By Lindsay Beyerstein
Nancy Pelosi is going all in to support a public option that would hold down costs by setting reimbursement rates at Medicare plus 5%. The CBO's latest cost estimates for various House health care reform options have galvanized Pelosi in favor of a Med+5 public option, Brian Beutler reports.
Pelosi has always favored some kind of public competition for private health insurers, but she has previously been non-committal about how hard a line a public plan could take to hold down costs.
The House Democrats are in negotiations to combine the various bills that passed their respective committees this summer. Chris Bowers has a good discussion of how Pelosi is using the CBO numbers and the Med+5 proposal to outmaneuver Blue Dog Democrats in the House and Senate. Basically, the stronger the public option the House bill proposes, the bigger the cost savings it will project. Fiscal conservatives will be hard-pressed to vote against a public option that's projected to cost less than the alternatives.
Rep. Raul Grijalva, the co-chair of the House Progressive Caucus, told Bloomberg that the caucus is gravitating towards the Med+5 plan, as opposed to a weaker proposal that would have the government negotiate rates with providers.
It's cheaper for the public to negotiate reimbursement rates for the entire plan because the massive bargaining power of the federal government drives down prices. Whereas, the public invariably gets a worse deal when rates are negotiated piecemeal. There's really no reason not to negotiate in one fell swoop, except as a gimme to vested interests.
Naturally, drug companies and health care providers want piecemeal negotiations. However, Obama has said he won't sign a bill that adds to the deficit and the House is looking for ways to save money. Letting the government drive a hard bargain is an attractive way to cut the costs of health care reform. Piecemeal negotiations would hobble one of the most powerful cost-control features of a public plan.