Obama Drops Public Option, Showdown With Pelosi Looms

Obama Pelosi

President Obama will be dropping the socialistic Public Option from his government-run health care plan.  This will certainly anger the liberal wing of the Democratic Party and make for some interesting showdowns with both House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid (emphasis mine).

“…Obama’s willingness to forgo the public option is sure to anger his party’s liberal base. But some administration officials welcome a showdown with liberal lawmakers… …The confrontation would allow Obama to show he is willing to stare down his own party to get things done.”

Harry Reid is losing in the polls in his run for reelection in Nevada and nobody outside of San Francisco likes Nancy Pelosi.  The President’s back is up against the wall.

It will be interesting to read the reaction from liberal pundits from the Huffington Post and M.S.N.B.C.

To read more on the change in President Obama’s position by Mike Allen and Jim Vandehei of Politico click here.

15 Responses to Obama Drops Public Option, Showdown With Pelosi Looms

  • You do realize that:

    (i) the proposed public option is strictly limited to those without employer-based coverage, and is designed to compete with private options, and that it’s sole point is to keep costs down (it would be very easy just to subsidize people to purchase very expensive coverage)?

    (ii) about 40 percent (this is off the top of my head, but I think it’s right) of healthcare spending in the United States now originates with the government. Medicare, covering all seniors, is basically a Canada-style single payer system. The VHA, covering military veterans, goes even further and is basically a UK-style single-provider system. Overall, this means a larger public role than the systems in countries like Germany and France. Do you propose to abolish medicare?

  • c matt says:

    (i) without employer based coverage

    Meaning what exactly – if your employer pays your coverage, or if it is offered, but you have to pay? E.g., employer covers the cost for the employee, but the employee has to pay out of pocket for spouse/dependent. Would the spouse/dependents qualify for the public option? If not, then they are really getting screwed.

  • S.B. says:

    MM — it’s wonderful that you finally, after so long, admit to the level of government spending in America, but you fail to follow the logic where it leads: if a single-payer system established in America would magically give us the cheapness and results of France (as you so commonly claim), then we should ALREADY see that Medicare covers everybody in America (not just the elderly), while spending less money to boot. The fact that Medicare does not even remotely do so betrays the vacuousness of your habitual refusal to consider all of the many reasons that American health is different from European countries, and why an American government program will with 100% certainty be incomparably more expensive than what is seen in France.

  • C Matt – if you have employer-based coverage, nothing changes. This was an issue during early negotation and it was decided to restrict to public option only to those out on their own and in small busineses.

    SB– I have never made such a magical claim, and you know it. But we do have a very good comparison — Medicare and private insurance. And we know that while costs are rising unsustainably in both, the rise is actually smaller in medicare. Of course, everybody focuses on the explicit cost on the public balance sheet (taxes), but not the implicit cost on household balance sheets (rising premia preventing wages from increasing).

    On why the cost per capita is twice as high in the United States, there is no simple answer. Part of it is insurance company profit-seeking and administrative– single payer is able to keep costs in check by simply efficiency gains — spreading risk over the greatest number of people and having a single administrative system. That’s an important part of it, but it’s not all of it. Like everyone else who follows this issue seriously, I was impressed by Atul Gawande’s little cost experiment. And here is the paradox — on one hand we have so many people left behind (47 million with no insurance, 25 million with insufficient insurance, widespread rationing by cost) and yet on the other hand we clearly have a lot of treatment that is not needed. And this happens in places where the income of a doctor or healthcare provider is tied directly to the quantity of treatments ordered. This is a classic market imperfection, as the healthcare provider is exploiting an information asymmetry in a way that maximizes his revenue. In places where doctors are paid a salary, or where income is pooled, you do not see these problems with ineffiency (the Mayo clinic is a good example here).

    So, there are really 2 issues — access and cost. Access is actually not that hard — dish dish out a lot of money to subsidy coverage at whatever cost demanded by private insurance companies. I think everybody would agree that this is unsustainable. We must also trim costs. The public option is a small step in that direction — though it is not neutered that I doubt it will do much good at this point. The big cost issues remain outstanding.

  • S.B. says:

    SB– I have never made such a magical claim, and you know it.

    No, I don’t know it. I can’t even count how many times you’ve made the claim that European countries with single-payer get better healthcare for less money. It’s clear that you’re trying to suggest that the US could replicate the same. If you’re not trying to suggest that, you should write more clearly.

    Anyway, if you read Gawande’s article, he points out that the incentives in the fee-for-service model are so overwhelming that the method of payment (government vs. private insurance) is pretty much irrelevant. That point seems right on to me.

