Colorado’s two Democratic senators could have an outsized influence on the shape of health care reform taking shape in Congress — if they seize the opportunity.
“Democrats nearing Consensus on Health,” The New York Times declared last week. But notice: nearing consensus. They’re not there yet. And one remaining point of contention — at least in the Senate — is actually among the most important to the future of consumer choice and a private health-care market: Should the reforms include a public insurance plan as an option to private coverage?
Most liberal Democrats say yes. They believe private companies’ administrative costs are too high and need the discipline of a government competitor. Most Republicans suspect, with reason, that the “competition” will be rigged and the true goal of some liberals is to crowd out private insurers so the nation evolves toward a single-payer system, with federal bureaucrats dictating its terms.
If Democrats hang together they can obviously write a bill any way they like. But if moderate Democrats share qualms about the long-term effects of a public insurance plan, then those mavericks could find themselves cracking the whip on any ultimate deal.
That’s where Sens. Mark Udall and Michael Bennet come in. If they want to burnish their centrist credentials — and far more importantly, stand up for consumer choice within 17 percent of the economy — they could push for an alternative to a public plan, perhaps along the lines of one proposed by Sen. Kent Conrad, D-N.D., involving nonprofits.
Last week Bennet told me that his major focus has been on “making sure that we’re doing [reform] in a fiscally responsible way,” including addressing Medicare’s benefit structure. He could “imagine an outcome that might involve a public plan and one that doesn’t,” but wants “to make sure we’re creating more competition, not less.”
A Udall spokeswoman told me the senator is keeping an open mind while studying all options. He “has real sympathy,” she said, “for including an insurance plan not driven by profit that would compete with private companies, but knows it will take work to strike a balance that ensures competition is on a truly level playing field.”
But what’s the test for a level playing field? In a recent post on his blog, Harvard economist Greg Mankiw boils it down to this: Would the public insurance plan “have access to taxpayer funds unavailable to private plans?”
“If the answer is yes,” Mankiw writes, “then the public plan would not offer honest competition to private plans. The taxpayer subsidies would tilt the playing field in favor of the public plan.”
A public option might make sense if private insurers were as wasteful as sometimes portrayed. But critics often underestimate the overhead of a public plan like Medicare by ignoring, for example, the social costs of collecting taxes and failing to acknowledge that private expenditures on negotiating rates, claims scrutiny, pursuit of fraud and so on is mostly money well spent.
Such comparisons are also skewed in Medicare’s favor by the fact that its beneficiaries are generally older and, as a result, their claims are usually much larger than those of beneficiaries in the private market.
More than any people in the world, American consumers value choice. And yet their health care options in the coming years could be progressively trimmed to a one-size-fits-all plan — unless a few Senate moderates sound the bugle now.
E-mail Vincent Carroll at vcarroll@denverpost.com.
