Tuesday, December 08, 2009

A public option that isn't? What's the tradeoff?

(12/9 update at bottom)

The Times is reporting tonight that the "Gang of 10" Democratic senators designated to come up with a health care reform bill that can pass has agreed to put the public option on ice. It's not entirely clear what liberals got in return yet but here's the outline as picked up by Robert Pear and David Herszenhorn:


The Senate majority leader, Harry Reid of Nevada, said on Tuesday night that he had reached “a broad agreement” among a group of 10 Democrats who have been working to resolve the dispute over a proposed government-run insurance plan that has posed perhaps the biggest obstacle to major health care legislation.

Mr. Reid refused to provide details, saying only that the group of 10 senators – five liberals and five centrists – would be sending proposals to the Congressional Budget Office for analysis. The broader Senate Democratic caucus appeared to be in a state of confusion with even some senior party leaders saying they were unaware of any agreement.

But Democratic aides said that the group had tentatively agreed on a proposal that would replace a government-run health care plan with a menu of new national, privately-run insurance plans modeled after the Federal Employee Health Benefits Program, which covers more than eight million federal workers, including members of Congress, and their dependents.

A government-run plan would be retained as a fall-back option, the aides said, and would be triggered only if the new proposal failed to meet targets for providing affordable insurance coverage to a specified number of people.

The agreement would also allow Americans between age 55 and 64 to buy coverage through Medicare, beginning in 2011.
If this is accurate in basic outline, some key questions: 1) If the compromise "private option" doesn't control costs effectively, how "hard" a trigger will be set for how strong  a public option? Cf. that Urban Institute paper arguing that a "hard" trigger -- one set off by clear metrics and hard to circumvent -- for a strong public option -- one with pricing tied to Medicare rates -- could be more effective at controlling costs than the relatively weak public options in the House and Senate bills. 2) What percentage of the cost of providing health care to the uninsured would be encompassed by offering Medicare to the 55-64 set?  I would imagine a very high percentage. And would that make for a cheaper risk pool in the insurance exchanges?  3) Would Medicare really be extended to all the uninsured aged 55-64? Or will the eligible pool be pared by a zillion cuts?  4) Will Republicans howl that Medicare expansion is "worse" than a public option?  And are they "right" -- i.e., would it bring the U.S. that much closer to single payer or at least monopsony (government control over health care pricing)? 

None of the usual scholarly suspects pushing the basic template of Democratic health care reform like the look of the pseudo-public option at the center of this rumored compromise. But the right trigger for the right public option, paired with a huge expansion of Medicare and the concurrent cuts to Medicare Advantage, looks at least potentially like an effective cost-controlling package.

UPDATE 12/9: Brian Beutler at TPM clarifies the nature of the new "nonpublic" option and its relation to a public option trigger:
...one of the trade-offs will be to extend a version of the Federal Employees Health Benefits Plan to consumers in the exchanges. Insurance companies will have the option of creating nationally-based non-profit insurance plans that would offered on the exchanges in every state. However, according to the aide, if insurance companies don't step up to the plate to offer such plans, that will trigger a national public option.
 If this is accurate, it's worth noting that a) the plans within the FEHBP look-alike would be nonprofit, and b) the "trigger" would be insurance companies' failure to participate, rather than metrics of spending or affordability. Also, according to The Wonk Room, the "triggered" public option would look like the option in the House bill, rather than a stronger plan tied to Medicare. Finally, people aged 55-64 opting to buy into Medicare would be unsubsidized up until 2014 but subsidized thereafter.

Finally, there's this vague but tantalizing tidbit from Beutler: "the group has tentatively agreed to new, and strengthened, insurance regulations, which the aide could not divulge at this time."  Strong coverage rules for all insurers could be more important than the provenance of the participants.

2 comments:

  1. The public option is obviously as dead as a doornail. My advice to the progressives is to take what they can get now.

    I don't know what kind of health care reform will come out of this session, but I strongly suspect it won't be much. There is, however a silver lining behind this very dark cloud. I am reminded of the Civil Rights Act of 1957. Don't be embarrassed if you've never heard of it, there really isn't a hell of a lot to remember about it; a mere pittance, really - a scrap of leftovers tossed out to "American Negros" (in the parlance of the age) in order to appease them. But it made the passing of the Civil Rights Act of 1964 - the one we remember - all the more easier seven years later.

    We'll live to fight another day.

    http://www.tomdegan.blogspot.com

    Tom Degan

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  2. not clear to me that health-care is a movement the same way civil rights was. also, no court help (what's the equivalent of brown v. board of ed?). however, yi think you are right that adding a public option to an existing universal national health care system could be easier than getting it in now.

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