Tuesday, December 8, 2009

Liberal Demands Over Giving Up the Public Option Threaten Health Care Deals

I actually feel for Harry Reid this morning.

He was on his way. He had mastered an incredibly fine balance in his health care bill.

No it wasn’t real health care reform and it wasn’t going to bend any curves but the Dems long ago gave up on that looking for one big political “W” instead.

The liberals were finally backing off on the public option there never were the votes for. But even the “neutered” public option both he and Pelosi put in their bills still wasn't enough for a handful of moderate Democrats and the ladies from Maine. So, he put ten Democrats in a room to split the difference and get a deal at least his 60-vote caucus could live with.

They did and came up with a bizarre public option compromise that just plain finished the idea off that a government-run plan should compete with the private market and “keep it honest”—the OPM-run not-for-profit choice within a choice.

Liberals finally woke up and understood they were about to just give the private health care market millions of new customers subsidized by taxpayers and little was going to change in America’s health care system (took’em long enough).

So they said, “Wait a minute. Here’s our list of what we want for giving up on the robust public option.”

Their list includes:
  • Tougher rules for the insurance industry—maybe including a 90% minimum loss ratio.
  • Expanding Medicaid from 133% of poverty to 150%.
  • A Medicare buy-in for people age 55 to 64.
The bottom line—if they can’t get a robust public option they are demanding that millions of people become part of the existing government-run Medicare and Medicaid public plans.

In the context of what they believe needs to be done to manage the health care system this all makes sense. It’s just another way to get to the same place.

But it also opens up a number of really big worm cans.

The insurance industry will hardly go quietly in the face of these proposals.

The previous deals with providers to limit their exposure to the health care bills are now in jeopardy. Providers now see millions of new patients coming to them at reimbursement rates 20% to 30% lower for Medicare and even lower for Medicaid. The House bill already expands Medicaid to 150% of poverty but Senate Finance purposely decided to stay at 133% to placate the providers.

The original Senate Finance bill at 133% of poverty for Medicaid was also designed to placate very nervous governors about the Congress expanding Medicaid too far and with it lots of unfunded mandates for the states. Those governors are now very worried about what is going on in the Senate.

Reid, and Baucus before him, had struck a fine balance with providers and governors.

The liberal wish list now threatens that balance.

This is not a do-over. But it does mean lots of finely balanced understandings and deals are back on the table.

And with few shopping days til Christmas!
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