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What's Actually Going on With the Public Option?

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I wish I'd had the foresight and vision to keep a Word document tracking every time the administration "hedged" or squirmed or twisted on the public option. I've lost count of the number of headlines and blog posts I've read accusing the White House of throwing the public option overboard. This week, the big news is that Kathleen Sebelius said the public option should not "be the only focus of the conversation." Which is, you know, true. She also telegraphed an openness to Kent Conrad's co-op compromise. This story is currently on A1 of The Washington Post, the New York Times, and pretty much everywhere else.

But is it news? I remember when the problem was Nancy-Ann DeParle saying the president supported the public option because you needed a way "keeping the private plans honest," but then qualifying that statement by saying, "if there are others ways of doing that [than a public option], he’d be open to talking about it." That was in April.

And I remember Sebelius saying that "you could theoretically design a co-op plan that had the same attributes as a public plan.” That was in June.

As far as I can tell, there's been no change in the administration's position. It has always supported a public plan option. It has never claimed it essential, or the only path to competition in the insurance market. The one deviation came in July, when Obama said the words "must include" in a sentence that also had the words "public option." But it's not clear whether he was talking about the health insurance exchange or the public option. And that only happened, to my knowledge, once. That statement, not this one, was the deviation.

The question has never been whether the White House supports the public option. It's whether Congress -- and, in particular, the Senate -- has the votes to pass it. Sebelius's statement this week does not change the administration's position. But it is being widely reported because it comes in context of the sagging popularity of health-care reform, and the changing conventional wisdom on the legislative politics. Namely, many think it increasingly likely that the White House will have to compromise on the public option because it will not be able to find sufficient votes in the Senate and is growing more desperate for a deal. That may or may not be true, but that's the actual story here. Blowing up Sebelius's comments is just a backdoor way of getting at it.

Photo credit: CNN/AP.

By Ezra Klein  |  August 17, 2009; 10:00 AM ET
Categories:  Health Reform  
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Comments

Weak and disingenuous, Ezra. I don't think the debate on the public option -- and, more importantly, the administration's murky position -- has remained static since April. Just look how August -- that muggy month of socialized medicine, death panels, guns at rallies, "Keep government's hands off my Medicare" -- has shifted the polling. Forget Grassley's public statements: just look at the utterances of Dems like Ross and Murtha.

Posted by: scarlota | August 17, 2009 10:13 AM | Report abuse

Well stated, Ezra. It boils down to the senate, and not whether they have 60 votes for the public option but 50 votes under reconciliation. More importantly what kind of public option. Dems know they have to pass something, so in the end they will finesse it. I also agree with another point of yours, that the Exchange is the essential element here. After all, the employer is the one who chooses the public option or private insurance. The public is not going to get excited about that.

Posted by: cmpnwtr | August 17, 2009 10:23 AM | Report abuse

It's not just the president; by some counts there are as many as 20 senators who only hedge and dodge when asked if they support the public option. Any assumption that it can't pass is either a guess or on the basis of communications that have not been made public.

Is abolishing the filibuster possible at this point? Would it even help (ie. does the public option even have 50 votes)?

Posted by: tyronen | August 17, 2009 10:23 AM | Report abuse

There should be a true public option, so people can choose for themselves a way that costs less.

The Republican motto: "Let us charge you more, for no value added!"

Posted by: Lee_A_Arnold | August 17, 2009 10:23 AM | Report abuse

If the "public option" truly will be self sustaining and non-subsidized then I don't at all get why a co-op is different than a public option. If the goverment will tell providers they cannot accept medicare without accepting the public option then thats certainly different but otherwise if its just a 1 time funding of a non-profit driven enterprise that can be self sustaining then a co-op seems like the right direction to go in.

Posted by: spotatl | August 17, 2009 10:27 AM | Report abuse

It may be nothing more than a trial balloon. As we've seen in recent weeks, the administration easily disavows the statements of its cabinet members and the Congressional leadership likewise disavows the administration's statements/deals.

Posted by: tbass1 | August 17, 2009 10:36 AM | Report abuse

Well, there's also a huge difference -- and this hasn't been commented on at all in the MSM -- between getting a bill out of the Senate to conference, and getting it passed by the Senate after it emerges from conferences. Reform is dead if they can't get a bill to conference, and it's been clear for some time now that the votes for cloture don't exist if conservative senators from both parties view a new federal health insurance entity as a deal breaker -- and are willing to therefore filibuster.

I think it's overwhelmingly likely that House negotiators will try to include a public option in the final bill. Not sure if they'll succeed -- and it remains a possibility that such a move could still prove to be a deal-breaker in the Senate. But although less likely to come about, I think a public option is still far from dead.

