By John Reichard, CQ HealthBeat Editor
May 6, 2009 – HHS Secretary Kathleen Sebelius offered a relaxed defense of — what else? — the "public plan" option in her debut Wednesday before the House Ways and Means Committee, portraying it as par for the course in many states around the country, not some exotic new structure that would gobble up the private insurance market.
It seems unlikely that any Republicans are going to be brought around to the contentious concept as Congress debates an overhaul of the health care system, but if anyone can make the sale it may be the former Kansas governor and state insurance commissioner, whose straightforward Midwestern manner may be an effective Obama administration antidote to fears that the public plan would take the nation on a scary foray deep into socialist health care.
Asked by Committee Chairman Charles B. Rangel, D-N.Y., why the public plan — an ambiguous term but one that many define as a government-run insurance plan offered in a government-sponsored insurance exchange along with private insurance plans — is important to improving quality and lowering costs, Sebelius tailored her argument to the virtues of marketplace competition.
Sebelius said "what I'm a believer in . . . is that competition is a very healthy component of any market situation. I think that competition helps promote innovation, helps promote best practices and also can help to lower costs.
"In many parts of the country, including in my home state of Kansas, there are a lot of areas in the state where there aren't choices of private carriers . . . which is why in our design of the state employee health insurance plan we created a . . . side-by-side public and private option."
About 30 states have similar designs, Sebelius said, adding that public and private insurance options exist side by side in State Children's Health Insurance programs.
"I know many states in their design of the children's health insurance plan, the public plan is a side-by-side option with private carriers," she said. "The underlying issues are, "What are the rules? What are the actuarial issues going into the design of the plan and is there a level playing field?' " She also emphasized that private plans enjoy unfair competitive advantages in that they've been able to "cherry pick," enrolling low-cost customers while avoiding those needing costly care.
Sebelius shared a Midwestern moment with Rep. David Camp, the top Republican on the committee who represents a district in Michigan that includes the Leelanau Peninsula, a popular summer vacation area where Sebelius owns property. Camp noted the Sebelius connection to the Leelaunau in his opening statement and Sebelius joshed back that she pays too many property taxes in Camp's district.
Friendly talk aside, Rep. Paul Ryan of Wisconsin — whom Rangel sweet-talked by introducing him as a rising star in the Republican Party — wound up for a hard-hitting question by noting that despite nice rhetoric by the Obama administration about Americans being able to keep their current coverage, a public plan paying relatively low rates might cause providers to charge private plans so much that over 100 million Americans could lose their current coverage.
Ryan layered on more questions in his remarks, repeatedly questioning how the administration would fund a $1.2 trillion overhaul plan that offers no suggestions for half of the funding and includes problematic provisions to pay for the other half.
Before observers could get a sense of how well Sebelius would parry the energetic questioning of the hard-charging Ryan, Rangel informed Ryan that he unfortunately had used up all his time asking his questions and had left no time for Sebelius to answer.
Ryan grinned without complaint, fireworks forestalled by an agreement that the committee's many questioners would keep their questions limited to allow everyone on the panel to inquire in the two hours Sebelius was slotted to appear.
Rangel pledged that he would meet with Republicans privately next week in a search for common ground. "We're having a very informal meeting to determine if there is anything at all we can do" to get GOP support for a Democratic overhaul plan, he told a knot of reporters who clustered at the podium after the hearing.
Reporters aimed to pry loose from Rangel some details about how House Democrats aim to overhaul the health care system, including how he might pay for revisions. Rangel said the structure of the public plan would depend on how the Congressional Budget Office (CBO) scores its cost. Asked whether he hopes to obtain CBO scoring of savings from the public plan, Rangel said "I'm hoping that I will, but not enough that I need." When one reporter poked a microphone in front of Rangel after asking if the chairman would consider taxing "high end" health insurance benefits to pay for an overhaul, a smiling Rangel yelled into the microphone, "NO WAY!"
Rangel was then asked whether he might propose cutting hospital payments to pay for the overhaul. "I would not want to get involved in cutting hospital payments, no, no," he said. But Rangel and other Democrats may have no choice but to cut provider payments widely among other painful choices they might have to make if a dramatic coverage expansion is to be funded.