  • Matt McDonald says:

    MM,

    C Matt – if you have employer-based coverage, nothing changes. This was an issue during early negotation and it was decided to restrict to public option only to those out on their own and in small busineses.

    This is simply not true. Under all of the public option proposals, ANYONE (including illegal immigrants) can chose any plan in the HIE including the public option. Even if such a restriction were added nothing stops the employer from opting to drop it’s employees into the public option.

  • SB: ” can’t even count how many times you’ve made the claim that European countries with single-payer get better healthcare for less money.”

    Yes, I’ve made it a zillion times because it is A FACT. I have no doubt that a single-apyer system in the US would reduce costs and increase coverage, and be better aligned to the requirements of Catholic social teaching. Will it magically reduce costs from 15 percent of GDP to 8 percent of GDP? Of course not. Any anyway, this is all irrelevant, since clearly the great free market liberal masses would rather suffer and die from lack of care than flirt with “socialism”.

    Matt: You are flat out wrong on this one. Restricting the public option to those outside employer-based insurance is central to the proposals (I think that is silly, but anything stronger would clearly not pass muster with the ideological liberals that oppose healthcare reform). See a flow chart that makes this point succinctly: http://vox-nova.com/2009/08/19/9222/. And as for employers dropping coverage, there would be a big penalty for doing something like that.

  • MacGregor says:

    Matt: No public option covers illegal immigrants. The congress and the president have already said they will not agree to any legislation that says this. The only way they get treatment is by going into emergency rooms where hospitals are morally obligated to give them care if the injury or sickness is serious.

    The part of this article that shows the lack of intellectual honesty with many conservative pundits, is that when President Obama proves that he is not a liberal ideologue, when he shows that he believes in bipartisan, pragmatic governance – no one commends him on it. They only talk about “show downs” and his political problems as if he failed. What hypocrisy!

    And Art Deco, what part of your post is in any way Catholic? I challenge you to get in front of any congregation in the country as say that.

    “Do you propose to abolish medicare?

    Git ‘r done.”

  • Art Deco says:

    And Art Deco, what part of your post is in any way Catholic? I challenge you to get in front of any congregation in the country as say that.

    The parishs I attend congregate for the Divine Liturgy, not to listen to my opinions on anything. Minion can ask a rhetorical question. If he gets a serious answer, that’s a gift. Me stingy today.

    I have already bored the assembled with my suggestion of what a revised mode of financing medical care might look like, as a component of a reconstituted tax and welfare system. Of course, there were a mess of holes in the idea, but I am not in the insurance business and I was only ever the smallest fry in the world of hospital administration, so I cannot draw on any fund of knowledge to fill the holes. If you are interested, it is here somewhere.

  • Dale Price says:

    I’d have far less problem with the public option if there was some mechanism to guarantee that the government would remain one competitor among several and not a slow-growing monopolist of the system. The government is no mere private competitor–it has pricing and contracting advantages unique to its role as the trustee of the public fisc. I am unaware of any such mechanisms in the plan(s) before Congress.

    And, in one of the plans before Congress, there is a penalty of up to 8% of payroll for employers who want to dump their coverage. I also believe it caps out the size of the employer which can take advantage of the option, but I’m much less clear on that.

    As I said in a previous thread, 8% of payroll may or may not be an incentive to drop coverage. Without knowing how health costs compare on average to payroll, I have no meaningful frame of reference.

  • S.B. says:

    Yes, I’ve made it a zillion times because it is A FACT. I have no doubt that a single-apyer system in the US would reduce costs and increase coverage, and be better aligned to the requirements of Catholic social teaching.

    A little more epistemic modesty might be in order, wouldn’t you think? In discussing any policy issue of any magnitude, 100% certainty amounts to overconfidence and bias. Has it never crossed your mind that the same forces that have caused Americans to spend so much more on health care — including via government spending, which isn’t subject to your canards about administrative costs or insurance company profits — may well continue to be in place? That this will cause Americans to overuse medicine in a single payer system to an even greater degree, thus causing overall costs to rise?

  • wilson says:

    The real issue is liberal agenda. Get the liberals out of absolute power and see how many problems disappear. The american ppublic is already sending that message at the polls and it’s about time!
    Also; someone with the guts needs to take Obama into custody by citizen’s arrest for failure to prove he qualifies under the U.S. Constitution to hold office; since the justice system in this country is failing to do it’s duty. Every executive order Obama has signed is worthless and must not be recognized officially. Those he has placed in office are there illegally and must be removed. Those of you who are supporting Obama must realize you are supporting a usurper and probably illegal alien. Someone with authority must investigate fully all the hidden personal information which cannot be released to the public under court order. This has nothing to do with national security and everything to do with treason; which when prosecuted rightfully carries the death sentence during this time of war we currently are fighting.

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