Also, while I'd love to think reconciliation is an option, I think progressives have to differentiate between wishful thinking and reality. Senator Conrad, among others, says it simply can't be done. I reckon he's a better judge of the feasibility of such a move than 99% of the folks discussing this subject (though I'd love to be proven wrong!).

Posted by: Jasper99 | August 17, 2009 10:38 AM | Report abuse

I have a hard time believing the White House says anything to the media without first thinking of the consequences. Of course there have been a few bloopers when this may not have been true (Obama: The Post Office is the one always having problems)

Could this murkiness on the public option be purposeful, so that it ignites some passion in the millions of Americans who DO want a public option, or even single payer?

Posted by: ashleyinthedistrict | August 17, 2009 10:43 AM | Report abuse

"If the "public option" truly will be self sustaining and non-subsidized then I don't at all get why a co-op is different than a public option."

I've been thinking the same thing. Once could imagine a national cooperative with, say, 12 million members, emerging within a decade. If it's truly non-profit, there's no reason it can't be priced just as cheaply as a governmental unit selling coverage -- unless the government entity is willing to turn to the taxpayers to fund losses. But if a national coop became a sufficiently large and important provider of coverage, I could imagine a situation arising whereby it becomes -- and one hesitates to use such language but here I go -- too big to fail (and therefore has a claim on government money to backstop it). A national health insurance coop could usher in single payer by the back door. It sounds, though, that at least initially we'd be looking at fifty state level coops, so a lot of details would have to be worked out.

Posted by: Jasper99 | August 17, 2009 10:47 AM | Report abuse

Quick q: why does Conrad's co-op proposal, drafted on the back of an envelope, not face any kind of assessment of its usefulness, either in the media or from other pols?

Is it because it satisfies some unstated but well-established Village Bipartisan BS criterion? Is there some Beltway assumption that pulled-from-the-ass plans deserve the benefit of the doubt when they're promoted by Sensible Plains Senators With Basketweave Haircuts?

Posted by: pseudonymousinnc | August 17, 2009 11:12 AM | Report abuse

The story here is that the administration is acting as if it's a spectator to the debate. They're open to this, they won't oppose that. Where's the administration's plan? Because Obama has failed to show leadership on health care, there's nothing for the majority that elected him to rally around, and the crazy minority opposition is getting all the attention. He's snoozing in a deck chair while the Titanic is going down.

Posted by: Bloix | August 17, 2009 11:15 AM | Report abuse

The reason why a co-op won't work is obvious. Many insurance companies started out as non-profit co-ops. Then they privatize. In 10 years the non-profit co-op will suddenly be allowed to privatize and incorporate and nothings changed.

Posted by: endaround | August 17, 2009 11:21 AM | Report abuse

the point of these issues is that a public option, co-op whatever you want to call it CANNOT work in an uneven playing field. They must pay premium taxes. Also if anyone was watching Rep Ross limped back to the democratic party by his ammendment in the energy and commerce committee. His ammendment which was the "deal" he struck allowed the Secretary of HHS to choose to either negotiate as private insurers do OR set rates at medicare +5. Well i wonder what the Secretary will choose???

A co-op is just another bait and switch. It needs to work just like an insurance company and have the same requirements on it. Reserves, taxes, negotiation requirement.

Those three things MUST be present.

Posted by: visionbrkr | August 17, 2009 11:43 AM | Report abuse

Ezra is right.

Posted by: bluegrass1 | August 17, 2009 11:48 AM | Report abuse

Another issue with the co-ops is whether they'd be allowed to collectively bargain for payment rates and drug prices. A local co-op with a few hundred/thousand people isn't going to be able to muscle much money out of hospitals/doctors/pharma, but a national coalition of millions of members probably could.

Posted by: MosBen | August 17, 2009 11:49 AM | Report abuse

"the point of these issues is that a public option, co-op whatever you want to call it CANNOT work in an uneven playing field."

Perhaps you haven't noticed, but the current playing field, with monopoly and duopoly insurers in most states, ain't exactly even. Or competitive. It's like the food options on a flight: they're all overpriced and taste the same.

Posted by: pseudonymousinnc | August 17, 2009 12:01 PM | Report abuse

A big problem here is that no one has explained clearly what the public option really means. Here in CA state employees have a wide choice of plans, but in some counties there wasn't enough competition, sometimes not even any plans. So CalPERS developed plans itself. I believe they in effect hire the docs and pay them. That's how I've seen the public option. It ensures that everyone has coverage. Or maybe it is like Kaiser Permanente, which I've had practically since they began because my father worked for UC, one of the first groups to sign up. And I think they are great. Maybe the public option is Kaiser run by the gov't.

