What Is Health Insurance

What Is Health Insurance

what is health insurance

What is Health Insurance and Public Health?

Overview

A new government insurance program, the so-called public option, was proposed by President Obama in the spring of 2009 as a way of “keeping insurers honest” by promoting competition. It soon became one of the central points of contention in the debate, attacked by conservatives as government takeover of health care. Despite polls that consistently indicated strong public support, the idea fell victim to divisions among Democrats in the face of unanimous Republican opposition. The bill passed by the House included the public option but it was stripped from the Senate bill to secure the votes of conservative members of the Democratic caucus and overcome a Republican filibuster. And when Democrats lost their 60-vote “supermajority” in the Senate and shifted their sights to using a filibuster-proof “reconciliation” process to pass a final version after losing their, even many prominent supporters of the public option said they considered it politically impossible to restore it to the bill. After passage of the bill, some Democrats vowed to create one in later legislation, but many liberals wondered if they had missed their last best chance to create a government-run health plan.
Table of Contents

* Overview
* Background
* The House Bill
* The Senate Bill
* Search for Alternatives
* The Option Is Dropped
* The Endgame

Background

Under the public option as originally proposed, a government-run plan would be offered through a new marketplace, or exchange, where individuals who currently do not have insurance could buy coverage. People who want to sign up would pay premiums for the government-run plan, just as they would pay for competing private plans offered in the exchange. Some small businesses would be able to buy coverage through the public plan, but most people who get their insurance through a large employer could not participate, under the bills now being considered.

Democrats said that such a plan, with lower administrative costs and no need for a profit margin, would be able to offer care more cheaply, thereby pressuring private insurers to lower rates. Such a plan could also use the government’s bargaining power to hold down payments to hospitals and doctors, as Medicare does.

Republicans argued that a public plan would inevitably drive private insurers out of business and prompt employers to drop private coverage, pushing people who are already insured onto a plan run by the government. While many polls show strong support for the public option, it was the focus of ire for many of the conservatives whose protests at town halls meetings in August threatened to derail Mr. Obama’s proposals. In response, the president suggested that he would be willing to drop the idea in favor of other measures to promote competition.

The health care bills passed by three House committees and the Senate health committee over the summer of 2009 all included a public option. The bill passed in the Senate Finance Committee by its Democratic chairman, Max Baucus of Montana, did not.

The House Bill

On Nov. 7, the House passed its health reform by the narrow margin of 220-215. The vote came only after Speaker Nancy Pelosi agreed to weaken the public option provisions. Instead of basing its charges on Medicare’s fee schedule plus 5 percent, the plan would have to negotiate rates with hospitals and doctors, just as private plans do. The change meant that the public option would be likely to deliver less in terms of savings, but it reassured enough conservative Democrats to win passage.

The Senate Bill

In late November, the Senate began work on a bill proposed by the majority leader, Harry Reid of Nevada, that was a combination of the two committee bills. It included a public option that would allow states to choose not to take part in it — a so-called “opt out.”

As a result, Mr. Reid lost Senator Olympia J. Snowe of Maine, the one Republican who had given Democratic efforts a tinge of bipartisanship. And a group of conservative members of his caucus declared they would join Republicans in blocking a vote on the bill if the public option were not removed.

Search for Alternatives

In December, as the Senate began consideration of the bill, Mr. Reid convened a group of five liberal and five conservative Democratic senators to seek common ground on the public option, sessions that gave rise to the ideas of Medicare-at-55 and the extension of a system like the federal employees plan.

In announcing the agreement, Mr. Reid was apparently trying to create a sense of momentum for the health care legislation, which had already been on the Senate floor for nine days with no immediate end in sight.

But any optimism was handed a blow when Senator Joseph I. Lieberman, independent of Connecticut, announced that he would vote against the legislation. The bill’s supporters had said earlier they thought they had secured his agreement to go along with a

How Health Insurance Works

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