Media uncritically trumpet Lieberman's dubious public option claims

Several media outlets have uncritically reported Sen. Joe Lieberman's (I-CT) statement that he will oppose cloture for the Senate health care reform bill -- which Senate Majority Leader Harry Reid has said will include a public option that each state could opt out of -- because he believes the public option would create a costly government entitlement program that taxpayers can't afford. However, as CBS News noted in a blog post on Lieberman's announcement, while Reid has yet to release details of the compromise Senate legislation, every other proposed bill with a public option so far has required the costs of the public plan to be covered by the premiums of those who enroll in it.

Numerous media outlets uncritically report Lieberman's claims

From an October 27 Associated Press article:

Connecticut Sen. Joseph Lieberman says while he's “strongly inclined” to vote to move Sen. Harry Reid's health care plan to the Senate floor for debate, he would ultimately oppose the measure because it includes a public option.

Lieberman said Tuesday in a telephone interview with The Associated Press that he's worried a public option would be costly to taxpayers and drive up insurance premiums.

From an October 27 Politico article:

“We're trying to do too much at once,” Lieberman said. “To put this government-created insurance company on top of everything else is just asking for trouble for the taxpayers, for the premium payers and for the national debt. I don't think we need it now.”


“I can't see a way in which I could vote for cloture on any bill that contained a creation of a government-operated-run insurance company,” Lieberman added. “It's just asking for trouble - in the end, the taxpayers are going to pay and probably all people will have health insurance are going to see their premiums go up because there's going to be cost shifting as there has been for Medicare and Medicaid.”

Lieberman said he “very much” wants to vote for health care reform but that he's worried about stifling “the economic recovery we're in” or adding to the federal debt.

“I feel this way about a national, government-created health insurance company - whether it's a trigger or not,” he said. “My answer is - we're - we have the opportunity to do some great reforms here. These exchanges that we're talking about, I think, are going to drive competition and probably bring the cost of health insurance down or at least contain the cost increases for a lot of people. Let's give that two or three years to see how it works to see how it works before we talk about creating another entitlement that will end up increasing the national debt and putting more of a burden on taxpayers.”

From an October 27 article:

Lieberman said the inclusion of an opt-out provision would not change his position.

“To me, the opt out doesn't change the basic facts. The last thing we want to do now is create another Washington-run health insurance company,” he said. “There's enough good things that we're talking about - health care delivery reforms, insurance market reforms, extending coverage to people who don't have it now. I think we're just asking for trouble that the taxpayers don't need. I think the end result of it - I mean we are having enough time sustaining Medicare.”

The Democrat-turned-independent said he could not support the creation of a public option because “it still creates a whole new government created entitlement program for which taxpayers will be on the line.”

From an October 27 post at NBC News' First Read blog:

“We're trying to do too much at once. To put this government-created insurance company on top of everything else is just asking for trouble for the taxpayers, for the premium payers and for the national debt. I don't think we need it now.”

He'd vote against a plan with a public option “even with an opt-out because it still creates a whole new government entitlement program for which taxpayers will be on the line. ... I've told Sen. Reid that if the bill stays as it is now I will vote against cloture.”

Which Democrat handed him a gavel again?

By contrast, CBS compares Lieberman claims to the facts

CBS: Public option in bills “would be financed by premiums,” not taxes. In an October 27 post to CBS News' Political Hotsheet blog, Stephanie Cordon wrote: “Lieberman has said he opposes a public option because of the potential burden it could place on taxpayers. However, Democrats have crafted a public option that would be financed by premiums rather than federal funds.”

Bills already written with public option require its costs to be covered by premiums

House, Senate Health Committee bills require premiums to cover costs of public plan. Although the Senate has not released the text of its compromise bill, both the House tri-committee bill and the Senate HELP Committee's bill require their public options to charge premiums sufficient to cover administrative costs as well as the cost of enrollees' benefits.

