Schumer: Public Option Is Vital

On Thursday, July 12, 2007 on Capitol Hill in Washington, Sen. Chuck Schumer, D-NY, makes a point as he reacts to President Bush's latest statement on the situation in Iraq. Behind him is Senate Majority Leader Harry... On Thursday, July 12, 2007 on Capitol Hill in Washington, Sen. Chuck Schumer, D-NY, makes a point as he reacts to President Bush's latest statement on the situation in Iraq. Behind him is Senate Majority Leader Harry Reid. (Lauren Victoria Burke) MORE LESS
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Sen. Chuck Schumer (D-NY) issued the following prepared remarks Tuesday morning regarding the “level playing field” public option amendment. Here’s the full text:

Thank you, Mr. Chairman. I’d like to offer amendment C1, cosponsored by Senators Bingaman, Stabenow, Menendez and Cantwell to create a level playing field public insurance option to compete against private insurance options in the Exchange.

Senator Rockefeller just made a very compelling case for an aggressive public health care plan that builds off the successes of Medicare to generate $50 billion of cost savings in our health care system. I applaud his efforts and will continue to work with him towards our common goal of securing a public option in the final bill.

There are some of our colleagues and many Americans to the left of the Rockefeller amendment who want only the government involved. There are many others who say that the government should never be involved, particularly on the right. Each, in my opinion, is wrong. Competition means competition, and if you believe in real competition you should let both compete upon a level playing field, and let the best plan win.

All of us have been working hard at this very difficult endeavor for months now, and we’re doing it because there is no question in our minds that the health insurance market needs reform. It’s because of the lack of competition in this market that, for too many middle-class Americans, health care coverage is too unstable and too expensive.

Right now, the health insurance industry is one of the least competitive industries in America – and middle class American families are paying the price. According to a study by the American Medical Association, 94% of insurance markets are “highly concentrated” by the definition used by the Justice Department. In 40 states, two insurers dominate over half the market. In 10 states, the top two insurers control over 80% of their respective markets.

In the past decade, consolidation has only increased. This consolidation has been a key factor in the rise of premiums and deductibles, and the overall increased cost to consumers. Private insurers have been able to charge more and more and provide less coverage. Across the nation, premiums for working families have doubled from 2000 to 2007 while overall quality has deteriorated.

Over the same period, profits at 10 of the country’s largest publicly traded health insurance companies rose 430 percent, from $2.4 billion to $12.9 billion – a sign that the benefits of consolidation are not going to consumers.

Right now, this bill could go farther to improve the uncompetitive landscape of the health insurance market. Failing to do everything we can to deal with this problem could prove costly to the taxpayers and consumers in the long run.

Four out of four Congressional committees have joined President Obama in concluding that the only real mechanism for increasing competition in the insurance industry and keeping private insurers honest is to create a guaranteed affordable option to compete alongside them in the marketplace. That is what we are talking about today: creating more competition so consumers have more choice.

And let me once again be clear. The best way to achieve this goal is to create fair competition. When we speak of a “level playing field,” that is exactly what we mean. It will have no advantages.

After being set up by the government, the level playing field public option will have to stand on its own. No providers will be required to participate. And prices will be negotiated between the plan and providers. They will not be imposed. Although I support Senator Rockefeller’s public plan amendment, which is priced off of Medicare – this is the key difference between our approaches. The level playing field option does not set prices.

It will have to obey the same reserve requirements and rating requirements as private plans, and will have to follow the same rules. It will be independent, self-financed, and self-sustaining. There will not be another infusion of federal dollars if it cannot make it the first time around. And if it fails, it fails because it did not offer better quality service at lower prices.

But we believe it will succeed because it will remove many of the incentives that lead too many insurers to prioritize profits and growth over the healthcare of their customers. The level playing field public option will have reduced marketing costs. It will be able to use its purchasing power to generate real savings that it can pass on to consumers. And it will not have to generate profits. That amounts to an approximate 20% cost savings right off the bat, and it will go directly to consumers. That alone is enough to support this amendment.

But it will do more. As a health insurance plan whose shareholders are the American public, this level playing field plan will by design serve the public’s interest. It will put patients, not profits, first and foremost.

If a patient develops cancer, it will not look for ways to cut them off of insurance. If a parent discovers a child has diabetes, it will not go out of its way to raise premiums and impose new fees. A plan that has a built-in incentive to put the interests of its consumers first behaves differently than a plan that has to look out for its shareholders’ interests. It’s that simple.

It is important to remember: this option will be a choice. Let me repeat – a choice. A guaranteed, affordable choice. No one is required to sign up for this plan. It is an option for the public. People can stick with their private insurance if they are happy. But with the public plan, they will have one more choice. And by giving them one more choice, this amendment will not undermine or threaten competition within the Exchange, but enhance it.

There is a parallel. We have a public college system that exists alongside our private college system. It creates competition that has improved both the public and private systems, and it has helped college remain accessible to many middle-class Americans. Why should we treat Americans’ health care any differently?

The debate over the public plan has been long and intense so far. And even after this markup, there will be exhaustive debate and amendments offered on the floor.

This will be a good test vote so the American people know there is significant support in this Committee for a level playing field public option. This isn’t the first word on the public insurance option. It won’t be the last either.

I am working with moderate colleagues both in this Committee and on the floor to make changes they find acceptable. They have been very engaged and interested, and I appreciate their involvement. I am optimistic that we can come up with a compromise.

But it is important to continue to work with our colleagues to bring this issue the Senate floor–and all the way to conference if we have to.

For some, the public option has simply become a symbol of how serious we are about reforming our health care system. But to many of us, this is more than a symbol. It is vital to make this bill a much better bill – to keep costs down and provide real choice. We will keep fighting so that the bill that lands on the President’s desk has a good, strong, robust public option.

I ask all of my colleagues who support health care reform to join me in addressing the competition problem the best way we know how – by creating a guaranteed competitor that competes on a level playing field with the powerful insurance companies and gives Americans an affordable choice, no matter where they live.

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