Over the last week, I've been talking with key figures in the House, Senate and White House, and the outlines of a deal are becoming reasonably clear. The public option is, alas, dead. But the idea of setting up a national insurance exchange -- alongside state exchanges -- where the uninsured can purchase coverage is very much alive. The House is demanding this as the price for giving up on the public plan, and a national exchange would provide for much more consumer-friendly regulation of health insurance policies.David Herszenhorn also reports that "House Democrats are pushing hard for a national insurance exchange, or marketplace, rather than the state exchanges proposed by the Senate."
Cf. Jacob Hacker, a chief architect of the concept of the public option, writing in the wake of Lieberman's shut-down of negotiations to preserve or replace it:
The lack of a public option also makes even more imperative tough requirements on insurers to make them live up to their stated commitment to change their business model and slow the spiraling cost of coverage. The most important way to do this is to move away from the Senate bill’s state exchanges and toward a national exchange such as that contained in the House bill. The federal government needs to be directly involved in implementing and enforcing strong national regulations of insurers and creating the new exchange. Otherwise, the effort for reform might fail at the hands of hostile governors.
The federal government is the only entity big enough and powerful enough to ensure a highly consolidated private insurance industry follows the law. It can and must demand transparency and obedience to the new rules. Insurers must open their books, and subject their rates, administrative costs, and profits to federal review. These new rules must apply to all plans, not just those within the exchange. And states should have authority not only to enforce these rules, but to innovate beyond them as well.Instead of fighting the lost battle over the public option, MoveOn.org and other left/progressive activist groups should be urging members to press their senators and representatives to put the national exchange in the final bill.
These are not politically unrealistic goals. Most are already embodied in the House bill. In bridging the differences between the two bills, Democratic leaders and the President must insist on a final bill that delivers on these fundamentals.
UPDATE 3:30 ET: This afternoon, Jonathan Cohn and Igor Volsky elaborate on the advantages of a national exchange, both citing Timothy Jost.