Health-Care Reform: Obama Finesses the Public Plan

The headlines and news coverage coming out of the Aug. 16 shows may have seemed to mark a major turn in the debate over health-care reform. "White House Backs Away From Public Health Care Option," cried Politico.com. The New York Times led its story with a declaration that the Administration had "sent signals" that it was moving away from "its once-firm vision of a government organization to provide for the nation's 50 million uninsured and was now open to using nonprofit cooperatives instead." And the Drudge Report, predictably enough, was running a big photo of a white flag.

But was this big news? What started the flurry was a comment on CNN's State of the Union by Health and Human Services Secretary Kathleen Sebelius that a government-run plan is "not the essential element" of the Obama Administration's drive to overhaul the country's health-care system. White House Press Secretary Robert Gibbs echoed that point on CBS's Face the Nation, where he said that Obama's "bottom line" is that there should be "choice and competition in the insurance market." Hardly a new development, considering that the White House and the President have been sounding pretty flexible for months on the subject of a public option. Spokeswoman Linda Douglass reiterated that in a statement on Aug. 16. "Nothing has changed," she said. "The President has always said that what is essential is that health-insurance reform must lower costs, ensure that there are affordable options for all Americans and increase choice and competition in the health-insurance market. He believes the public option is the best way to achieve those goals."

But not the only way. "The public option, whether we have it or we don't have it, is not the entirety of health-care reform," Obama said at a town-hall meeting on Aug. 15 in Grand Junction, Colo. "This is just one sliver of it, one aspect of it."

When I asked Obama about the public option in an interview on July 28, he described something that sounded more like an insurance company than a big new government program. "We defined it fairly clearly in terms of what we thought would work best," he said. "It shouldn't be something that's simply a taxpayer-subsidized system that wasn't accountable, but rather had to be self-sustaining through premiums and that had to compete with private insurers." Under this definition, a cooperative arrangement, of the type being talked about by the Senate Finance Committee, might fit the bill by providing an alternative to purely private insurance. When I asked whether this sort of arrangement, modeled on private business organizations like rural cooperatives, might be an acceptable alternative to the public option that has become an ideological hot button, he said, "I think in theory you can imagine a cooperative meeting that definition. Obviously, sort of the legal structure of it is less important than practically how can it operate."

The fact is that Obama's stand on the public option has never fit neatly into the narratives on either side of the political aisle. The left has come to view it as the holy grail of health-care reform — in no small part because many liberals believe that a Medicare-like program for the uninsured would be the first step toward a government-run single-payer system like those found in Canada and Europe. The right has made it a focal point of its opposition for the same reason. However, Obama has never presented the public option as anything other than a means to an end — one that he would be perfectly willing to achieve through other avenues if necessary. His goal is twofold: to provide a low-cost alternative to the private system that already exists and to assure competition in a health-care market where it is generally lacking. Though there are more than 1,000 private insurance carriers in this country, the dominant ones operate as a near monopoly in most states.

Privately, White House officials have been downplaying the importance of a public plan, saying it is far more important to focus on the structure and the regulations surrounding the state insurance exchanges that would be created as the marketplace for insurance under a revamped health-care system. These exchanges would give purchasers of health insurance, whether they be individuals or businesses, an option of plans to choose from, all of them offering at least a minimum package of benefits and a guarantee against exclusion for pre-existing health conditions. White House chief of staff Rahm Emanuel has even gone so far as to suggest that a public plan might be necessary only as a backup, if that new system failed to produce the kind of competition that is necessary to bring down health-care costs.

So what happens if Obama takes the next step and explicitly abandons the public option? The left will be disappointed and its enthusiasm for the whole exercise may wane, though Obama probably won't lose many votes among liberal Democrats on Capitol Hill. At the same time, he probably won't pick up many from Republicans, who are looking less and less like they are in the mood to find a compromise. But it could help keep some shakier centrists aboard. And it would lower the intensity of the heat around the entire debate, by removing an issue that the White House has increasingly come to view as a distraction from the larger goals of its health-care reform.