The Public Option: Time To Let It Go?

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Time To Let It Go? — The latest flash point in the health care debate? The idea of a "public option." Opponents say it would lead to a government takeover and create unfair competition for insurance companies. Proponents say such a plan would increase health coverage and control spending. And others are saying: Enough with the public option, already! Washington Post business columnist Steven Pearlstein tells host Guy Raz why he thinks it's time to drop the idea.

GUY RAZ, host:

As the Cash for Clunkers program comes to an end, the debate over health care is just getting more intense. The latest flashpoint: whether the White House will abandon the so-called public option, the government-sponsored health-care plan.

Most Republicans now say they won't back a bill that includes that option. Here is Senator John McCain speaking today on ABC's "This Week."

(Soundbite of television program, "This Week")

Senator JOHN McCAIN (Republican, Arizona): I believe that one of the fundamentals for any agreement would be that the president abandon the government option.

RAZ: Some Democrats are now saying they may decide to push forward a bill without Republican cooperation. New York Senator Charles Schumer discussed that possibility on NBC's "Meet the Press."

(Soundbite of television program, "Meet the Press")

Senator CHUCK SCHUMER (Democrat, New York): Even if every Republican says that they will not be for a public option, we can find a level-playing-field-type public option where both insurance companies and this option compete, and we will get 60 Democratic votes for it.

RAZ: Just before he headed for vacation on Martha's Vineyard this weekend, President Obama accused Republicans of playing politics.

President BARACK OBAMA: I would love to have more Republicans engaged and involved in this process. I think early on, a decision was made by the Republican leadership that said, look, let's not give them a victory, maybe we can have a replay of 1993, '94, when Clinton came in. He failed on health care and then we won in the mid-term elections and we got the majority.

RAZ: But Republican Senator Orrin Hatch, also on "Meet the Press" this morning, said it's the president who isn't being upfront about the government's role in his proposal.

(Soundbite of television program, "Meet the Press")

Senator ORRIN HATCH (Republican, Utah): Most Democrats and Republicans believe that we should reform the insurance industry. There's no problem there. The real problem is, are we going to go into a government plan that can't even take care of what we have in Medicaid and Medicare?

RAZ: A public option would offer a health plan that, in some way, will be run by the government. Opponents argue it would create unfair competition, drive insurance companies out of business and build an enormous bureaucracy. Supporters say the plan would increase health coverage and control spending. And some are saying whether it's a good idea or not, for the sake of overhauling health care, the Democrats should simply abandon the proposal.

One of those voices is Steven Pearlstein, a business columnist with The Washington Post.

Steven Pearlstein, welcome to the program.

Mr. STEVEN PEARLSTEIN (Business Columnist, The Washington Post): I'm glad to be here.

RAZ: On Thursday, President Obama told a talk radio show that he's standing by his position, that the public option should be considered. You don't think that's a good idea. Why is that?

Mr. PEARLSTEIN: I'm not unalterably opposed to a public option, but it's not necessary. And the reason I wrote that column was because it's just getting too distracting. It's causing too many people to buy into the notion that what health reform is about is a government takeover. And one way to eliminate that concern would be to take the public option off the table.

RAZ: I mean, you are a big supporter of overhauling the health care system. The question for you is how that's going to happen.

Mr. PEARLSTEIN: Right. Obviously, the whole health reform effort is an effort by the government to reform a private marketplace which is no longer working and probably hasn't worked for a long time. It seems that the public wants the least possible intrusion and to maintain it as a private system with private hospitals, private doctors and private insurers. Why fight that when there are lots of different ways to solve it?

RAZ: One of the ideas you talk about and an idea that you advocate are government-chartered cooperatives. But how would they substantially differ from a public option?

Mr. PEARLSTEIN: My notion of a public option that would work is a public option that builds on the successful models that we have: the Mayo Clinic and the Geisinger Clinic and Intermountain Health in Utah.

And what are those things? Those are - groups of hospitals and doctors that work together in a coordinated way to provide a broad range of care. And so, setting up cooperatives or, you know, if you want to call it a public plan, call it a public plan. I don't know what public plan means, really, other than one that is sort of sponsored and chartered through the government. So you could do it through a cooperative arrangement. So change the words, but most importantly, change the structure of the thing.

A lot of liberals, when they hear the government option, what they mean, and perhaps what they want, is Medicare for all. That, in my opinion, would be the worst way to go. First of all, Medicare costs are going up quite fast, as fast as, you know - spending as fast as it is in the rest of the health care system.

RAZ: But not as quickly as it in the private industry. That's the argument that's being made.

Mr. PEARLSTEIN: Well, that argument is wrong. Medicare spending is going up as fast as it is in the rest of the system. The only thing is it starts from a lower base. That is, it costs less because they pay hospitals and doctors less than other insurers. All the rest of us pay more to allow Medicare and Medicaid to pay less. That's called cost shifting.

Well, if that's the way you have lower cost, obviously, if you put everyone under Medicare, you've got a problem because what that means is no one is going to be paying the full bill. So that's why you don't want to go to a public plan that's Medicare for all.

RAZ: Bottom line, Steven Pearlstein, where do you think Congress and the president ought to end up with these proposals?

Mr. PEARLSTEIN: They ought to end up with the most important part of health care reform, which is: A, make sure everyone has insurance and has to have insurance. You want to make sure that people who can afford it get subsidies. Those are the most important things. And the third most important thing is to begin to reduce the long-term cost growth of all health care, public as well as private, Medicare as well as private, and you do that by better managing care with better information to doctors and hospitals, with electronic records, with evidence-based research so we figure out what works and what doesn't. We don't have enough of that.

Those are the key elements. And yes, we do need to reform the insurance market so that it is competitive. But it doesn't necessarily mean that we have to have a public option as part of that competition.

RAZ: Steven Pearlstein is the business columnist for The Washington Post. Mr. Pearlstein, thanks so much for being with us.

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