Earlier this afternoon, the media had its first opportunity to question President Obama on healthcare reform after a tumultuous week on Capitol Hill that saw Democrats retreat behind closed doors when the Congressional Budget Office torpedoed Senator Kennedy’s Affordable Health Choices Act, Senator Baucus scrapped draft legislation in the Senate Finance Committee and key Democrats - including California’s Dianne Feinstein - broke ranks and vowed to defeat some of the proposals currently on the table.

Sadly, none of the reporters present - including Jake Tapper who we called out in yesterday’s Media Gaffe Reveals Healthcare Reform Pushed Back to December - failed to follow up on the President’s new December deadline (unless it is still October) for healthcare reform. HealthcareHorserace.com continues to investigate this story and will give our readers some clarification as soon as we know more.

The two rounds of questions that were put to the President on healthcare (which wasn’t bad considering this was also the first time the media got to question the President on Iran) focused on the highly controversial public option insurance plan proposed by Democrats and the ability of private insurers to compete with the government in the market place.

The first round of questions came from USA Today’s David Jackson.

Q Thank you, Mr. President. Two of the key players in the insurance industry, America’s Health Insurance Plans and Blue Cross-Blue Shield, sent a letter to the Senate this morning saying that a government health insurance plan would “dismantle” private insurers. Why are they wrong? And secondly, this public plan, is this non-negotiable? Would you sign a health care bill without it?

THE PRESIDENT: Well, let’s talk first of all about health care reform more broadly.

I think in this debate there’s been some notion that if we just stand pat we’re okay. And that’s just not true. You know, there are polls out that show that 70 or 80 percent of Americans are satisfied with the health insurance that they currently have. The only problem is that premiums have been doubling every nine years, going up three times faster than wages. The U.S. government is not going to be able to afford Medicare and Medicaid on its current trajectory. Businesses are having to make very tough decisions about whether we drop coverage or we further restrict coverage.

So the notion that somehow we can just keep on doing what we’re doing and that’s okay, that’s just not true. We have a longstanding critical problem in our health care system that is pulling down our economy, it’s burdening families, it’s burdening businesses, and it is the primary driver of our federal deficits. All right?

So if we start from the premise that the status quo is unacceptable, then that means we’re going to have to bring about some serious changes. What I’ve said is, our top priority has to be to control costs. And that means not just tinkering around the edges. It doesn’t mean just lopping off reimbursements for doctors in any given year because we’re trying to fix our budget. It means that we look at the kinds of incentives that exist, what our delivery system is like, why it is that some communities are spending 30 percent less than other communities but getting better health care outcomes, and figuring out how can we make sure that everybody is benefiting from lower costs and better quality by improving practices. It means health IT. It means prevention.

So all these things are the starting point, I think, for reform. And I’ve said very clearly: If any bill arrives from Congress that is not controlling costs, that’s not a bill I can support. It’s going to have to control costs. It’s going to have to be paid for. So there’s been a lot of talk about, well, a trillion-dollar price tag. What I’ve said is, if we’re going to spend that much money, then it’s going to be largely funded through reallocating dollars that are already in the health care system but aren’t being spent well. If we’re spending $177 billion over 10 years to subsidize insurance companies under Medicare Advantage, when there’s no showing that people are healthier using that program than the regular Medicare program, well, that’s not a good deal for taxpayers. And we’re going to take that money and we’re going to use it to provide better care at a cheaper cost to the American people. So that’s point number one.

Number two, while we are in the process of dealing with the cost issue, I think it’s also wise policy and the right thing to do to start providing coverage for people who don’t have health insurance or are underinsured, are paying a lot of money for high deductibles. I get letters — two, three letters a day — that I read of families who don’t have health insurance, are going bankrupt, are on the brink of losing their insurance; have deductibles that are so high that even with insurance they end up with $50,000, $100,000 worth of debt; are at risk of losing their homes.