The point is, I follow this pretty closely, and I'm not all that sure exactly how the public option works. The fault is shared by the Obama Admin and liberal media, from blogs (this one excepted) to Rachel Maddow. If the public optioon was all that critical, it should have been explained more clearly from April through July, rather than everyone just shouting "public option" and then talking about nothing but crazies in August.

All that said, I do think the keys are (1) getting near universal coverage with everyone eligible to buy in at the same rates and no preexisting condition discriomination or recissions allowed; (2) real competition among insurers, with a minimum of 3-4 per locality; and (3) subsidies for people who need them. Plus the beginnings of cost containment, like effectiveness panels and taxes on Rolls-Royce health plans and some tax on high income folks.

That would be a really good start and we could build from there. If health insurance reform that has those things is killed because it doesn't have someone's idea of a public option, that would mean loss of many Dem seats in 2010 and set things way, way back, especially for the un and underinsured.

Posted by: Mimikatz | August 17, 2009 12:20 PM | Report abuse

your observation on the role of the media in promoting stories like death panels, vince foster's death, etc., also applies to public option

right now the public option is being played as obama backing down

the media loves a headline and they use personality and conflict whenever they can

corporate media don't seem able to discuss the health care options objectively - health care costs in the us are a scandal of major proportion - fear of sponsors

i am watching with interest how long you
will be able to do what you do at the washington post - i am impressed so far

Posted by: jamesoneill | August 17, 2009 12:34 PM | Report abuse

Our Republican family supports the Public Option!
The 46 million uninsured - include EMPLOYEES of small businesses which can't afford to offer their employees insurance.

Posted by: angie12106 | August 17, 2009 1:31 PM | Report abuse

Media pundits and presstitutes who shape public opinion on health care reform - and have great health care coverage themselves - are happily singing the "Public Option is dead"!

And the media's Insurance and Pharma corporate sponsors are laughing all the way to the bank - WHILE our insurance premiums INCREASE and wages stagnate.

Why do people argue against their own best interests?
They're easily influenced by the CORPORATE MEDIA.

Republicans for the Public Option!

Posted by: angie12106 | August 17, 2009 1:37 PM | Report abuse

"the point of these issues is that a public option, co-op whatever you want to call it CANNOT work in an uneven playing field."

Perhaps you haven't noticed, but the current playing field, with monopoly and duopoly insurers in most states, ain't exactly even. Or competitive. It's like the food options on a flight: they're all overpriced and taste the same.


------------------------------------------

well you're overstating your point a bit. IMO, market share should never be over one third of the market. But in some systems like overnight delivery you have really only two companies and that keeps costs down.

Also in many states like mine the group insurance market is always moving. I'm in NJ and Horizon BCBS was $50+ million in the red due to large claims increases so guess what they're raising rates. Now Aetna, United, Cigna will be more competitive and gain market share. Its how markets work.

If you want to control costs you need to control what doctors and hospitals and pharma charges. You can also hold down insurers profits which is fine but that's a drop in the bucket as compared to the actual costs of care but it seems to get the most play because insurers are hated by most everyone.

Posted by: visionbrkr | August 17, 2009 1:58 PM | Report abuse

I do not understand why nobody is asking the conservative "Democrats" why they are opposed to the public option. I never heard any of them answer this question. Just saying there are not the votes in the Senate w.o any explication why is intelectually dishonest.
Let's take the important metrics of the reform everybody agrees on:

1. Univresality - No doubt a plan with public option will insure more people.
2. Choice - The public option only increases choice.
3. Affordability and 4. Cost - No doubt the price to insure a person or a family in the public option will be smaller than pay or subsidize the corresponding premium for the same coverage in a private plan.

So if more universal, more choices, more affordable, and will cost less why are these conservative "D" opposed (especially on cost how they square this with their deficit hawkiness)?

If asked the only remaining answer for them is ideological (the free market vs Big Gov, bla, bla, bla..).
If that were they go than we'll all know they are just GOP in disguise, enjoying all the perks of the majority and then stubbing their D colleagues in the back.

Posted by: Yoni1 | August 17, 2009 2:11 PM | Report abuse

"No doubt the price to insure a person or a family in the public option will be smaller than pay or subsidize the corresponding premium for the same coverage in a private plan."

Uhhh... why is this exactly? There are plenty of not for profit insurance providers out there. What magic wand do you think the public plan has that will let them do all this cheaper? Running up a massive portion of the population isn't on the table. Requiring providers that accept medicare to also accept the public plan is not on the table. I don't at all get where people think that the public plan is going to save all this money.

