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Once More, with Feeling: House Dems Pursue Public Option Bill

By John Reichard, CQ HealthBeat Editor

July 22, 2010 -- Rep. Pete Stark, D-Calif., and other House Democrats announced Thursday the introduction of a bill to add a government-run insurance plan to compete with private plans that will be offered in 2014 in insurance exchanges created under the health care overhaul law.

The bill (HR 5808), which has 128 original co-sponsors, would if enacted save $68 billion from 2014 to 2020, according to an estimate by the Congressional Budget Office (CBO).

The public option dominated much of the debate over health care overhaul legislation but could not get through a Congress with large Democratic majorities. Its chances of passage seem slim to none in coming months, particularly if Republicans gain seats in Congress in the November elections.

But Stark and other Democrats say the case is building all the time for adding a public option as premiums charged by private insurers rise ever higher. Some insurance industry officials worry that as premium charges grow over the years, support for the public option will extend beyond the passionate corps of Democrats now espousing the provision.

"Today, Consumers Union reported that Blue Cross Blue Shield plans amassed billions in surpluses as they raised rates for millions of Americans," Stark said in a news release. "This is a good example of why we need a public option—to create an insurance plan that competes based on delivering quality, efficient care, not on delivering profits to shareholders. The result is more competition, better coverage and lower premiums for millions of Americans."

Bob Kolodgy, chief financial officer at the Blue Cross and Blue Shield Association, said in a statement that "because nonprofit BCBS plans lack access to capital markets available to other companies, we rely on our own reserves to make the investments needed to increase efficiency and develop capabilities that help us better respond to increasing medical costs—a key driver of rising premiums. To suggest that reserves should be reduced now, at a time when health care reform has created an untested and uncertain environment, would be reckless."

The bill would save money by, in general, paying providers Medicare rates. Hospitals and doctors say they would be underpaid as a result, while insurers say that providers would hike their rates, forcing them to raise premiums to unaffordable levels.

Health care providers would not have to do business with the public plan as a condition for participating in Medicare.

The bill also would give authority to the HHS secretary to negotiate prescription drug prices for the public option, a measure that would be bitterly opposed by the pharmaceutical industry.

CBO's analysis of the bill assumes that premiums charged by the public plan offered in the exchanges would be five percent to seven percent lower than that of private plan competitors and that 13 million people would enroll in the public option in 2017-2019.

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