WASHINGTON - White House officials and senior Senate Democrats at work on health care legislation are strongly considering a requirement for the federal government to sell insurance in direct competition with private industry, officials said yesterday, with individual states permitted to drop out of the system.
Liberals in Congress long have viewed such an approach, called a public option, as an essential ingredient of the effort to overhaul the nation’s health care system, and President Obama has said frequently he favors it.
Democratic Senators Ben Nelson and Kent Conrad said in separate interviews that they had been told the plan was being considered in private negotiations. The White House had no comment on the remarks by Nelson and Conrad. Other officials said no final decisions had been made, and it seemed clear any such provision would generate resistance among moderate Senate Democrats. Legislation taking shape in the House is also expected to include a public option, although it is unlikely states will be allowed to opt out.
Also yesterday, House Democrats announced yesterday they have reached a deal on Medicare payments that will secure critical support from heartland and Pacific Coast lawmakers for the health care overhaul.
At issue is an old quirk with the government’s health care program for seniors and disabled people. In some states, Medicare recipients get quality care at lower cost than in many other places. But hospitals and doctors in frugal states aren’t rewarded. Instead, they make less money per patient than providers in higher-cost areas where the medical care is no better, and sometimes worse.
The deal with House Speaker Nancy Pelosi attempts to address the disparities without busting the budget.
Christina Romer, the chairwoman of President Obama’s Council of Economic Advisers, said the initial jolt of the $787 billion stimulus expanded the economy in the second and third quarters of this year. But, she said, the remaining spending will simply keep it from slipping.
“By mid-2010,’’ she said, “fiscal stimulus will likely be contributing little to further growth.’’
Her assessment underscored the fragility of an economic recovery marked by stubbornly high unemployment. Romer said the government has already spent $194 billion of the total stimulus package, most of it in tax cuts, aid to states, unemployment benefits, and food stamps.
Romer, testifying before Congress’s Joint Economic Committee, said that as of August the stimulus had created or saved 600,000 to 1.5 million jobs. She said a premature end to the stimulus would be “misguided.’’
Republicans were skeptical of Romer’s talk of stimulus success. Senator Sam Brownback of Kansas also said the administration’s push for health care and climate change legislation has created uncertainty among employers, who worry about tax increases and are thus unwilling to take risks that could create jobs.