Posted by: spotatl | August 17, 2009 2:35 PM | Report abuse

The fact is that Obama is a liar. Hardly a surprise for a politician, but much more was expected of him. Obama also made the mistake of saying this was not going to be a single payer government system, and then videos come out from prior years where Obama clearly says that is what he wants and then says how to gimmick the system to get there. Like Daedalus Obama's wings have melted and he is about to have touch down. The loss of credibility means Obama is done. He is a lame duck and 2012 cannot come soon enough to get someone in the White House who may be able to get our Country back on track.

Should the Spendocrats try to ram some kind of bill through on reconciliation they will be handed their walking papers in 2010. Much of the anger is about the rubber stamping of massive bills without reading or understanding them. The foolishness of that is coming home to roost.

Posted by: Bubbette1 | August 17, 2009 4:15 PM | Report abuse

The cite below shows the lack of understanding of the problem. In California the government unions have had a Democratic Legislature that has been on the government union payroll. It is and has been a parasitic relationship that is now going to kill the taxpayer host.

Several years ago, before the stock market crash these government unions had an estimated 430 BILLION in their retirement programs. After the crash that is now down to something like 128 billion.

The Democratic Legislature has signed laws that make the taxpayers guarantors of this debt. It is estimated that as much as a 60 BILLION dollar shortfall will start hitting next year that will need to be funded by the California taxpayers. It only gets worse after that.

Keep in mind this is the same Democratic Legislature that gifted many of these government unions 100% pay and medical benefits on retirement available as early as age 52. In Moraga a fireman retired and his annual retirement pay is $260,000.00 per year plus full medical, dental, etc.

The Democratic Legislature was told at the time this would bankrupt the State. As the fireman and other government unions use taxpayer dollars to send to these legislatures to support their campaigns it is a very happy little daisy chain.

Google bankruptcy and the City of Vallejo. The City of Vallejo had to go to bankruptcy court to get rid of these unsustainable retirement programs. The California Assembly responded by passing AB 155 to make it more difficult for cities (and their citizens) to go to bankruptcy court. Who sponsored the bill? The firefighters union.

So do not use California government unions as an example. When the full brunt of the debt guaranteed by the taxpayers start coming due there will be more bankruptcies. If you think California had difficulty closing a 26 billion dollar deficit wait until this starts hitting next year.

For those of you in New York, New Jersey, Mass. and other States with Democratic controlled Legislatures with huge government unions you are only a step behind California.

The only good news is that as money is so tight with the government unions they have had to lay off 30 Assemblymen.
___________________________

Mimikatz said," A big problem here is that no one has explained clearly what the public option really means. Here in CA state employees have a wide choice of plans, but in some counties there wasn't enough competition, sometimes not even any plans. So CalPERS developed plans itself. I believe they in effect hire the docs and pay them. That's how I've seen the public option. It ensures that everyone has coverage. Or maybe it is like Kaiser Permanente, which I've had practically since they began because my father worked for UC, one of the first groups to sign up. And I think they are great. Maybe the public option is Kaiser run by the gov't."

Posted by: Bubbette1 | August 17, 2009 4:29 PM | Report abuse

I have been a democrat my entire voting life. If Obama drops the public option, it will be the last time I vote. I know members of both parties have their hands in pockets of big business, I just thought maybe there were a few more democrats with morals. Max Baucus has sold his voters down the river, and now democrats are running scared like they always do, when the GOP brings out the "anti American, socialism,communism," etc. (take your pick). They have the power, now they need to stand up and go for it, or Obama will start looking like the weak, inexperienced man the GOP claimed him to be, and he can kiss re-election good-bye. Nothing good ever happens in this country with out a huge fight. From the revolution, civil war, unions,civil rights,women's rights medicare,and social security. Those men and women stood up and some died for their beliefs. Obama and the rest of the party need to do the same. Who does he think voted for him, not the people causing these scenes. The people who voted for him did so because he promised us these changes.

Posted by: jwald1 | August 17, 2009 7:10 PM | Report abuse

spotatl- a public option (or national co-op, whatever you want to call it) can hold prices down just by hewing to a Medicare+5 payment schedule. Efficient providers will be happy to take that, and it will give private insurers cover to lower their rates too. Right now private insurers don't bargain very hard with providers because other things are more important (like not getting a bad reputation in the community). To be fair, private insurers should be allowed to compete on a national level also.

Bubbette1- when did CalPERS ever have assets of $430 billion?? You're NOT entitled to your own facts.

Posted by: bmull | August 18, 2009 7:09 AM | Report abuse

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