is what the CBO had to say about the HELP committee bill:
The new draft also includes provisions regarding a "public plan," but
those provisions did not have a substantial effect on the cost or enrollment
projections, largely because the public plan would pay providers of health
care at rates comparable to privately negotiated rates - and thus was not
projected to have premiums lower than those charged by private insurance
plans. (page 3)
Obviously the "public option" in the Senate HELP committee bill (zero
enrollees; 17 million people left uninsured) and the "public option" in the
House bill (10 million enrollees (maybe!); 34 million people left uninsured)
are a far cry from the "public option" originally proposed by Professor
Hacker (129 million enrollees; 2 million people left uninsured). Have we
heard the Democrats in Congress who drafted these provisions utter a word
about how different their "public options" are from the large Medicare-like
program that Hacker proposed and his allies publicized? What have Professor
Hacker and his allies had to say?
In public comments about the Democrats' "public option" provisions, the
leading lights of the "public option" movement imply that Hacker's model is
what Congress is debating. Sometimes they come right out and praise the
Democrats' version as "robust" and "strong." But I cannot find a single
example of a a statement by a "public option" advocate warning the public of
the vast difference between Hacker's original elephantine, "Medicare-like"
program and the Democrats' mouse version.
For example, on June 23, Hacker testified before the House Education and
Labor Committee that "the draft legislation prepared by [the] special
tri-committee promises enormous progress." He went on to enumerate all the
benefits of a "public option." Yet the House tri-committee proposal bore no
resemblance to the public plan he described in his papers and that the Lewin
Group analyzed. Later, when Kaiser Health News asked Hacker in a July 6
interview why "your signature idea - a public plan - has become central to
the health care reform debate," Hacker again praised his "public plan"
proposal and offered no hint that the "public option" so "central to the
debate" was very different from the one he originally proposed.
Ditto for Hacker's allies. Representatives of Health Care for America Now
(HCAN), the organization most responsible for popularizing the "public
option," repeatedly describe the House and Senate HELP committee bills as
"strong" or "robust," always without any justification for this claim, and
have repeatedly failed to warn the public that the "public options" they
promote today are mere shadows of the "public options" they endorsed in the
past. On July 15, the day the HELP committee passed its bill, Jason
Rosenbaum blogged for HCAN:
The Senate HELP Committee has just referred a bill to the floor of the
Senate with a strong public option.
Searching the websites of the organizations that serve on HCAN's steering
committee - AFSCME, Democracy for America, Moveon.org and SEIU, for
example - one will find not a shred of information that would help the
reader comprehend how small and ineffective the "public options" proposed in
the Democrats' bills are, nor how different these are from the one Hacker
originally proposed. Yet these groups continue to urge their members and the
public to "tell Congress to support a public option."
Hacker's original model compared with the Democrats' mouse model
It has become fashionable among advocates of a "public option" to trash the
expertise and the motives of the Congressional Budget Office. But the CBO's
characterization of the "public option" proposed in the Democrats'
legislation is entirely reasonable. This becomes apparent the moment we
compare Hacker's blueprint for his original "Medicare Plus" and "Health Care
for America" programs with the "blueprints" (if tabula rasas can be called
"blueprints") contained in the Senate HELP Committee and House bills.
Hacker's papers laid out these five criteria that he and the Lewin Group
said were critical to the success of the "public option":
. The PO had to be pre-populated with tens of millions of people, that is,
it had to begin like Medicare did representing a large pool of people the
day it commenced operations (Hacker proposed shifting all or most uninsured
people as well as Medicaid and SCHIP enrollees into his public program);
. Subsidies to individuals to buy insurance would be substantial, and only
PO enrollees could get subsidies (people who chose to buy insurance from
insurance companies could not get subsidies);
. The PO and its subsidies had to be available to all nonelderly Americans
(not just the uninsured and employees of small employers);
. The PO had to be given authority to use Medicare's provider reimbursement
rates; and
. The insurance industry had to be required to offer the same minimum level
of benefits the PO had to offer.
Hacker predicted, and both of the Lewin Group reports concluded, that if
these specifications were met Hacker's plan would enjoy all three of
Medicare's advantages - it would be huge, it would have low overhead costs,
and it would pay providers less than the insurance industry did. As a
result, the "public option" would be able to set its premiums below those of
the insurance industry and seize nearly half the non-elderly market from the
insurance industry. According to the Lewin Group's 2008 report, Hacker's
version of the "public option" would, as of 2007:
. Enroll 129 million enrollees (or 50 percent of the non-elderly);
. Have overhead costs equal to 3 percent of expenditures;
. Pay hospitals 26 percent less and doctors 17 percent less than the
insurance industry (but these discounts would be offset to some degree by
increases in payments to providers treating former Medicaid enrollees); and,
. Set its premiums 23 below those of the average insurance company.
