WASHINGTON – President Obama yesterday took the fight for a public healthcare option to a skeptical audience, telling the American Medical Association that a government plan that would compete with private insurers is "not your enemy; it is your friend."
Addressing a key constituency whose rejection of Bill Clinton’s healthcare plan helped crush it 15 years ago, Obama said he believes a public plan would "put affordable healthcare within reach for millions of Americans."
He also told doctors that if health costs keep growing at current rates, the pressure could destabilize the healthcare system and threaten all reimbursements.
Doctors, hospitals, and other providers worry they would lose money under a government insurance plan if it used the power of its size to dictate payment rates that are much lower than what private insurers pay. That is essentially what Medicare and Medicaid do now, and many providers make up their losses by charging private insurers more.
The AMA has not ruled out embracing some form of a public option, but its members have been concerned about Obama’s intentions.
Obama tried to reassure doctors by saying the reform bill was not a "Trojan horse" for a Canadian-style single-payer system, as insurance companies and other opponents contend. But he stopped short of saying a public plan would pay doctors as much as private insurers do.
Instead, he said the legislation would include broad changes to the way doctors are paid for their services, so that rather than getting paid by the visit, procedure, or test – a model that encourages unnecessary expense – they would be paid for their overall treatment of a patient.
Doctors would ultimately benefit because they would be able to "focus on patient care," he said, and health costs would be brought under control.
Obama got a mostly warm reception; Dr. Mario E. Motta, president of the Massachusetts Medical Society, who was in Chicago for the president’s speech, said he believes the mainstream of the AMA is more flexible than it may seem.
"If a public plan was designed specifically the way he phrased it today – to give another option, to make sure all Americans are insured – and if its rates were adequate for physicians and it could pressure insurers to behave more responsibly," he said, doctors would sign on. But they will not support a plan that pays Medicare rates, which can be 20 percent lower than what private insurers pay physicians.
The question of whether to have a government-sponsored health insurance program – and how it should be financed and governed, and who would be eligible – is one of the most difficult political questions facing Congress.
Proponents say a public plan could cut administrative costs, bargain for lower prices, impose stricter quality guidelines, and pressure private insurers to do the same.
Opponents say the insurance industry, unable to compete with a powerful government plan, would eventually collapse and leave patients with no choices.
Dr. Donald Palmisano, a former AMA president and head of the Coalition to Protect Patients’ Rights, a leading conservative group on healthcare legislation, criticized Obama for focusing on government solutions.
"More than 80 percent of Americans currently have health insurance, and the vast majority of them are overwhelmingly satisfied with their coverage, so let’s fix the problem we have – not one that doesn’t exist," he said in a statement.
An analysis by the nonpartisan Lewin Group found that a limited public insurance plan paying Medicare rates could offer premiums 30 percent below market, but that a large public option plan could devastate the private insurance industry. If anyone could join, 131 million people would enroll, the study found, causing private insurers to lose 70 percent of their business.
"That would effectively end the employer-based healthcare system as we know it today," said Robert Zirkelbach, a spokesman for the insurance industry lobby.
Key committees in the House and Senate are scheduled to begin finalizing bills this week.
Both the left and right have staked out positions: Many liberal Democratic leaders have suggested they want a strong Medicare-style public plan; most Republicans firmly oppose that approach, fearing it could hurt private insurers.
Moderate Democrats, and a few Republicans, are pushing various forms of a weaker public plan that would pose less of a threat to private insurers but would provide an affordable alternative for people who cannot get insurance through their employers.
Senator Charles Schumer, Democrat of New York, has proposed setting ground rules for a public plan that would force it to compete on a level playing field with private insurers. But several moderate Democratic senators and many of the 100 or so moderate "Blue Dogs" and New Democrats in the House remain concerned.
In an effort to broker a compromise, Senator Kent Conrad, Democrat of North Dakota, has proposed allowing federally chartered "co-ops" to operate like independent nonprofit insurers.
But Jacob Hacker, co-director of the Center for Health, Economic, and Family Security at University of California, Berkeley, wrote in a piece on The New Republic website Sunday that Conrad’s co-ops would be too small to exert the necessary pressure on the private industry to lower costs or improve quality, undermining two major purposes of the public option.
Motta said the Massachusetts chapter of the AMA supports a limited public option and is fighting to defeat a resolution against one. At a discussion the other day, Motta said, he asked how many of the doctors loved their insurance companies.
"And not one hand rose," he said. "I think there is a sense that things need to change, despite the vocal minority."
Lisa Wangsness can be reached at lwangsness@globe.com.
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