After ‘Public Option' Setback, New Reform Strategy Needed

Healthcare reform protesters outside a town hall meeting in Montana.   (Anne Sherwood/Getty Images)

The Obama administration has delivered multiple signals of surrender on the ‘public option' front, one of the most popular provisions in the Democrats' healthcare reform efforts. Ninety percent of rank and file Democrats support a government-backed public health insurance option.

This capitulation to the power of for-profit insurers (and their loyal, well-financed chorus of Blue Dogs in the House and conservative Democrats in the Senate) is yet another illustration of how the insurance and drug companies have outgrown the constraints of democracy.

As Franklin Delano Roosevelt observed in 1933, "The liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic State itself."

The notion of a relatively strong public option based on Medicare was tossed overboard a while back in the Senate. It now seems very hard to envision how Democrats can regain the momentum to re-insert a Medicare-based public option in place of 50 scrawny state-based "co-ops."

Progressives in and around labor are reacting with fury, vowing a major fight when Congress returns, but the Obama Administration seems to have already decided on its course. It will take enormous pressure to turn this aircraft carrier around.

Moreover, if the public option were maintained in its present form—shrunken down to a set of nonprofit co-ops—its inclusion in the final reform bill would only serve to discredit a strong public role in healthcare. As Minnesota writer and activist Kip Sullivan points out, there is simply no way that 50 separate health co-ops—most likely operated by insurers—could crack into already monopolized markets of doctors and hospitals. The GAO has also concluded that co-ops would lack the power to serve as a measuring stick to keep for-profit insurers in line.

Many liberals, including presidential primary candidate John Edwards, had explicitly seen the public option—up until this point—as a kind of potential incubator for an eventual single-payer system, as citizens naturally gravitated toward a Medicare-style system that delivered with absolute certainty a full menu of choices of providers and hospitals and needed care. Meanwhile, other progressives in the Physicians for a National Health Care Plan have been convinced that the public option is no substitute for a "Medicare for all" (single-payer) system, and that insurers would use the public option as a dumping ground for older and sicker patients.

Neither scenario seems remotely likely at this point. Senate Democrats like Evan Bayh, Kent Conrad, Blanche Lincoln and others have made clear their opposition to any vigorous public option, and intend to limit it to a pathetic 10 million patients by 2019. This means that the public option—particularly if it stays in its pathetic "co-op" form—will be far too tiny to exert any influence on the private insurers. Further, these co-ops seem likely to wither on the vine from an inability to line up doctors and hospitals, so they may be too insignificant for insurers to use as a dumping ground.

The AFL-CIO's John Sweeney, Sen. Bernie Sanders, Speaker Nancy Pelosi, and Howard Dean, among others, plan to launch a major fight to revive a strong public option. But can they move Barack Obama to twist the arms of the Blue Dogs, Max Baucus, and Evan Bayh, when Obama has never laid down explicit policy principles? With Obama never drawing a line in the sand on the public option up until now, how probable is a sudden turn toward confrontation with conservative leaders of his own party in Congress?

If Obama cannot be moved far enough or fast enough, it may make sense to jettison the now-worthless public option (as it stands at this moment) and strip the Democrats' final healthcare plan down to its most vital elements. These would be aimed at providing immediate, tangible improvements in the lives of Americans and in preventing the emergence of even more powerful insurance and drug industries.

Given the disappointing capitulation on the public option, the most vital reforms (which would of course also incorporate a public option if progressives can succeed in reinstating a vigorous, Medicare-based version) would include:

• 1) Health coverage for all Americans. The noxious notion of an individual mandate to buy private insurance, as has occurred in Massachusetts, is circulating in Democratic bills. A much better solution would be to extend Medicaid to cover all low-income Americans.

• 2) Generous subsidies so that the new universal health plan covers middle-income Americans. It is politically imperative that the Democrats' health plan extend help to the middle class to pay premiums. If conservative Democrats in Congress continue along their present path— so that middle-class families pay as much as 35 percent of their total health costs, the final health plan will be all too easy for the Republicans to brand it as a program bleeding the middle class to take care of the poor.

• 3) Focus on effective regulation of the insurance and drug industries. For the insurers, this would entail not only setting up a regulatory apparatus to effectively monitor their most despicable practices like using pre-existing conditions and "rescission" to deny or nullify insurance politics, but also banning further consolidation of the industry so that it can no longer metastasize in economic reach and political clout.

If we ever hope to renew the fight for fundamental healthcare reform that eliminates the utterly parasitic insurers and controls drug corporation greed, the last thing we can permit in this round of reform is the further expansion and fortification of these two industries. Thus, it should be critical for Democrats to insert provisions blocking further mergers and prohibiting monopolistic practices.

What progressives need to do, according to Harvard government Prof. Theda Skocpol (whose book Boomerang superbly dissects the 1992-94 healthcare battle) told In These Times, is to begin thinking now on how to strategically set up the healthcare fights of the future on favorable terrain.

Rather than battling over some symbolic feature, it is vital to ensure that this fight is about the expansion of regulations that have fallen short in curbing insurer and drug company conduct. Thus, Skocpol's approach suggests that progressives must point out the limitations of the final bill in order to predict future problems and prepare the public for battles over much stronger reforms down the road.

Posted by Roger Bybee