I question some of Hacker's and the Lewin Group's assumptions, including
their assumption that any public program that has to sell health insurance
in competition with insurance companies could keep its overhead costs
anywhere near those of Medicare (Medicare is a single-payer program that has
no competition), especially during the early years when the public program
will be scrambling to sign up enrollees. A public program will have to hire
a sales force and advertise. It will have to open offices. It will have to
negotiate rates, and perhaps contracts, with thousands of hospitals and
hundreds of thousands of clinics, chemical treatment facilities, rehab
units, home health agencies, etc. Or it will have to contract with someone
to do all that. But I have little doubt that if a public program were to
open with a large enough customer base, and it had the advantage of a law
requiring that only its customers receive substantial subsidies, it could do
what the Lewin Group said it could do.
Now let us compare Hacker's original model with the mousey "public options"
proposed by the Senate HELP Committee and the House. Of Hacker's five
criteria, only one is met by these bills! Both proposals require the
insurance industry to cover the same benefits the "public option" must
cover. None of the other four criteria are met. The "public option" is not
pre-populated, the subsidies to employers and to individuals go to the
"public option" and the insurance industry, employees of large employers
cannot buy insurance from the "public option" in the first few years after
the plan opens for business and maybe never (that decision will be made by
whoever is President around 2015), and the "public option" is not authorized
to use Medicare's provider payment rates. (The House bill comes the closest
to authorizing use of Medicare's rates; it authorizes Medicare's rates plus
5 percent).
Is it any wonder the CBO concluded the Democrats' "public option" will be a
tiny little creature incapable of doing much of anything? More curious is
that CBO gave the House "public option" any credit at all (you will recall
CBO said it would enroll maybe 10 million people). The CBO should have
asked, Can the "public option" - as presented in either bill - survive?
Put yourself in the "public option" director's shoes
To see why the "public option" proposed by congressional Democrats remains
at great risk of stillbirth, let's engage in a frustrating thought
experiment. Let's imagine Congress has enacted the House version (it is not
quite as weak as the HELP Committee model and thus gives us the greatest
opportunity in our thought experiment to imagine a scenario in which the
"public option" actually survives its start-up phase). Let us imagine
furthermore that you have been foolish enough to apply for the job of
executive director of the new "public option," and the Secretary of the
Department of Health and Human Services (the federal agency within which the
program will be housed) decided to hire you. It's your first day on the job.
You know the House bill did not create a ready-made pool of enrollees for
you to work with the way the 1965 Medicare law created a ready-made pool of
seniors prior to the day Medicare commenced operations. You realize, in
other words, that you represent not a single soul, much less tens of
millions of enrollees. You will have to build a pool of enrollees from
scratch. You also know the House bill authorized some start-up money for
you, so you'll be able to hire some staff, including sales people if you
choose. You can also open offices around the country, and advertise if you
think it necessary. But you know you can't pay out too much money getting
the "public option" started because the House bill requires that you pay
back whatever start-up costs you incur within ten years. In other words, you
may hire enough people and open enough offices and buy enough advertising to
create a critical mass of enrollees nationwide, but you must do it quickly
so that your start-up costs don't sink the "public option" during its first
decade.
The only other feature in the House bill that appears to give you any
advantage over the insurance industry is the provision requiring you to use
Medicare's rates plus 5 percent, which essentially means you are authorized
to pay providers 15 percent less than the insurance industry pays on
average. But the House bill also says providers are free to refuse to
participate in the plan you run.
So what do you do? Let's say you open offices in dozens or hundreds of
cities, you hire a sales force to fan out across the country to sign up
customers, you advertise on radio and TV to get potential customers
(employers and individuals) to call your new sales force to inquire about
the new "public option" insurance policy. What happens when potential
customers ask your salespeople two obvious questions: what will the premium
be and which doctors they can see? What do your employees say? They can't
say anything. They haven't talked to any clinics or hospitals about
participating at the 15-percent-below-industry-average payment rate, so they
have no idea which providers if any will agree to participate. They also
have no idea what the "public option" premium will be because they don't
know whether providers will accept the low rates the plan is authorized to
pay. And they have no idea about several other factors that will affect the
premiums, including how much overhead the "public option" will rack up
before it reaches a state of viability, or who the "public option" will be
insuring - healthy people, sick people, or people of average health status.
So, let's say you redeploy your sales force. Now instead of talking to
potential customers, you direct them to focus on providers first. But when
your salespeople call on doctors and hospital administrators and ask them if
they'll agree to take enrollees at below-average payment rates, providers
ask how many people the "public option" will enroll in their area. Providers
explain to your salespeople that they are already giving huge discounts,
some as high as 30 to 40 percent off their customary charge, to the largest
insurers in their area and they are not eager to do that for the "public
option" unless the plan will have such a large share of the market in their
area that it will deliver many patients to them. If the "public option"
cannot do that, providers tell your salespeople, they will not agree to
accept below-average payment rates.
In other words, you find that the "public option" is at the mercy of the
private insurance market, not the other way around.
