Finance Panel Moves to Create State-Based Public Plans

Created: October 01, 2009 16:40 | Last updated: July 31, 2020 00:00

The Senate Finance Committee on Thursday approved legislation empowering states to create public insurance plans that would negotiate rates on behalf of some of their poorest residents.

The proposal, sponsored by Sen. Maria Cantwell (D-Wash.), would allow states to create “basic health plans” catering to those earning between 133 percent and 200 percent of poverty. The bill is designed to ease the budget squeeze on some states with generous Medicaid programs –  states which would otherwise be forced to pay a portion of the Medicaid costs for the same people.

Importantly, the bill would also empower states to negotiate with physicians, hospitals and other providers in search of affordable care. “It is a public plan, but negotiated with the private sector,” Cantwell said.

The new plan would be optional, Cantwell emphasized, with states participating only at their own discretion. “The state is in the driver’s seat,” she said.

Republicans weren’t convinced. They blasted a stipulation that those qualifying for the new plan wouldn’t be eligible for federal subsidies to buy different insurance coverage on the state exchange. “There is no choice for people if a state decides to do this,” said Sen. Jon Kyl (R-Ariz.).

There were additional concerns. Kyl and Sen. John Cornyn (R-Texas) both worried that, by draining the exchange of a chunk of beneficiaries, the risk pool would shrink, thereby raising premiums on everyone else. “This seems to me to be moving in the wrong direction,” Cornyn said.

Supporters of the Cantwell proposal hope it will solve a dilemma facing states under the health reform proposal moving through the Finance Committee. That bill hikes minimum Medicaid eligibility to 133 percent of poverty, but also requires states to maintain their current eligibility levels even if they’re well above 133 percent. Some states are concerned that, with Medicaid enrollment rising amid the recession, the mandate to keep eligibility steady will break their already bursting budgets. The Cantwell amendment will shift a percentage of those states’ Medicaid populations into a separate plan funded with federal subsidies.

The Congressional Budget Office has yet to estimate the cost of Cantwell’s proposal — a situation prompting Republicans to claim that it shouldn’t get a vote.

Sen. Jim Bunning (R-Ky.) called on Baucus to rule the amendment out of order until the CBO score is known. Baucus refused. “This amendment is structured in a way to save money,” he said. “Therefore it is in order.”

“We don’t know that,” Bunning snapped.

The vote was 12 to 11. Sen. Blanche Lincoln (D-Ark.) was the only member to cross party lines, joining all Republicans in opposing the bill.