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A Thinly-Disguised Power Grab: The Latest Senate "Compromise" On The Government-Run Health Plan

Posted By Robert Moffit On December 8, 2009 @ 3:17 pm In Obamacare | Comments Disabled

Details are diabolical. Very soon, the fine print of the latest Senate scheme on the government-run health plan will be unveiled. If the Senate leadership has its way, the newly hatched “compromise” on the “public plan” will move quickly by the fleeting light of day toward passage.

In their relentless drive to overhaul one sixth of the American economy, Senators are obviously making it up as they go along. In the latest desperate search to find some form of government-run health plan to compete against private health plans that is somehow acceptable to Senate liberals and moderates alike, the Senate Democratic leadership is entertaining the idea of stripping the existing “public option” from the big Senate health bill ( H.R. 3590), and replacing it with a combination of public options: an OPM/FEHBP sponsored plan ( that will be “private” in name only) and an expansion of the two giant- and financially troubled or debt ridden- Great Society entitlements: Medicare and Medicaid. If the original idea of the public option was to keep costs down, As its champions have tiresomely insisted, a proposal to expand Medicaid and Medicare is curious to say the least: Both are major drivers of the health care spending curve upwards- well into the stratosphere.

More Debt. Medicare and Medicaid expansions are nothing new. The latest proposal to expand Medicare, a program for senior and disabled Americans, down the age scale was proposed by the Clinton Administration in the late 1990’s, after the collapse of its 1342 page health care bill. The same proposal is under consideration now, expanding Medicare to cover people between the ages of 55 and 64 years of age. Depending on how the amendment is written, this could jump start a massive enrollment of the Baby Boom generation before 2011, when the first wave of Boomers is set to retire. No details are available, nor is there any kind of cost estimate. Medicare already has a long-term debt of $38 trillion.

Higher State Costs. A major Medicaid expansion is already embodied in both the House and Senate bills. The Senate bill would expand Medicaid up the income scale to 133 percent of the federal poverty level, and the House bill would expand it to 150 percent of the poverty level; in both cases there would be massive erosion of private health insurance among families in these income categories. Which is the key point, apparently. For those who are enrolled in it, Medicaid delivers poor quality care compared to private health insurance. But Senate liberals are undeterred, and the issue of poor quality is rarely even discussed in the largest of the government’s health programs.. Of course, the problem with the massive Medicaid expansion is that it will also add to the already burdensome Medicaid costs on the states.

More Central Control. The more interesting element of this proposal is the creation of an “FEHBP Plan” administered by the Office of Personnel Management (OPM). OPM is the agency that runs the popular and successful Federal Employees Health Benefits Program (FEHBP) that covers members of Congress and federal workers and retirees. There are no details about any of this yet, beyond some discussion of broad concepts in the media. However, it appears that under the Senate Democrats’ compromise proposal, OPM would be given authority to contract with private, non-profit insurers( such as Blues and Kaiser ) to compete in the federally -designed health insurance exchanges that would be erected in each of the states under the Senate bill. It appears that the government would sponsor certain favored health plans to compete against the private health plans in the states. It is not clear how a restricted set of plans would add much to competition or to expand personal choice of benefits, particularly if the benefits are politically standardized.

The key question is what authority OPM would have in the negotiation of rates and benefits, and in the financing and the administration of the program. These details are crucial. If OPM were given absolute authority to set premiums and benefits, it could conceivably set premiums below the market prices, thus undercutting private health plans on an un-level playing field, leading to the kind of erosion of private health coverage that was envisioned under the “robust” public plan favored by the Left. If it sets rates and benefits on the basis of the market rates, of course, it would fail to achieve the Left’s goal of a “robust:” administered pricing system, a central rationale for the public plan in the first place. But, of course, that could change over time. The key issue in health care policy is the infrastructure of power and control; the levers of power and domination, additional staff and funding, can be always added later, especially if an artificially low priced, government-sponsored health plan (or plans) starts to run deficits.

Meanwhile, consider the existing power of OPM. Under current law, the Director of OPM has plenary authority in negotiating rates and benefits with private health plans, a vast authority repeatedly upheld by the federal courts. The OPM Director reports to only one person: The President of the United States. If the goal is for government to dominate the health insurance markets through the creation of a new “public option” – private health plans that are private in name only- the end result could be a national health insurance market literally run out of the West Wing of the White House.


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