This thought experiment illustrates for you the mind-numbing chicken-and-egg
problem created by any "public option" project that does not meet Hacker's
criteria, most notably, the criterion requiring pre-population of the
"public option." If the pre-population criterion isn't met, the poor chump
who has to create the "public option" is essentially being asked to solve a
problem that is as difficult as describing the sound of one hand clapping.
You need both hands to clap.
How did the mouse replace the elephant?
How did the "Medicare Plus" proposal of 2001 (when Hacker first proposed it)
get transformed into the tiny "public options" contained in the Democrats'
2009 legislation? The answer is that somewhere along the line it became
obvious that the Hacker model was too difficult to enact and had to be
stripped down to something more mouse-like in order to pass. Did the leading
"public option" advocates realize this early in the campaign? Or midway
through the campaign when the insurance industry began to attack the "public
option"? Or late in the campaign when they found it difficult to persuade
members of Congress to support Hacker's original model? Whatever the answer,
will they find it in their hearts to tell their followers their original
strategy was wrong?
I suspect the answer is different for different actors within the "public
option" movement. Hacker surely knew what was in his original proposal and
surely knows now that the Democrats' bills don't reflect his original
proposal. Hacker and others familiar with his original proposal were
probably betrayed by the process. As the "public option" concept became
famous and edged its way toward the centers of power, they couldn't find the
courage to resist the transformation of the original proposal into the mouse
model.
For other actors within the "public option" movement, ignorance of Hacker's
original proposal and of health policy in general may have led them to rely
on more knowledgeable leaders in the movement. Their error, in other words,
was to trust the wrong people and, as the "public option" came under attack,
to cave in to group think. This error was facilitated by the "public option"
movement's decision to avoid mentioning any details of the "public option"
whenever possible.
What next?
Those of us in the American single-payer movement must continue to educate
Congress and the public on the need for a single-payer system. We must also
convince advocates of the "public option" that they have made two serious
mistakes and, if they learn quickly from these mistakes, that real reform is
still possible.
The first mistake was to think that a "public option" that merely took over
a large chunk of the non-elderly market (as opposed to one that took over
the entire market) could substantially reduce health care costs and thereby
make universal coverage politically feasible. Any proposal that leaves in
place a multiple-payer system - even a multiple-payer system with a large
government-run program in the middle of it - is going to save very little
money. Even if Hacker's original Health Care for America Plan had taken over
half the non-elderly market and then reached homeostasis (something Hacker
swore up and down it would do), the savings would have been relatively
small. The reason for that is twofold. First, any insurance program, public
or private, that has to compete with other insurers is going to have
overhead costs substantially higher than Medicare's. (It is precisely
because Medicare is a single-payer program that its overhead costs are low.)
Second, the multiple-payer system Hacker would leave in place would continue
to impose unnecessarily large overhead costs on providers.
The second mistake the "public option" movement made was to think the
insurance industry and the right wing would treat a "public option" more
gently than a single-payer. Conservatives have a long history of treating
small incremental proposals such as "comparative effectiveness research" as
the equivalent of "a government takeover of the health care system." It
should have been no surprise to anyone that conservatives would shriek
"socialism!" at the sight of the "public option," even the mouse model
proposed by the Democrats.
The bait-and-switch strategy adopted by the "public option" movement has put
the Democrats in a terrible quandary. Seduced by the false advertising about
the potency of the "public option" to lower costs, Democrats have raised
public expectations for reform to unprecedented levels. Failing to meet
those expectations during the 2009 session of Congress, which is inevitable
if the Democrats continue to promote legislation like the bills released in
June, is going to have unpleasant consequences. Is there no way out of this
quandary?
Conventional wisdom holds that if the Democrats don't pass a health care
reform bill by December, they will have to wait till 2013 to try again. But
if the "public option" movement were to join forces with the single-payer
movement, the two movements could prove the conventional wisdom wrong. This
won't happen, obviously, if the "public option" movement fails to perceive
the reasons it failed.
It is conceivable the "public option" movement could decide the
bait-and-switch strategy was wrong and that their only error was not to
stick with Hacker's original model. It should be obvious now that that would
also be a tactical blunder. We have plenty of evidence now that
conservatives will react to the mousey version of the "public option" as if
it were "a stalking horse for single-payer." We can predict with complete
certainty they will treat Hacker's original version as something even closer
to single-payer. If a proposal is going to be abused as if it were
single-payer, why not actually propose a single-payer? At least then, when a
particular session of Congress comes and goes and we haven't enacted a
single-payer system, we will have educated the public about the benefits of
a single-payer and have further strengthened the single-payer movement.
To sum up, "public option" advocates must choose between continuing to
promote the "public option" and seeing their hopes for cost containment and
universal coverage go up in smoke for another four years, and throwing their
considerable influence behind single-payer legislation. At this late date in
the 2009 session, it is unlikely that a single-payer bill could be passed
even if unity within the universal coverage movement could be achieved. But
if the "public option" wing and the single-payer wing join together to
demand that Congress enact a single-payer system, December 2009 need not
constitute a deadline.
Kip Sullivan belongs to the steering committee of the Minnesota chapter of
Physicians for a National Health Program.
