Hospitals Decry Public Option in Democratic Platform

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By Nathaniel Weixel

July 11 — Hospital groups want the Democratic Platform Drafting Committee to remove calls for a public insurance option from the final version of the party's platform.

In a letter sent July 8 to the committee, the American Hospital Association and the Federation of American Hospitals said creating a public option with Medicare-like payments would reduce provider payments to hospitals.

Medicare already pays less than private insurance for the same procedures, the groups wrote, and “adding millions more enrollees whose health care would be reimbursed at Medicare rates would likely threaten access to needed health care services, particularly for those in vulnerable communities.”

A public option was initially part of discussions when the Affordable Care Act was being negotiated, but lawmakers eventually realized there wasn't political support for it, especially among moderate Democrats. Progressives supported it as a voluntary transition toward single-payer insurance, while conservatives opposed it as a government takeover of health care.

President Barack Obama also gave the idea more credence. Writing in the July 11 issue of the Journal of the American Medical Association, Obama said Congress should revisit legislation that would allow a public plan to compete alongside private insurers “in areas of the country where marketplace competition is limited” (see related article) .

While the vast majority of Americans live in areas where there’s competition in the insurance exchanges, some parts of the country have long struggled with limited insurance market competition and continue to do so, Obama said.

“Public programs like Medicare often deliver care more cost-effectively by curtailing administrative overhead and securing better prices from providers,” Obama wrote. “Adding a public plan in such areas would strengthen the Marketplace approach, giving consumers more affordable options while also creating savings for the federal government.”

Platform Language

Democrats included a public option in the draft platform released July 1, and the full document will be ratified at the convention in Philadelphia beginning July 25 (128 HCDR, 7/5/16).

The public option language in the platform is meant to bring the party a step closer to its goal of universal health care, either through Medicare or a public option. Democratic presidential candidate Hillary Clinton recently reaffirmed her support for a public option, but the inclusion of it in the draft platform represents a victory for Sen. Bernie Sanders (I-Vt.), who had been campaigning on a promise of ‘"Medicare for all.”

In a July 9 statement, Clinton reaffirmed her support for the public option, saying she “will pursue efforts to give Americans in every state in the country the choice of a public-option insurance plan.” Clinton also called for a “Medicare buy-in,” which would allow people 55 years or older to opt-in to the program “while protecting the traditional Medicare program.”

However, hospitals say adding millions of additional enrollees is not the way to increase health coverage.

“We hope the Democratic platform draft will continue to move the nation in the direction of more equitable, affordable health coverage and access to care, resulting in improved population health,” the groups wrote. “However, our members have serious concerns that creating a public option with Medicare-like payments would subvert those goals by depressing insurer payments to health care providers and disrupting the fragile finance system that sustains hospitals today.”

Politics vs. Reality

Caroline Pearson, a senior vice president at the health-care consulting firm Avalere Health, told Bloomberg BNA the public option wasn't included in the ACA because of strong opposition from providers and the insurance industry.

Trying to institute a public option in the post-ACA landscape wouldn't be as drastic, and wouldn't need the support of industry, she said. It's more important for Clinton and the Democrats to attract the more-liberal Sanders supporters, Pearson said. The political needs are stronger than the need to keep stakeholders happy, Pearson said.

In addition, there's no guarantee that Clinton would be able to pass a public option if she were to become president.

“You have to separate election politics from governing,” Pearson said. “It's helpful right now to win over the liberal branch of the party.”

For example, Pearson said, Obama ran for office opposing an individual mandate but “then added one into the ACA because it was necessary to bring insurers on board.”

Pearson said that if Clinton tried and failed to pass a public option, it wouldn't be a major political loss.

“If Clinton supports this now, and can’t get it through Congress—I don’t know if that’s a major loss for her,” Pearson said.

To contact the reporter on this story: Nathaniel Weixel in Washington at nweixel@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

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