Public Plan As Fallback Gaining Traction? Daschle Blueprint May Be In Play

Creation of a public plan could be tagged to determine that the goals of health care reform have not been met.

Health reform discussions in Washington are giving more attention to the idea of having a government-run insurance plan as a fallback option, providing a compromise on the contentious public plan issue.

The idea is that a government plan would not be established unless there was a determination, after a certain period of time, that the goals of health reform - including affordable coverage and lower costs - had not been met.

The pharmaceutical industry is familiar with the concept of a government-sponsored plan as a fallback option, since the Medicare Modernization Act included such a provision for Medicare Part D. Then, as now, the industry's concern with a government-run plan is that it would lead to price controls.

In the case of health care reform, the trigger for a government plan would include cost savings considerations. Under Part D, a government plan would be triggered only when fewer than two private plans are available in a certain area. That situation has not arisen.

White House support for the fallback concept may go a long way toward building consensus in Congress for such a compromise. President Obama may address the issue in his health care reform speech to a special session of Congress, scheduled for Sept. 8.

A federally funded public plan is included in the health reform bills that have been reported out by three House committees and the Senate Health, Education and Labor Committee. However, it is not expected to be part of the Senate Finance Committee bill, which is still being drafted.

Snowe Emerging As Key Player

Sen. Olympia Snowe, R-Maine, one of the six-member bipartisan team of Finance Committee negotiators working on the bill, has been pushing for consideration of a public plan only as a fallback. Of the three Republican members of the team, which also includes Sens. Mike Enzi, Wyo., and Chuck Grassley, Iowa, Snowe has been viewed as the most willing to work with Democrats on finding a compromise to the public plan.

Nonetheless, the "Bipartisan Six" continued negotiations on health reform legislation via conference call Sept. 3 and will meet in person on Sept. 7 when the Senate reconvenes, according to a statement from the committee. Chairman Max Baucus, D-Mont., is still working toward a Sept. 15 deadline for producing a bill, his office said.

Fallback Proposed In Report By Ex-Senators

The fallback concept is among the ideas outlined in a report on health care reform authored by former Sen. Tom Daschle and two other former Senate majority leaders - Republicans Howard Baker and Bob Dole. The report was released in late June under the auspices of the Bipartisan Policy Center.

It discusses state-based insurance market reforms and the formation of exchanges through which individuals and small businesses could purchase private insurance. The report also proposes that states have the ability to establish a health insurance plan, "modeled after self-insured plans that many have created as part of their employee benefit programs, co-op plans with consumer boards, or other designs, to provide another choice of coverage in the exchange."

After five years, the report states, "if HHS determines that the states have been unsuccessful in implementing insurance market reforms and establishing exchanges that provide affordable insurance options ... the President would submit to Congress for its consideration a proposal for a federal or state plan to be offered through exchanges, alongside private plans."

Daschle has publicly acknowledged the public plan is the most contentious issue in the health reform debate, but has maintained a compromise is possible ('The Pink Sheet,' June 8, 2009). Although Daschle does not have a formal public role in reform since he withdrew from consideration to head the White House's health care reform office, he has continued to work behind the scenes.

He met with President Obama Aug. 21 in a visit described by the White House as a "quick check-in on the health insurance reform process and to exchange views on the process moving forward."

-Cathy Kelly ([email protected])