Next step for Kennedy health care plan

Steve Henn May 29, 2009

Next step for Kennedy health care plan

Steve Henn May 29, 2009


Kai Ryssdal: Congress is back to work next week after its Memorial Day break. There’s no shortage of bills and proposed legislation floating around on Capitol Hill, of course. And next week, Senator Ted Kennedy’s office is set to add to the list, with a draft of his plan for health care reform.

Marketplace’s Steve Henn is on the line from Washington. Hey Steve.

Steve Henn: Hey Kai.

Ryssdal: Obviously it’s early yet on this bill, still in the planning stages, but what does it look like right now?

Henn: Well, right now it looks like Senator Kennedy is putting together a bill that’s based on the Massachusetts model for health care reform. Remember, a few years ago that state created a program that provided nearly universal coverage and they did it by requiring everyone to purchase health care.

The federal program would pretty much work the same way. And it would subsidize low-income folks who can’t afford to buy health care on their own. It would also require most employers to come to the table and chip in too.

Now the Kenendy proposal also includes what’s been called sort of a public health care option. Basically this is a government-run insurance program that would compete against private insurers.

Ryssdal: It’s kind of a controversial point though, Steve. What are people saying about this?

Henn: The private insurance industry really dislikes this idea. Because a government insurer will likely be so big, it can force price concessions from hospitals and doctors and use that to sort of have a competitive advantage against the private firms that offer health insurance. And the private industry is afraid that it could effectively push them out of business.

Ryssdal: Is there a way to put a price tag on this thing yet?

Henn: There is. I mean, right now we know that there are 46 million people in the country who don’t have health insurance. And if we’re going to provide subsidies that would allow all of those folks to buy health insurance, the best guess is it would cost somewhere between $120 and $140 billion in the first year. And then over the next 10 years, anywhere from $1 trillion to $1.5 trillion.

Ryssdal: OK, but we’re all familiar with trillion dollar price tags these days. Still though, anywhere from a trillion to a trillion and a half dollars, that’s a big big number in there. Why the fudge factor?

Henn: Well, the fudge factor comes from differing estimates on how fast health care costs are going to grow. So one way to hold down costs is to create a public insurance program that just forces doctors to take a price cut. Another way to hold down health care costs, and many people think in the long term this would be more effective, is to get at the incentives that drive doctors and reimbursements.

Right now, doctors are paid sort of almost in piecework. So a radiologist gets paid for each scan he or she performs. The more scans, the more money, whether you need them as a patient or not. People who are trying to hold down costs in the long term think the key to doing that is going to be to pay doctors for successful health care outcomes, not for procedures. And if they can do that, maybe we can save half a trillion dollars in 10 years.

Ryssdal: Yeah. A note on process here, this goes to the committee next week, they take it apart and look at it and then what happens?

Henn: Well, Senator Kennedy is going to walk his proposal by Democrats on his committee next week and then in mid-June there is probably going to be a bipartisan mark-up of the bill, so the legislation will be introduced. The ultimate goal is this is all wrapped up and done by August, but there’s a long way to go.

Ryssdal: Yes, there is. Steven Henn in Washington. Thanks Steve.

Henn: Sure thing.

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