Despite the cheers and jeers, all the attendees of a recent healthcare reform talk in Tucson left unscathed.

Democratic Rep. Gabrielle Giffords addressed the issue of reform and answered audience questions at Sahuaro High School on Tucson's east side Tuesday, Sept. 1. The event was the last in a run of three held in Giffords' Southern Arizona congressional district.

A crowd of 1,200 people filled the school auditorium to capacity, while seating for another 1,000 people was set up in an outside courtyard.

Giffords, an advocate for reform, reminded the crowd numerous times that she has not endorsed any of the plans under consideration in Congress.

"I am not here to defend any specific piece of legislation," Giffords said.

One bill in particular has drawn the ire of many who disagree with the scope and complexities it proposes. House Resolution 3200, a 1,017-page long overhaul of the healthcare industry, more specifically health insurance, has been greeted with skepticism on many fronts. Across the country people have criticized legislators suspected of having not read the bill.

"Yes, I have read the bill. It's not an easy read," the congresswoman said in response to such calls from audience members.

Perhaps the most controversial issue to emerge from the healthcare debates has been a plan to create a government-sponsored insurance exchange to cover the millions of uninsured Americans. It's called the public insurance option.

Giffords threw her support to the proposal, saying, "I strongly support a public option." The crowd reacted to her statement with mixed cheers and loud boos.

Proponents of the public option say the plan would provide coverage for those without insurance, an estimated 45 million people or roughly 15 percent of the population, and effectively reduce the costs for the rest of the country.

This would be accomplished, supporters say, by injecting competition into the health insurance system and reducing the costs the public pays to provide care for those without insurance.

The public option would come at a cost, and Giffords acknowledged as much.

"Part of this bill, I'm not going to deceive you, if you make over $350,000 a year, you are going to pay a surcharge," Giffords said.

To pay for part of the option, people in the highest tax brackets would pay more in taxes. According to the House Ways and Means Committee, tax rates for married people filing jointly who earn beyond the $350,000 threshold would see about a 1 percent tax increase. The same would apply to those who file single earning more than $280,000.

A 1.5 percent hike would be applied to joint filers who make more than $500,000 and single filers who earn more than $400,000. People earning more than $1 million would feel the largest increase, Zwith a 5.4 percent jump. The same applies for single filers who earn in excess of $800,000.

"The surcharge would have no impact on 98 percent of all households," Giffords said in an interview after the Tuesday night event.

Savings from eliminating fraud and corruption in current government healthcare programs like Medicare and Medicaid also would pay for the public option, Giffords said.

"There are people who have continually defrauded our system," Giffords said. "Weeding out the bad apples is essential whether we pass reform or not."

President Barack Obama also has said eliminating fraud and reducing excessive payments through the government programs would help to pay for reform.

"About two-thirds of health care reform can be paid for not with new revenues, not with tax hikes, just with taking money that's not being spent wisely and moving it into things that will actually make people healthy," the President said in a July 23 speech.

Insurance companies benefit from more than $100 billion per year in "unwarranted subsidies" paid out of Medicare, Obama said.

Despite the savings anticipated through cutting waste and abuse, the Congressional Budget Office, the research arm of Congress, estimates that H.R. 3200 would provide coverage for more than 37 million people by 2019 and add more than $1 trillion to the deficit.

Opponents of the public option argue the plan would effectively eliminate private insurance.

"If the public option is just another option, then you have 1,501 health insurance options in America instead of just 1,500," Republican Sen. John McCain told The Explorer during a visit to Oro Valley last week.

But McCain said the public option isn't simply another alternative; he said it would create an unequal playing field where private insurers wouldn't be able to compete with a government-run plan.

Like McCain, Robert E. Moffit, Ph.D., who researches Medicare, Social Security and healthcare policy at the Washington, D.C.-based Heritage Foundation, believes the public option institutionalizes advantages for the government in providing health insurance.

"The public option has both legal and regulatory exemptions that apply to private insurance plans," Moffit said.

He also said the public option, if enacted, would in short order begin to resemble other government healthcare programs.

"The public option could start to replicate what we see in Medicare," Moffit said. He described Medicare as a cost-shifting program, where participants receive medical care or drugs and the government reimburses healthcare providers for their services. The cost shift comes in, Moffit said, from the below-market rate at which doctors and hospitals are reimbursed by Medicare. That causes care providers to charge higher costs for the same services to those people who aren't covered under Medicare – the vast majority of people in the country with private insurance.

Moffit foresees a similar future in H.R. 3200 and its key feature, the public option.

"Taxpayers would assume the risks of the public plan," Moffit said.

He supports more incremental approaches to reform, for instance allowing states greater authority to enact reforms of their own and to allow consumers to buy into more competitive plans outside of their home states.

One reform that Moffit said would bring down costs and create better competition would be to provide tax credits for people who seek private insurance on their own. The vast majority of people either get health insurance through an employer, or a government plan like Medicare or a state-run option.

Insurance benefits provided by employers are paid for with before-tax dollars. That's not the case for the few people who purchase insurance on their own.

"There's a tax penalty in effect for buying health insurance on your own," Moffit said.

He recognizes the fix wouldn't cure all that ails healthcare, but said it would go far to inject real competition into the system.

Emphasizing her so-called Blue Dog Democrat credentials, Giffords said she won't support any bill that doesn't pay for itself.

What shape reforms might take is at this point up for speculation, but the public option appears to be one aspect where the two parties can't find an accord. As McCain said about the public option, "That's a deal breaker."

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