From the America's Affordable Health Choices Act of 2009, as introduced in the U.S. House of Representatives:



(1) IN GENERAL. -- The Secretary shall establish geographically-adjusted premium rates for the public health insurance option in a manner --

(A) that complies with the premium rules established by the Commissioner under section 113 for Exchange-participating health benefit plans; and

(B) at a level sufficient to fully finance the costs of --

(i) health benefits provided by the public health insurance option; and

(ii) administrative costs related to operating the public health insurance option.

From the Affordable Health Choices Act as passed by the Senate Health, Education, Labor, and Pensions Committee:

''(5) PREMIUMS. --

''(A) PREMIUMS SUFFICIENT TO COVER COSTS. -- The Secretary shall set premium rates in an amount sufficient to cover expected costs (including claims and administrative costs) using methods in general use by qualified health plans.

Bills' tax revenues are used to cover expansion of coverage, with or without public option

Senate Finance bill with no public option requires tax on high-cost plans to cover expansion of Medicaid and subsidies for lower- and middle-income Americans purchasing insurance. The revenues from the excise tax and penalty payments, along with the savings from Medicare, would pay for the expansion of the Medicaid program and the subsidies to help certain lower- and middle-income Americans purchase private insurance through the exchanges. From the Congressional Budget Office's (CBO) analysis of the Senate Finance Committee bill, which does not include a public option:

According to CBO and JCT's assessment, enacting the Chairman's mark, as amended, would result in a net reduction in federal budget deficits of $81 billion over the 2010-2019 period (see Table 1). The estimate includes a projected net cost of $518 billion over 10 years for the proposed expansions in insurance coverage. That net cost itself reflects a gross total of $829 billion in credits and subsidies provided through the exchanges, increased net outlays for Medicaid and the Children's Health Insurance Program (CHIP), and tax credits for small employers; those costs are partly offset by $201 billion in revenues from the excise tax on high-premium insurance plans and $110 billion in net savings from other sources. The net cost of the coverage expansions would be more than offset by the combination of other spending changes that CBO estimates would save $404 billion over the 10 years and other provisions that JCT and CBO estimate would increase federal revenues by $196 billion over the same period. In subsequent years, the collective effect of those provisions would probably be continued reductions in federal budget deficits. Those estimates are all subject to substantial uncertainty.


On a preliminary basis, CBO and JCT estimate that the proposal's specifications affecting health insurance coverage would result in a net increase in federal deficits of $518 billion over fiscal years 2010 through 2019. That estimate primarily reflects $345 billion in additional federal outlays for Medicaid and CHIP and $461 billion in federal subsidies that would be provided to purchase coverage through the new insurance exchanges and related spending. The other main element of the coverage provisions that would increase federal deficits is the tax credit for small employers who offer health insurance, which is estimated to reduce revenues by $23 billion over 10 years. Those costs would be partly offset by receipts or savings, totaling $311 billion over the 10-year budget window, from four sources: net revenues from the excise tax on high premium insurance plans, totaling $201 billion; penalty payments by uninsured individuals, which would amount to $4 billion; penalty payments by employers whose workers received subsidies via the exchanges, which would total $23 billion; and other budgetary effects, mostly on tax revenues, associated with the expansion of federally subsidized insurance, which would reduce deficits by $83 billion.

House tri-committee bill requires tax on high-income Americans to cover expansion of Medicaid and subsidies for lower- and middle-income Americans purchasing insurance. CBO's July 17 cost estimate of the House bill indicates that expanding Medicaid and providing subsidies for some families to purchase insurance through the exchanges would cost roughly $1.2 trillion. This cost is offset, in part, by revenues from a surtax on high-income Americans as well as savings from Medicare and other federal health programs. Congress Daily reported that House leaders “released CBO estimates for liberals' preferred version of the public option that show $85 billion more in savings than for the version the Blue Dogs prefer.”

CBO score of Senate HELP bill shows bulk of cost is for subsidies for lower- and middle-income Americans purchasing insurance. CBO's July 2 analysis of the Senate HELP Committee's bill, which does include a public option, shows that the subsidies to help certain low- and middle-income Americans purchase insurance through the exchange would cost around $723 billion. CBO also found that the public option “did not have a substantial effect on the cost” projections for the bill.