March 12, 2009 / 2:36 PM / 10 years ago

Obama's public health insurance idea draws fire

WASHINGTON (Reuters) - A big new public health insurance program envisioned by President Barack Obama is shaping up as one of the most contentious issues in his drive to overhaul the U.S. healthcare system.

President Barack Obama speaks at the White House in Washington March 11, 2009. REUTERS/Kevin Lamarque

The White House and congressional Democrats have not given details of any proposal.

But even before a plan emerges, some Republicans and the insurance industry are expressing concern about any new public health insurance program. And conservative policy experts are trying to shape the debate by calling such a move a step toward “socialized medicine.”

Obama aims to sign a bill this year making sweeping changes in the healthcare system, which is the world’s most expensive even as 46 million Americans have no health insurance and the United States lags other nations in important health measures, such as life expectancy and infant mortality.

Most Americans — about 170 million — get private health coverage through an employer, although some buy their own private insurance. Others are eligible for public programs that offer coverage to the elderly and disabled (Medicare), the poor (Medicaid) and low-income children (State Children’s Health Insurance Program).

But many go without coverage, paying instead out of their own pockets for care if they get sick, or trying to do without medical attention. A new public insurance program would be intended to offer coverage to those who currently do not have it or who want an alternative to private insurance.

Obama last year proposed “a new public plan based on benefits available to members of Congress that will allow individuals and small businesses to buy affordable health coverage.” It is part of an initiative to cut the number of uninsured while improving healthcare quality and controlling costs that are forecast to reach $2.5 trillion this year.

Leading congressional Democrats have embraced the idea but the specifics are still being worked out.


“There are, obviously, different ways of designing a public plan that would have different effects,” White House budget director Peter Orszag told a Senate hearing this week.

Robert Moffit, a health policy expert at the conservative Heritage Foundation think tank, said he believes some proponents of a new public program see it as a first step toward a full government takeover of the healthcare system.

“It’s a Trojan Horse for national health insurance where you basically rig the competition against private health insurance and you set up the economic incentives to encourage employers to dump people into the public plan,” Moffit said.

Democrat Henry Waxman, who as chairman of the House of Representatives Energy and Commerce Committee will play a major role in getting legislation through Congress, envisioned “a public plan like Medicare or some variation of it.”

“This system will work better if there is a public plan available as an alternative to private coverage,” Waxman told a meeting of the American Medical Association this week. “Don’t let anyone tell you that what I’m interested in is socialized medicine. I tell you flatly that is definitely not the case.”

Changes in the U.S. healthcare system have been difficult to get through Congress, such as when President Bill Clinton’s efforts failed in 1993. Republicans including Representative Roy Blunt, a leading House Republican voice on health care policy, have signaled that any new public insurance program will draw particular scrutiny.

Robert Zirkelbach of America’s Health Insurance Plans said the insurance industry group has “serious concerns” about the impact of a new public program on private insurers. “We think it would be almost impossible to create a level playing field,” he said.

An analysis by the Lewin Group, a healthcare policy consulting firm, predicts a migration of people out of private insurance if a new public plan is created.

If all businesses and individuals are able to get health insurance through the program, the plan could end up enrolling 130.5 million people, including 118.5 million people who currently have private insurance, according to the Lewin Group’s analysis.

If only small businesses and individuals could use the program, up to 31.8 million people could leave private insurers for the public plan. Under that scenario, the public program could have enrollment of 42.7 million people, the Lewin Group said.

Editing by Maggie Fox

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