Health Insurers Fire Volley In New Battle Over The Public Option

When Senate Democrats announced a new push for a public option in Obamacare last week, the private insurance industry swung into action. And it did so quickly.

On Friday, the industry’s main trade group sent out an “action alert” to members, asking them to call Senate offices and offering a set of talking points critical of the public option ? that is, a government-run insurance plan for people buying coverage through one of Obamacare’s exchanges.

“We need proven solutions that will make healthcare more affordable for everyone,” Marilyn Tavenner, president of America’s Health Insurance Plans, said in a statement accompanying the action alert obtained by The Huffington Post. “A public option is not one of those solutions – not for consumers, for doctors, for hospitals, or for taxpayers. We need to solve problems, not make them worse.”

The alert came hours after Sen. Jeff Merkley (D-Ore.) announced he’d recruited 32 co-sponsors for a new bill expressing support for a public option ? a position that both President Barack Obama and Democratic presidential nominee Hillary Clinton have publicly endorsed in the last few weeks.

Merkley’s resolution is nonbinding and unlikely to pass, since Republicans have a majority and unanimously oppose the public option. But the insurance industry’s vigorous reaction suggests it considers the prospect of a public option becoming law to be real ? and dangerous.

“The fact that insurance companies are already rallying to kill this idea shows all the more the importance of a public option in holding insurance companies accountable and providing much-needed competition in the marketplace,” Merkley said.

Democrats have recently renewed their push for the public option to shore up the exchanges, which have been plagued by rising premiums and dwindling competition in many parts of the country. Besides Obama and Clinton, supporters include Democratic leaders such as Sens. Dick Durbin (D-Ill.) and Patty Murray (D-Wash.) and high-profile progressives like Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.).

The fight over the public option was one of the most high-profile battles in 2009 and 2010, when Congress was crafting the legislation that eventually became the Affordable Care Act.

Depending on how it’s designed, a public option could use government leverage to demand cheaper prices from hospitals, drug makers and other medical care providers. The idea would be to pass those savings along to consumers as lower premiums and out-of-pocket costs ? in theory, forcing private insurance companies selling through the exchanges to bring down their premiums as well.

During the Obamacare fight, the public option had enthusiastic, sustained support from progressives. But it couldn’t get past opposition from more conservative Democrats ? and even concerned some more liberal ones. One big reason was lobbying from trade groups representing pretty much every part of the health care industry, including insurers.

In the memo that went out to AHIP members on Friday, vice president Jeremy Allen, AHIP’s senior vice president for federal affairs, said that a public option “would not do anything to address the challenges in the Exchanges” and called for other measures to shore up the exchanges ? like tighter scrutiny of people who apply for insurance during the year, outside of the normal open enrollment period.

The letter also called for delaying a tax on insurers that’s scheduled to take effect again this year after Congress temporarily suspended it last year.

“This is not anything new,” Clare Krusing, AHIP press secretary, told HuffPost. “Our position on the public option has been clear and consistent. The public option is not a solution that will fix the Exchanges, nor is [it] an answer to the cost challenges facing consumers.”

“The big insurance lobby is spooked because the public option is back,” said Sarah Badawi, senior lobbyist for the Progressive Change Campaign Committee, which is part of a seven-member coalition leading the public option charge. The other members of the coalition are Daily Kos, Democracy for America,,, UltraViolet, and the Working Families Party.