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Why Lieberman Blocks a Public Option

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Reprinted from Consortium News

With the health-reform bill's "public option" truly reduced to the "sliver" that President Barack Obama once called it -- and indeed having become a feature that mostly benefits the insurance industry -- the next question must be: why is it still being opposed by industry defenders like Sen. Joe Lieberman?

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As the health bill has moved through Congress, the public option has been whittled down from an expansive alternative that might have enticed 119 million Americans to sign up, according to an industry-backed study, to a tiny remnant that the Congressional Budget Office believes will attract only six million customers, including many sick people whom private insurers don't want anyway.

Put crudely, the public option in its current form would vacuum up the chronically ill and thus spare the insurance industry not only the expense of paying for their care but also the administrative costs of figuring out new creative ways to deny these sick people medical coverage.

According to the CBO, the planned "insurance exchanges" thus would give private insurers an estimated 24 million new -- and relatively healthy -- customers, many with government subsidies that would go directly into the coffers of the insurance industry. Without the public option, the industry might get six million more customers but they would include lots of sick people.

That means the current legislation with a weak public option is a win-win-win for the insurance industry.

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It's most lucrative market -- large employers providing group benefits for employees -- would be protected from competition from the public option; the surviving public option for individuals and small businesses would be barred from achieving savings by tying payments to Medicare rates; and the public option thus would get stuck charging higher premiums than private insurers because it would end up with the sickest part of the population, the CBO says.

So, from the perspective of an insurance executive, what's not to like?

One obvious concern for private insurers would be that after the public option becomes available in 2013 through the insurance exchanges, Congress might be pressured by dissatisfied Americans to expand it into a real alternative to the harsh, profit-making practices of the insurance industry. That is called the "camel's nose under the tent" theory.

Yet, while it's hard to predict the future, it seems equally plausible that the industry would be worse off if it succeeds in eliminating the public option or killing health-care reform outright. As the U.S. health-care crisis worsens, private insurers and their political defenders could be blamed -- and a more radical change might become possible.

That is the view of some progressives, such as Rep. Dennis Kucinich, D-Ohio, who believe the House-passed bill is so thoroughly compromised that it makes more sense to vote it down and start over, seeking either a "robust" public option tied to Medicare rates or a full-scale single-payer system that could prove the death knell for the insurance industry.

On balance, therefore, it would seem that the House-passed legislation and a similar bill in the Senate would represent a fairly safe -- and reasonably profitable -- bet for the industry, at least relative to the risks of stripping out the public option or simply blocking reform.

So Why All the Fuss?

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Which brings us to the question of why industry defenders are determined to sink the bill.

For the Republicans, the answer is easy: they want Obama to fail. Sen. Jim DeMint, R-South Carolina, put it bluntly in July when he declared that "If we're able to stop Obama on this, it will be his Waterloo. It will break him."

For conservative Democrats, the answer is slightly more complex. Operating in districts or states where right-wing media is particularly powerful and largely unchallenged, they may think they can achieve some safety by positioning themselves as independent-minded critics of Obama's agenda.

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http://www.consortiumnews.com

Robert Parry broke many of the Iran-Contra stories in the 1980s for the Associated Press and Newsweek. His latest book, Secrecy & Privilege: Rise of the Bush Dynasty from Watergate to Iraq, can be ordered at secrecyandprivilege.com. It's also available at
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