Public Option Remains Health-Care Reform Hurdle

As the health-care debate continues at full throttle, many people in resource- and cash-strapped California are trying to figure out just how federal mandates impact the state where 37 percent of people are uninsured. A June 19 panel at the Commonwealth Club ("California Health Care and the Stimulus: The Promises, Possibilities, and Pitfalls") hosted four key players in the overhaul of the system, who weighed in on the need for a fundamental shift in not only action, but in thinking and planning.

“We want reform that is sustainable, that is long-term, that is not something short-lived that’s going to make everyone feel good and then in a year we find that we’ve failed on it,” Elizabeth Imholz of the Consumers Union told the Commonwealth Club crowd. “I think if there’s ever been a moment, this is it.”

And the proverbial ball has started rolling, albeit fraught with some snags. The fiscal stimulus package infused California with a huge amount of cash in February, increasing the federal medical assistance percentage (FMAP) for Medi-Cal, which introduced the idea that the veritable down payment on health care could be an economic boon. However, the budget cuts made in July to close the massive, $24-billion budget deficit equaled a $1.4 billion slash to Medi-cal, which serves 7 million people. Currently, Medi-Cal serves as the state’s de-facto “public option,” for those who qualify; cutting it would require an even larger effort to essentially start from scratch.

As the federal health-care bill continues to work its way through Congress, California’s cuts usher some provisions of the bill to the forefront. States will be required to expand their health-care programs to more of the uninsured, even though federal funding for such programs by 2015 will be dramatically scaled back. All major health-care bills moving through Congress would use Medicare as a vehicle for expanding coverage, adding perhaps 11 million people, a 20-percent increase.

“Medicare, which we’ve all relied on [or, our parents have] for a very long time, will go broke in about eight years at the current rate of spending and the current rate of revenue coming into it,” said David Lansky, president and CEO of the Pacific Business Group on Health. “To make Medicare sustainable -– if we don’t do any healthcare reform –- someone has to find about $13 trillion to put into the trust fund.”

President Obama has received criticism for uncertainty over whether his plan will include a public option for the uninsured, and those currently dependent on Medicare and Medicaid have few other options. Further complicating the issue is the perplexing fact that the system is currently without a designated administrator. How can the debate continue without this crucial position? Medicare and Medicaid crucially need someone who is working with Congress and preparing for a possible new, expanded role.

As Dr. Cortese of the Mayo Clinic recently told The New York Times, Medicare is, in effect, the nation’s largest insurance company and the president and Congress function as the board of directors. Former Medicaid director Vernon K. Smith says an administrator is needed to address the “future fiscal stability of the Medicaid program.”

While the debate continues, the numbers of uninsured are not decreasing. Employer-provided coverage doesn’t always provide the reassurance it did in the past because of uncertainty over employment during the recession. People who have lost their jobs -- as nearly 64,000 Californians have -- and their coverage along with it may be looking to none other than Medi-Cal as a provider.

“More and more people -- as we sink deeper into the recession -- are going to become eligible for Medicaid and going to need those services,” said Imholz.

If the stated goals of a new health-care system -- reducing the cost of health care, ensuring quality insurance service for consumers, providing affordable coverage to uninsured, and not adding to the deficit -- are to be realized, some observers are saying that is will be necessary to streamline the systems already in place.

“One of the other major components of the [proposed] framework ... is an expansion of the Medicaid program as well as increased payment to Medicaid providers,” said Toby Douglas, chief deputy director of the California Department of Public Health. “It could be a very good thing, but it brings up the question of who’s going to pay for it.”

Opponents of government-run health-care worry that if it is provided, tens of millions of Americans would leave their employer-provided coverage for the cheaper public option, in turn bankrupting the federal government. More market-oriented approaches were broached at a June 11, 2009, presentation at The Commonwealth Club. [See the video here.]

At the panel discussion on overhauling the system, Douglas further explained that all parties -- on the right, the left and elsewhere -- must stay involved to hash out a solution. “There is discussion that can be built on that type of framework,” he said. “But it also isn’t clear exactly when people talk about a public plan if they are talking about that local, state public plan or more of a national one, and that’s what really needs to be worked out more in detail.”

– By Heather Mack