Was a Public Plan Ever Really in the Cards?

Did Sebelius speak the truth?

The media should have seen it coming. Last week, on CNN, Health and Human Services Secretary Kathleen Sebelius said a public insurance option was “not the essential element” of reform, and that a non-profit cooperative arrangement might fulfill the White House goal of more competition in buying health insurance. Many in the media professed surprise at Sebelius’s statement—but with all the flip flops and subtle hints dropped here and there over the past few months, it’s mystifying that Madame Secretary’s remarks seem to have caught everybody unawares.

The day before Sebelius’s CNN appearance, President Obama said something similar to town hall attendees in Colorado. The president said of the public option: “Whether we have it or we don’t have it, is not the entirety of health care reform. This is just one sliver of it, one aspect of it.” But after Sebelius’s remarks, the administration worked hard to douse the fire. Said Sebelius:

All I can tell you is that Sunday must have been a very slow news day, because here’s the bottom line: Absolutely nothing has changed. We continue to support the public option. That will help lower costs, give American consumers more choice and keep private insurers honest.

All along, though, Sebelius has been saying similar things that should have had reporters asking questions about whether the administration was really serious about a public option, and what kind it would be. The president’s campaign boilerplate called for a new public plan, like Medicare, that would be available for small businesses and people without other insurance. Then came the eight lofty principles tucked into his budget message, none of which mentioned a Medicare-esque public option, or any of the co-ops currently discussed. One principle called for giving Americans a choice of health plans and physicians, as well as the option of keeping their employer-based coverage.

Off and on the president has talked about the necessity of a public plan. But as insurers, doctors, drug companies, and the U.S. Chamber of Commerce tightened the noose around members of Congress, and their Republican allies used Frank Luntz’s tested messages to warn about a government takeover of health care, the president’s HHS secretary started sending other signals.

In April, Sebelius testified that she supported a public option that is “constructed effectively and wisely” and with “actuarial support.” On June 14, she told CNN that the health insurance plan proposed by the administration would increase competition and drive down costs. Two days later, Sebelius told the Associated Press that the insurance lobby wouldn’t block a public health plan, because most Americans realize they would be better off if the industry had competition. She predicted that, in any showdown over a public plan, the industry would blink first. To paraphrase Barney Frank: What planet was she on?

In a mid-June interview on This Week with George Stephanopoulos, Madame Secretary failed to vigorously support the kind of Medicare-like plan envisioned by Obama’s campaign platform. To be downright honest, Sebelius was evasive as she could be. Stephanopoulos pressed hard on the public plan, asking if the president was open to a cooperative instead of a full-blown public plan. She skirted the question.

Stephanopoulos tried again: “When the president looks at this, does he say, ‘I want a public plan, and it must be in the final bill,’ or ‘I’m open to other sorts of alternatives?’” She replied that he had “reinforced his support for a public option” in a letter to the Senate Finance Committee, and then launched into her messages about choice and competition. Finally, Stephanopolous asked “And he’s going to insist on it?” Again, she avoided answering:

I think he is making it clear that’s a direction he thinks will be beneficial for the public and to make sure costs go down. And that’s a central belief of his. This has to lower costs for everyone.

By June 27, she e-mailed a statement to Bloomberg News, saying the Obama administration “remains open to all serious ideas” that give all Americans “real health care choice.” In a meeting with Bloomberg editors and reporters, she elaborated—“You could theoretically design a co-op plan that had the same attributes as a public plan”—and repeated that the president remains open to all serious ideas.

For astute reporters, there have been other hints that a public plan might not make it. In late March, Senate finance chairman Max Baucus told Time’s Karen Tumulty that he considered a public plan a bargaining chip to force insurers into market reforms, like taking everyone regardless of preexisting conditions.

For me, though, the most tell-tale sign of the public plan’s demise came from Families USA executive director Ron Pollack, the cheerleader-in-chief for health reform. After his consumer advocacy group climbed into bed with Big PhRMA, Pollack said that while a public plan is “important,” the “key ingredients in making health coverage affordable are addressed through what we’re talking about.” Among Pollack’s key ingredients: expanding Medicaid, giving families subsidies to buy insurance in the private market, insurance market reforms and limiting out of pocket expenses.

Another important clue came from one of my good, reliable sources, who said that an AARP lobbyist told her that the public plan was simply something to be traded away.

The saga of the public plan is a story of the lobbying might of health care interests, indecisiveness on the part of the president, and the reluctance of the press to stitch all the pieces together. But there’s still a chance for redemption. Not much has been said or written about what’s left if the public plan vanishes—the individual mandate that will require every American (with few exceptions) to carry insurance.

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Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR's healthcare desk, which is part of our United States Project on the coverage of politics and policy. She also blogs for Health News Review. Follow her on Twitter @Trudy_Lieberman.