And that has to be part of reform, making sure that even if you’ve got health insurance now, you are not worried that when you lose your job or your employer decides to change policies that somehow you’re going to be out of luck. I think about the woman who was in Wisconsin that I was with, who introduced me up in Green Bay — 36 years old, double mastectomy; breast cancer has now moved to her bones and she’s got two little kids, a husband with a job. They had health insurance, but they’re still $50,000 in debt, and she’s thinking, my main legacy, if I don’t survive this thing, is going to be leaving $100,000 worth of debt. So those are the things that I’m prioritizing.

Now, the public plan I think is a important tool to discipline insurance companies. What we’ve said is, under our proposal, let’s have a system the same way that federal employees do, same way that members of Congress do, where — we call it an “exchange,” or you can call it a “marketplace” — where essentially you’ve got a whole bunch of different plans. If you like your plan and you like your doctor, you won’t have to do a thing. You keep your plan. You keep your doctor. If your employer is providing you good health insurance, terrific, we’re not going to mess with it.

But if you’re a small business person, if the insurance that’s being offered is something you can’t afford, if you want to shop for a better price, then you can go to this exchange, this marketplace, and you can look: Okay, this is how much this plan costs, this is how much that plan costs, this is what the coverage is like, this is what fits for my family. As one of those options, for us to be able to say, here’s a public option that’s not profit-driven, that can keep down administrative costs and that provides you good, quality care for a reasonable price — as one of the options for you to choose, I think that makes sense.

Q Won’t that drive private insurers out of business?

THE PRESIDENT: Why would it drive private insurers out of business? If private insurers say that the marketplace provides the best quality health care, if they tell us that they’re offering a good deal, then why is it that the government — which they say can’t run anything — suddenly is going to drive them out of business? That’s not logical.

Now, I think that there’s going to be some healthy debates in Congress about the shape that this takes. I think there can be some legitimate concerns on the part of private insurers that if any public plan is simply being subsidized by taxpayers endlessly, that over time they can’t compete with the government just printing money.

So there are going to be some I think legitimate debates to be had about how this private plan takes shape. But just conceptually, the notion that all these insurance companies who say they’re giving consumers the best possible deal, that they can’t compete against a public plan as one option, with consumers making the decision what’s the best deal. That defies logic, which is why I think you’ve seen in the polling data overwhelming support for a public plan. All right?

Q Is that non-negotiable?

(Ed Note: The President decided not to answer this question and moved on to another reporter.)

Later in the press conference, Jake Tapper from ABC News (a name you may recall from yesterday’s Media Gaffe Reveals Healthcare Reform Pushed Back to December) returned the conversation to healthcare reform.

Jake Tapper.

Q Thank you, Mr. President. Before I ask my question, I’m wondering if you could actually answer David’s. Is the public plan non-negotiable?

THE PRESIDENT: That’s your question. (Laughter.)

Q Well, you didn’t answer –

THE PRESIDENT: You think you’re going to — are you the ombudsman for the White House press corps? (Laughter.) What’s your — is that your question? (Laughter.)

Q Then I have a two-part question. (Laughter.) Is the public plan non-negotiable? And while I appreciate your Spock-like language about the logic of the health care plan, the public plan, it does seem logical to a lot of people that if the government is offering a cheaper health care plan, then lots of employers will want to have their employees covered by that cheaper plan, which will not have to be for profit, unlike private plans, and may possibly benefit from some government subsidies, who knows. And then their employees would be signed up for this public plan, which would violate what you’re promising the American people, that they will not have to change health care plans if they like the plan they have.

THE PRESIDENT: I got you. You’re pitching, I’m catching. I got the question. First of all, was the reference to Spock — is that a crack on my ears? (Laughter.) All right, I just want to make sure. No?

Q I would never make fun of your ears, sir. (Laughter.)

