The Public Option Dead End

November 23, 2009 6:05 a.m.

While the range of abortion related amendments remains a major hurdle for a health care reform bill getting to President Obama’s desk, it is clear, as it has been for some time, that the real fight hangs on the Public Option, especially in the senate. Depending on your count there are three or four senate Democrats who’ve made broad commitments that they will not vote for a bill that includes the so-called “opt-out” public option. And that probably means they won’t vote for any bill with a public option at all.

What gets less discussion is how circumscribed the public option (in current House and Senate versions) has become and how much or whether it’s even worth fighting for.

Let me explain what I mean.There’s been a decent amount of discussion of “robust” versus non-robust public options, which has mainly referred to whether reimbursement rates are tied to Medicare rates or independently negotiated. Getting less attention is how many people are even eligible for the public option. I think a lot of people still imagine that what we’re talking about is a government-administered health insurance option that you can buy into if you don’t like your options in or simply can’t access private health insurance at all.

So if TPM is tired of our group plan, we can switch to the Public Option plan. Or if one of our employees is individually unsatisfied, they can switch.

However else that would effect the private insurance market, there’s no question that would apply a lot of competitive pressure on private insurers. Such a plan would not, I think, doom private insurers, as they claim it would. But it would dramatically, radically transform the market they operate in. Yet, that’s not even close to how any of the plans now on the table would work. The current plans would only be open to a few million people — basically those who don’t currently have private coverage through their employers and aren’t eligible for Medicaid. (There are some exceptions at the margins, but broadly speaking that’s how it would work.) And at that size, there are good reasons to think that the Public Option would become a dumping ground for what health care policy types call “creaming” — health insurers wanting to maintain pools of the young and the healthy and dump responsibility for the aged and chronically ill on to public programs or on to nothing at all. Regardless of that, it’s pretty questionable whether such a highly restricted public option would provide any significant competitive pressures on private insurers that would yield benefits on the cost containment front. And in part because of this, it’s questionable whether the Public Option’s premiums would even be cheaper.

Now, there are many people who look at this and say that the bill(s) under discussion are so anemic that they’re maybe not worth fighting for at all. And that’s certainly a legitimate opinion. But I think there’s another question. Considering how down to the wire this is, is it really worth holding up everything else contained in the bill when the point of contention, the public option, is as measly as it is?

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