Public Option is Just Another Private Party – and We’re Not Invited

The elaborate Congressional circus whimsically referred to as ‘healthcare reform’ – the one that has held the nation captive since President Obama’s earliest weeks in office – came complete with dancing clowns, disappearing acts and trained tigers jumping through hoops. But today the magic is gone.

The performance is degenerating. The public is beginning to understand what the political players knew all along – that this three ring circus was never meant to be more than a sideshow.

Americans have been forced to bear witness to embarrassing public displays of angst over their government spending a paltry $85 billion (or so) annually on health care for millions of Americans when about 20 times that amount has been gifted to the still-unaccountable robber barons responsible for the ongoing financial crisis.

Today, anyone not in a comatose state has surely grown tired of the smoke and mirrors. Surely Americans have noticed the eerie disconnect between the carefully staged healthcare ‘debate’ with its fixation on the cost of an increased government role, and the nonexistent debates on the (far more costly) war in Afghanistan or the obscenely expensive government program to bail out Wall Street.

It was against this surreal backdrop that House Speaker Nancy Pelosi agreed to support an even more frail version of what never was a particularly ‘robust public option’ for health care consumers in the first place. The move marked not the beginning, but the continuation of an unraveling process that began before the ‘health care debate’ ever got off the ground.

Dropping the part of their plan that would have allowed insurance premiums to be set by the government in favor of ‘negotiating rates’ with insurers is only the latest in a series of compromises by House Democrats that puts industry interests ahead of (what we used to call) the ‘public good.’ Concepts of ‘meaningful cost containment’ and ‘greater competition’ in the insurance market have vanished into thin air.

It’s hard to believe that only a few months ago we were promised that the ‘public option’ would accommodate 120 million people. Today that number is down to 10-12 million – and god only knows what it is they’ll be getting into.

In other words, Wall Street, the insurance industry and their Democratic lap dogs (only some of whom are blue) have made a mockery of the entire premise of health care reform – greater public access. 

Public Loss, Private Gain

An article published a few months ago in the Wall Street Journal reassured investors that “elements of health-care reform potentially most onerous to industry have little chance of being included in any overhaul bill that might make it through Congress.”

The authors must have been clairvoyant.   

How else could they have known that Speaker Pelosi would ultimately ‘see the light’ and decide in favor of the insurance industry with respect to how payments for care would be made under a ‘public option.’ When the Speaker announced recently that she no longer supported payments based on Medicare rates (as she had promised progressives she would), and would instead support tying rates to those of the big insurance companies, Wall Street must have been so relieved that its investors would have one less ‘onerous element’ of health care reform to worry about. Insurers too can sleep well knowing that whatever plan eventually comes out of Congress, it is almost certain that the ability to compete or to put downward pressure on costs will have all but disappeared. Pelosi also dropped a number of tentative provisions to promote consideration of "Medicare for All" models and to allow states to experiment with single-payer plans.

Little wonder then, that Wall Street analyst Richard Evans, in a report published November 3rd, was able to proclaim with complete confidence that the health insurance industry needn’t worry too much about the prospect of a government-run health plan – at least not as it now is taking shape in Congress.

Any government plan, Evans assured investors, “is likely to resemble a competitor that the for-profit insurers already know … It appears the public option would be required to negotiate price with providers, pay back its start-up capital, cover its operating costs, and earn sufficient reserves … In other words, it looks like a Blues [Blue Cross] plan.”

If Evans is right – and he probably is – those investors who worry that the public option is little more than a gateway drug to socialized health care (translate: single payer) can rest easy knowing that Congress – once something, anything, gets passed – is likely to wash their hands of ‘the problem’ into the unforeseeable future.

“Whether reforms pass or not, the degree of political capital and legislative bandwidth consumed by the effort are simply staggering, despite the fact that health reform remains well below economic concerns on voters’ radar screens … From this, we infer that, after the health reform effort reaches an end, the near- to midterm odds of Congress again turning its attention to anything related to healthcare is as close to zero as it has ever been.”

Evans goes on to advise investors that Pharmacy Benefits Managers (known in the industry as PBMs) will be “clear winners” if the current iteration of a ‘public option’ is passed into law. “PBMs have the potential for positive earnings surprises,” he predicts.

The PBMs, it should be said, are dominated by three large players and several mid-size players, including Walgreens, CVS/CareMark, Prime Therapeutics, MedImpact, as well as a slew of ‘captive’ (part of a managed care company) PBMs. Those include Wellpoint, Aetna, Cigna and others.

Corporate Control over Public Health Insurance

In a comprehensive executive summary at the Physicians for a National Health Program (PNHP) website, Kip Sullivan, JD writes: “Both the Senate and House versions of the proposed ‘public option’ require that corporations with expertise in health insurance administer the option.” Sullivan believes this is very bad news for the public.

He warns that private sector firms will likely play a role “that closely resembles the role that defense contractors play in the production of weapons for the Pentagon. Just as Northrop Grumman carries out all tasks necessary to create a fighter plane, so private corporations (not public employees) will carry out all tasks necessary to create the ‘option’ health insurance programs.” This function, he says, “is obviously very different from, and more significant than, merely processing claims.”

The options in the current Senate and House bills, writes Sullivan, “will not resemble the traditional Medicare program but will in fact consist of numerous insurance programs (or plans) functioning at the level of individual insurance markets, that is, at the level of states and regions within states. Once you understand this, you begin to grasp what it means to say that private corporations will ‘administer’ the option program. You begin to comprehend that the multiple local option programs might actually be owned by, or administered by privately owned corporations, possibly health insurance companies.”

Public Option Not an Option for Most

According to Robert Laszewski, president of Health Policy and Strategy Associates, the current House proposal works pretty well for families making $20,000 or $30,000 a year. “A family making $27,000 a year will pay about $1,000 (annually) toward their health insurance,” he told Jim Lehrer on PBS’ News Hour. Under the option now being considered, a family making $55,000 annually would pay about $5,400 – that’s nearly $500 per month – nothing to sneeze at. A family making $73,000 will pay $8,700 toward their health insurance bill.

“We’re just not doing anything for the middle class here,” Laszewski told Jim Lehrer.

Laszewski believes Congress will need to get “either more savings or more revenues into this program in order to make it affordable for families in the middle range. And the people we’re really talking about here are people between about 300 percent and 400 percent of poverty level income” – currently a huge segment of the population.

Of course, the open secret is that a single payer system is inevitable in the long run. And by the time Americans finally get coverage for all, no one will care what it is called. Congress will eventually be forced to follow the lead of states like Pennsylvania, California, Illinois, Ohio and Massachusetts, all of whom are currently working to implement their own single-payer healthcare.

If the Democrats’ option turns out to be little more than window dressing for Congress to throw hundreds of billions of dollars per decade at the insurance industry, and if (as seems likely) the public option fails to either effectively control prices or open up the system to all who need it, Americans will pay a huge price – both as patients and as taxpayers.

In the meantime, Congress should stop pretending they’re doing something, and actually do something to help the American people. If legislators got to work saving Americans’ homes and jobs instead of distracting them with sides shows and ‘voodoo healthcare’ they’d have to actually deal with the mess they’ve made of this country.

Now that would be a show worth watching.


Sandy Leon Vest is editor-publisher of SolarTimes, an independent quarterly energy newspaper with a progressive point of view. SolarTimes is available online at, and distributed in hardcopy throughout the San Francisco Bay Area and beyond. Sandy LeonVest’s work has been published nationally, as well as internationally, and includes 15 years at KPFA Radio in Berkeley, CA. Photo from flickr by ProgressOhio