Sen. Cantwell's Health Care Amendment passes

The Wall Street Journal reports today that Senator Cantwell was successful in obtaining approval of an amendment that allows states to use federal funds for public health insurance plans instead of providing direct subsidies to low and middle income people.

Senator Cantwell sees the amendment as a public plan that would be negotiated with the private sector.

More from the Wall Street Journal:

By Patrick Yoest of DOW JONES NEWSWIRES
WASHINGTON --The Senate Finance Committee approved an amendment to health-care legislation Thursday that would allow states to use federal funds to set up public health insurance plans for lower-income and middle-income people.

The amendment, offered by Sen. Maria Cantwell, D-Wash., would allow states to steer funds from the government from the health-care measure to set up plans for those whose income puts them between 133% and 200% of the poverty line. The state plans would then contract with private insurers to provide the coverage.

Cantwell referred to it as "a public plan, but negotiated with the private sector." The amendment was approved by a 12-11 vote, with all Republicans and Sen. Blanche Lincoln, D.-Ark., voting against it.

States wouldn't be required to set up the plans. If they did, the amendment encourages them to offer "care coordination" - or greater collaboration among health care providers - as part of an effort to lower costs. Cantwell suggested that the states would have significant bargaining power with their own plans, pointing to an example in her home state, known as the Basic Health Plan.

"This is a way to help the whole nation move towards those kinds of efficiencies," Cantwell said.

Those that would eligible for coverage in a state plan - which Cantwell estimated would be up to 75% of the adult population currently lacking insurance - don't qualify for Medicaid in most states.

Under Senate Finance Chairman Max Baucus' health-care bill, they would receive subsidies to purchase health coverage in an insurance "exchange." The Cantwell amendment would allow states to use the value of the subsidies to finance a state health plan, however.

Roughly $200 billion in what would have been spent on subsidies would instead be steered to the states under the amendment, according to Cantwell. She said that "about a dozen states" would be immediately ready to set up the plans. The state plans would attract managed care organizations to areas that don't currently have them, she said.

America's Health Insurance Plans, a trade group that represents health insurers, raised questions about the Cantwell amendment in a statement.

AHIP spokesman Robert Zirkelbach said the Basic Health Plan in Washington state "has had significant unintended consequences, including budget shortfalls, skyrocketing premiums, waiting lists, and reductions in enrollment."

Zirkelbach said the group doesn't have "a lot of specifics" on the Cantwell amendment right now, but that "a new government-run plan in any form is not necessary."

Leading insurers in AHIP include Aetna Inc. (AET), Humana Inc. (HUM), Cigna Corp.(CI) and UnitedHealth Group Inc (UNH).

Cantwell acknowledged the budget shortfall in her state, but said that the state plan was still functioning effectively and that a number of insurers still participated in the Washington state health plan.

"It's been tough economic times, but that's all the more reason that we don't want to see poor people fall through," Cantwell said. "If you don't put a negotiator in the room to negotiate with insurance companies, you are not going to get the rates down."