Bad Option

The proposed public option for health insurance seemed to die weeks ago only to be revived again in a Senate committee.

And despite being beaten back again yesterday, the controversial measure is expected to reappear as the health reform debate moves out of committee and onto the floors of the Senate and House.

While many Republicans say the reason they can't support a public plan is because it expands the government's already large role in providing health insurance, there's a more immediate concern among a number of health care providers and business groups. The public option measure offered by Democratic Senator Jay Rockefeller of West Virginia that failed in committee would reimburse doctors and hospitals at rates comparable to Medicare, the government's health plan for seniors. In other words it won't pay providers dollar for dollar to compensate for the services they perform.

That's all it took for Democratic Senator Kent Conrad of North Dakota to vote against it, saying hospitals in his state would go broke if a Medicare-type government plan was created. Big businesses don't want more Medicare-type coverage either because they say that there's a cost shift to the private sector when the government doesn't pay the full bill for medical services. So it's clear moderate Democrats aren't going to support another plan that reimburses like Medicare or Medicaid, which pays doctors and hospitals even less.

For Obama's health reform to win support from all Democrats, the president needs to garner support from both the right and the left of his party, and the public option has been a significant divider. Some Democrats want Obama to step in and referee once the issue is debated by the full Senate and House, Politico reports. But it seems clear that some alternative plan (besides a proposal for nonprofit cooperatives) needs to be hatched if a reform plan is going to move forward.