Public Health Insurance Plans Worry Some Industry Backers

WASHINGTON (AP) _ The search for agreement on health care may be short lived.
The flashpoint is a proposal that would give Americans the option of buying medical coverage through a government plan. President Barack Obama and many Democrats have endorsed it, as one part of a broader health overhaul. On Saturday, Republicans laid down a challenge.
"I'm concerned that if the government steps in, it will eventually push out the private health care plans millions of Americans enjoy today,'' Rep. Roy Blunt, R-Mo., said in the Republican weekly radio address.
Blunt, who will play a leading role in the debate, warned: "This could cause your employer to simply stop offering coverage, hoping the government will pick up the slack.''
The proposal he referred to would, for the first time, offer government-sponsored coverage to middle-class families, as an alternative to private health plans. By some estimates, it could reduce premiums by 20 percent or more -- making it much more affordable to cover the estimated 48 million people who don't have health coverage.
It could also be a deal breaker for broad, bipartisan agreement on health care.
Insurers fear competition from a government plan could drive them out of business, and Republicans worry it would lead to a government takeover of health care. Liberals, meanwhile, are equally adamant that Americans deserve the choice of government-sponsored health care.
"The purpose of health care reform is to make sure all Americans have health care, not to promote the insurance industry,'' said Rep. Jan Schakowsky, D-Ill., who serves on a House panel that will help write the legislation.
The new government coverage could be similar to what seniors have in Medicare, which is run directly from Washington. Or it might be designed like the federal employee health plan, available to members of Congress, and delivered through private insurers.
Asked at the White House health care summit this week about the brewing controversy, the president promised to address the qualms felt by some. But he did not abandon the notion of a government plan.
"I'm not going to respond definitively,'' Obama said, answering a question from Sen. Charles Grassley, R-Iowa. "The thinking on the public option has been that it gives consumers more choices and it helps ... keep the private sector honest, because there's some competition out there.
"I recognize, though, the fear that if a public option is run through Washington, and there are incentives to try to tamp down costs ... that private insurance plans might end up feeling overwhelmed.''
Obama says he is committed to preserving a health care system in which government, employers and individuals share responsibility. Many Americans may not realize the government already picks up nearly half the nation's $2.4 trillion health care bill, through programs including Medicare and Medicaid.
A public plan for the middle class could give a final nudge that puts the system firmly in government hands.
Obama's campaign proposal -- a foundation for Democrats in Congress -- called for setting up a national insurance marketplace through which individuals and small businesses could buy coverage. People could pick private insurance or opt for a government plan that would resemble coverage for federal employees.
A recent analysis by the Commonwealth Fund, a nonprofit group that sponsors health care research, is giving supporters of a public plan some ammunition.
The study estimated costs and coverage under a hypothetical health reform plan similar to what Obama proposed in the campaign. It found that a public plan like Medicare could reduce projected health care costs by about $2 trillion over an 11-year period. Premiums in the public plan would be at least 20 percent lower, partly because of reduced administrative costs. Within a decade or so, some 105 million people would be in the public plan, compared with about 107 million with private insurance.
Commonwealth Fund President Karen Davis said the administration has been very interested in the study. "Some of their top economists are on the phone, poring over it,'' she said in an interview.
Democrats say they will fight to ensure a public plan stays in the final bill.