THE PRESIDENT: In answer to David’s question, which you co-opted, we are still early in this process, so we have not drawn lines in the sand other than that reform has to control costs and that it has to provide relief to people who don’t have health insurance or are underinsured. Those are the broad parameters that we’ve discussed.

There are a whole host of other issues where ultimately I may have a strong opinion, and I will express those to members of Congress as this is shaping up. It’s too early to say that. Right now I will say that our position is that a public plan makes sense.

Now, let me go to the broader question you made about the public plan. As I said before, I think that there is a legitimate concern if the public plan was simply eating off the taxpayer trough, that it would be hard for private insurers to complete. If, on the other hand, the public plan is structured in such a way where they’ve got to collect premiums and they’ve got to provide good services, then if what the insurance companies are saying is true, that they’re doing their best to serve their customers, that they’re in the business of keeping people well and giving them security when they get sick, they should be able to compete.

Now, if it turns out that the public plan, for example, is able to reduce administrative costs significantly, then you know what? I’d like insurance companies to take note and say, hey, if the public plan can do that, why can’t we? And that’s good for everybody in the system. And I don’t think there should be any objection to that.

Now, by the way, I should point out that part of the reform that we’ve suggested is that if you want to be a private insurer as part of the exchange, as part of this marketplace, this menu of options that people can choose from, we’re going to have some different rules for all insurance companies — one of them being that you can’t preclude people from getting health insurance because of a pre-existing condition, you can’t cherry pick and just take the healthiest people.

So there are going to be some ground rules that are going to apply to all insurance companies, because I think the American people understand that, too often, insurance companies have been spending more time thinking about how to take premiums and then avoid providing people coverage than they have been thinking about how can we make sure that insurance is there, health care is there when families need it.

But I’m confident that if — I take those advocates of the free market to heart when they say that the free market is innovative and is going to compete on service and is going to compete on their ability to deliver good care to families. And if that’s the case then this just becomes one more option. If it’s not the case then I think that that’s something that the American people should know.

Q I’m sorry, but what about keeping your promise to the American people that they won’t have to change plans even if employers –

THE PRESIDENT: Well, no, no, I mean — when I say if you have your plan and you like it and your doctor has a plan, or you have a doctor and you like your doctor that you don’t have to change plans, what I’m saying is the government is not going to make you change plans under health reform.

Now, are there going to be employers right now — assuming we don’t do anything — let’s say that we take the advice of some folks who are out there and say, oh, this is not the time to do health care, we can’t afford it, it’s too complicated, let’s take our time, et cetera. So let’s assume that nothing happened. I can guarantee you that there’s a possibility for a whole lot of Americans out there that they’re not going to end up having the same health care they have, because what’s going to happen is, as costs keep on going up, employers are going to start making decisions: We’ve got to raise premiums on our employees; in some cases, we can’t provide health insurance at all.

And so there are going to be a whole set of changes out there. That’s exactly why health reform is so important.

In his remarks, the President offered up many of the same things he’s been saying about healthcare reform from the get go, but we now have some context to analyze these statements in. 

I’ve said very clearly: If any bill arrives from Congress that is not controlling costs, that’s not a bill I can support. It’s going to have to control costs. It’s going to have to be paid for. So there’s been a lot of talk about, well, a trillion-dollar price tag. What I’ve said is, if we’re going to spend that much money, then it’s going to be largely funded through reallocating dollars that are already in the health care system but aren’t being spent well.

Translation: I’ve made it clear to Congress that the more money they want to spend on healthcare reform, the more they’re going to need to raise taxes on people. 

The President is a politically astute man. It has become clear over the past week that Congress faces two distinct options when it comes to healthcare reform. First, they can try to devise legislation that provides universal access to healthcare in America. The price tag on this will be in excess of $1.6 trillion according to CBO estimates of which less than half can currently be payed for by “reallocating dollars that are already in the health care system but aren’t being spent well” as the President suggests. 

