Obama aide sees public health plan as part of reform

Nominee for Director of the White House Office for Health Reform Nancy-Ann DeParle speaks after being introduced by U.S. President Barack Obama in the East Room at the White House in Washington, March 2, 2009.

* DeParle optimistic about creating public insurance plan

* Says policy differences could be bridged

* Concerned ideological opposition could thwart agreement

By Donna Smith

WASHINGTON (Reuters) - President Barack Obama's top healthcare adviser said on Wednesday she was optimistic the White House and congressional Democrats could overcome opposition by Republicans and insurers to a proposed new government-run health insurance program.

"I'm actually very hopeful that we will be able to reach an agreement on that," Nancy-Ann DeParle, who was tapped by Obama to head the newly created White House office on health reform, told reporters.

The public health plan envisioned by Obama is shaping up to be one of the more contentious issues among lawmakers as they try to overhaul the $2.5 trillion U.S. healthcare industry in an effort to contain costs and expand coverage to an estimated 46 million uninsured people.

DeParle said Obama asked her to try to reach bipartisan agreement on a sweeping healthcare overhaul.

Acceptance of a new public plan will depend largely on how it is designed and whether objections voiced by Republicans and private insurers reflect policy differences or ideological opposition to a broader government role in healthcare, she said.

"If objections are over policy, then I think we can work together and have a public plan that people can agree to," DeParle said at a briefing sponsored by the non-profit Kaiser Family Foundation and others.

"If it is a philosophical debate, then that is another thing and people may not be able to agree."

DeParle said she meets regularly with members of Congress and staff to help draft overhaul legislation that Obama hopes to sign into law by the end of the year.

PUBLIC-PRIVATE COMPETITION

Obama backs a public health plan that would compete with private insurers to provide affordable coverage to the uninsured.

Most Americans get health insurance through an employer and many, particularly self-employed or small business owners, buy their own policies. Others get coverage through existing public plans such as Medicare for the elderly and Medicaid for the poor.

Republicans and private insurers oppose creating a new public plan, arguing it would be a first step toward a European-style, government-controlled system because it would drive private health insurance companies out of business.

DeParle said a public plan would have much lower overhead expenses that would help meet Obama's goals of lowering the cost of healthcare and keeping the insurance market "honest and competitive."

She said Obama was open to discussing other ways of achieving that goal. While Republicans oppose a new government plan, it is a crucial component of reform for many Democrats who control Congress.

Few details have emerged on what a public plan would look like. Some supporters have suggested expanding the Medicare program for the elderly, which could draw opposition from doctors who complain about low Medicare reimbursement rates.

Others have suggested a model used by some states and large companies for their employees where they assume the insurance risk but contract with private insurers to run the plan.

(Editing by Maggie Fox)