Kennedy seeks public health care plan that finances itself

Senator Edward M. Kennedy’s committee will propose creating a government-backed alternative to private insurance designed to pay for itself after getting federal start-up money.

A summary of the provision written by the Massachusetts Democrat’s Health, Education, Labor and Pensions Committee describes a public insurance plan that could be quickly available around the U.S. with payment rates set by the Health and Human Services Department. The summary was provided by a person close to the committee.

President Barack Obama said in a June 2 letter to the chairmen of the health and finance committees that government- backed insurance is necessary to make affordable coverage available to everyone and keep private insurers “honest.” The administration is pushing for an expansion of health care that won’t add a “dime to the deficit,” Health and Human Services Secretary Kathleen Sebelius said June 28.

“We’re very pleased with it,” Richard Kirsch, the national campaign director of Health Care for America Now, a Washington-based coalition of more than 1,000 groups advocating government-backed insurance, said in a telephone interview. The health committee’s proposal would have “national reach and the ability to lower rates and provide real options to the insurance industry.”

America’s Health Insurance Plans and the BlueCross BlueShield Association, two health-insurance trade groups, told Kennedy in a letter June 19 that a government-run plan “would dismantle employer-based coverage, significantly increase costs for those who remain in private coverage, and add additional liabilities to the federal budget.”

“We share the concerns that providers, players and patients have about the impact that a government-run program would have,” said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, in a telephone interview yesterday. “Current government plans underpay for services, those costs get passed through the health-care system and employers and consumers pay higher premiums as a result.”

Republican leaders have attacked Obama’s health-care proposal and opposed a new government insurance plan. Senator Mitch McConnell of Kentucky, the minority leader, said June 28 on “Fox News Sunday” that “it looks like” the administration may pay for the overhaul, in part by “cuts to Medicare and to seniors.”

The Senate Finance Committee, whose Democratic chairman is Senator Max Baucus of Montana, is working on an overhaul proposal that would include an alternative to insurance supplied by companies such as Cigna Corp. of Philadelphia and Minnetonka, Minnesota-based UnitedHealth Group Inc.

Sebelius, in an interview last week with Bloomberg News, said she was open to the idea of medical-insurance cooperatives as well as government-backed insurance based on Medicare, the U.S. health plan for the elderly and disabled. Senator Kent Conrad, a North Dakota Democrat and chairman of the Budget Committee, proposed cooperatives as a potential compromise. Lawmakers are seeking to find a plan to meet Obama’s main goals of expanding health coverage for the estimated 46 million uninsured and slowing the pace of increasing medical costs.