This is going to mean massive cuts to existing federal programs like Medicare, Medicaid, CHIP (Children’s Health Insurance Program) and the Veteran’s Health Administration. It also means massive taxes levied on employers and individuals to cover the policies of those who cannot afford them. The Democrat talking point on this is “You’re going to feel a little pain.” The reality is that pursuing universal healthcare is going to be more like losing a limb.

Option two for Congressional Democrats is proposing legislation that they can afford. The conventional wisdom is that the price tag Congress can cover is about $1 trillion over ten years. According to CBO estimates of current Democrat proposals, this means insuring approximately 16 million of the 46 million currently without health insurance in this country.

Either option is politically unacceptable with the voting public and President Obama knows this. As we’ve seen with his handling of the situation in Iran, this President is all too happy to make big promises and leave the heavy-lifting and consequences to others.

Next, lets look at President Obama’s thoughts on government intervention into the free market.

Why would it drive private insurers out of business? If private insurers say that the marketplace provides the best quality health care, if they tell us that they’re offering a good deal, then why is it that the government — which they say can’t run anything — suddenly is going to drive them out of business? That’s not logical.

Now, I think that there’s going to be some healthy debates in Congress about the shape that this takes. I think there can be some legitimate concerns on the part of private insurers that if any public plan is simply being subsidized by taxpayers endlessly, that over time they can’t compete with the government just printing money.

So there are going to be some I think legitimate debates to be had about how this private plan takes shape. But just conceptually, the notion that all these insurance companies who say they’re giving consumers the best possible deal, that they can’t compete against a public plan as one option, with consumers making the decision what’s the best deal. That defies logic, which is why I think you’ve seen in the polling data overwhelming support for a public plan. All right?

Translation: I got your free market right here pal!

The President is making a politically smart play here and, once again, putting the onus on Congress if the public option does in fact drive America into a single-payer healthcare insurance system. 

We all know that (logically) the free market will always prevail over government agencies on a level playing field. So, the President is challenging the free market economy to do so. A fair challenge if anyone thought the government was going to play fair on this one. As the President preemptively points out, the biggest fear is a public option insurance plan with a blank check and a mandate with no budgetary restrictions. That is the worst case scenario and the equivalent of you or I starting a software company in our garage to compete directly with Microsoft. The little guy is going to lose every time. President Obama promises that this is not the plan.

So kudos to the President for a hand well played here. The only way to challenge him on this one is to go back to the future and call the man a liar. We’re going to hold off on that one for the time being.

The next quote from the news conference is perhaps the most interesting.

So there are going to be some ground rules that are going to apply to all insurance companies, because I think the American people understand that, too often, insurance companies have been spending more time thinking about how to take premiums and then avoid providing people coverage than they have been thinking about how can we make sure that insurance is there, health care is there when families need it.

But I’m confident that if — I take those advocates of the free market to heart when they say that the free market is innovative and is going to compete on service and is going to compete on their ability to deliver good care to families. And if that’s the case then this just becomes one more option. If it’s not the case then I think that that’s something that the American people should know.

Translation: Insurance companies cannot be trusted so we’re going to either get them to run themselves the way we think they should or drive them into the ground.

I’m reminded of Bill Clinton and the definition of “is.” President Obama clearly calls for some “ground rules that are going to apply to all insurance companies.” This leads us to a very important question about the proposed public option insurance plan. Will this plan be a government program, a government agency, or a for-profit corporation (aka an insurance company)?

If Democrats propose legislation that further regulates for-profit insurance companies but exempts the public option plan as a non-profit or government entity whose mission is to provide healthcare insurance for those who are under-served by or cannot afford private insurance, this is a not-so-thinly-veiled prescription for unfair competition and the very single-payer system the President has guaranteed is not on the table.

Only time will tell what’s in store as the Democrats continue their push for healthcare reform, but be sure that HealthcareHorserace.com will be here to keep you in the know as the race unfolds.