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The Federalist Compromise

This, from a smart reader, seems like a better compromise than a "trigger":

Maybe we should be allowing states to choose if they bring in a public option themselves? At least we can get CA, NY, and many of the big pieces into play and see how it works. That seems far better than giving up the whole pie, as they seem intent on doing.

Presumably, if California's public option did deliver significant savings for consumers, it would become difficult for Missouri to justify denying its residents the same opportunities. This would be particularly true if states could choose whether or not to tie their public option to Medicare rates, thus creating an insurance alternative that would actually work to provide savings. And if doctors and hospitals didn't go bankrupt in that state, and private insurers didn't totally collapse, that would be pretty good evidence that the worst of the critics' fears could be safely dismissed, or at least addressed.

By Ezra Klein  |  September 14, 2009; 12:09 PM ET
Categories:  Health Reform  
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Sounds good to me.

Posted by: leoklein | September 14, 2009 12:14 PM | Report abuse

Kind of absurd to guarantee the right to purchase affordable insurance to everyone, but only if they live in a blue state.

I'm stuck in Texas, so that's not going to work out too well for me.

But what the hell, we're already embracing some pretty sick distortions of logical policy in the interests of getting this passed. What's one more?

Posted by: adamiani | September 14, 2009 12:19 PM | Report abuse

Allowing any public option, whether it's national or state by state, to pay Medicare rates is off the table. It's just not politically possible. Obama has received buy-in from docs, insurers, hospitals, etc. Don't you think the price of that agreement was at least a concession that they won't face huge reimbursement reductions that would occur if a public plan paid Medicare rates??

Posted by: mbp3 | September 14, 2009 12:26 PM | Report abuse

I live in Pennsyltucky, allegedly a blue state but one whose state house is controlled by Republicans - and the insurance industry. We'd be screwed.

Posted by: uberblonde1 | September 14, 2009 12:32 PM | Report abuse

What's to stop states from creating their own public options even without one included in the bill? The willing can even merge their efforts to create a multi-state one.

Posted by: bluegrass1 | September 14, 2009 12:32 PM | Report abuse

don't some states already have a public option? aren't they already free to set up their own plan?

Posted by: inquirium | September 14, 2009 12:34 PM | Report abuse

I say, baloney! Missouri maybe, but Alabama, Arkansas or freeking South Carolina, now way! Anyway, even single large states would have a hard time achieving the numbers necessary to negotiate decent rates with providers. Smaller states wouldn't have a chance.

Which brings up another point... The only way the so-called co-ops could be viable is if they encompass whole regions of the country, not simply regions within each state.

Posted by: adagio847 | September 14, 2009 12:43 PM | Report abuse

This is a great, great, great idea. Pennsylvania wouldn't be run by Republicans for long if they didn't support bringing affordable public healthcare to its residents.

Posted by: Drew_Miller_Hates_IDs_That_Dont_Allow_Spaces | September 14, 2009 12:43 PM | Report abuse

Isn't there already an amendment in the bill allowing states to set up single-payer? Seems that a public option amendment would be rather redundant, no?

Posted by: StevenAttewell | September 14, 2009 12:44 PM | Report abuse

what is stopping a state right now from offering a public option? Its supposed to be funding 1 time only and exist completely on incoming premiums. I don't get why people think that calling something a "public option" is a kind of magic wand that instantly leads to massive savings. Any state that wants to have a public option is of course absolutely free to start one.

Posted by: spotatl | September 14, 2009 12:49 PM | Report abuse

"Any state that wants to have a public option is of course absolutely free to start one."

Exactly! Look at Vermont's proposed experiment, for example.

Another viable alternative might be a national income tax return check-off box allowing those who want to do so to irrevocably devote a fixed percentage (say, 7%) of each subsequent year's pre-tax salary towards a fund to help those who need additional health care. Of course everyone who claims to want a liberal health care plan would check the box... solving the finance problem.

Posted by: rmgregory | September 14, 2009 1:02 PM | Report abuse

How are the public options doing in CA and NY now?

Posted by: kingstu01 | September 14, 2009 1:04 PM | Report abuse

and then add that "buy health insurance across state lines" deal that Dick Armey is always talking about.

Posted by: bdballard | September 14, 2009 1:18 PM | Report abuse

One big problem with state-by-state public option, in addition to the issue of scale, is the more or less certainty of adverse selection. States with the worst-behaving insurance companies and sickest, poorest non-medicaid populations will see the most call to establish a public option, and their versions will start out under the most financial stress. State budgets have been screwed for so long that the feds would pretty much have to kick in the 400% of poverty-line subsidies as well.

Posted by: paul314 | September 14, 2009 1:29 PM | Report abuse

The point of a public option is the subsidy; if it's run purely on premiums, it has no advantage over private plans. Most states won't be able to spend that kind of money just now. Look what happened to Tenncare.

Posted by: tomtildrum | September 14, 2009 1:51 PM | Report abuse


the public option still gets an advantage from not having shareholders and top executives to fund. And depending on how much they spend trying to reject claims and ditch unprofitable patients they may have an advantage there as well...

Posted by: paul314 | September 14, 2009 2:13 PM | Report abuse

tomtildrum- as I underststand it all the current public plans being discussed are non-subsidized. Any plan on the exchange would be subsidized on a sliding scale equally. I think this is where the disagreements about the public plan come in- what some people think is being disscused is not on the table whatsoever.

Posted by: spotatl | September 14, 2009 2:32 PM | Report abuse

spotatl is right.

All plans on exchange are eligible for affordability subsidy (to the individual to use towards getting coverage.) The public option has no advantage, via special subsidy.

The potential advantages to the public option are:
1) lower reimbursement rates (some bills use medicare +%, others require pub. option to bargain at outset, one has rates based on medicare for 3 years -- then bargaining.)
2) lower overhead (no profits, little to no marketing, low cost execs, ect...)
3) it provides a strong cost point that private insurers will have to compete with, driving down their cost of ins. offerings. Without public option, many areas will have but one or two choices, where price fixing can lead to very high margins.

If people in TX want to get ripped off, they can pursue their wild fantasies of fighting commies. If people in NY and CA can be adults, then they will enjoy the benefits. We've all suffered from the pol's that TX gives us, it would be up to texans to correct thier own mess under this idea. Use it as an organizing tool to get adults into office.

Posted by: rat-raceparent | September 14, 2009 2:42 PM | Report abuse

As a state legislator, I'm all in favor of the public option being left to the states to individually operate.

Each state's economy is different (mine is a small New England state where 90% are small businesses) and health care needs across a region (affluent, well-served developed areas vs. poor rural areas) could be addressed with regionally targeted pilot programs using the evolving payment reform systems like medical home and accountable care organizations.

If a state public option -- say an outgrowth of SCHIP plans -- was coupled with the state's own public sector health care expenditures (public employees health care and Medicaid), even the affects of adverse selection could be mitigated.

At the state level, especially in smaller states with many small businesses, more cooperative collaboration of government, small business, and local hospital and care provider groups could show an effective path to quality coverage and cost containment.

Posted by: jshafham | September 14, 2009 2:43 PM | Report abuse

Divide and conquer - that is industry's mantra. It is easier and cheaper to buy a state legislature - and if you don't succeed, then get federal pre-emption.

Yes, Ezra, it might be preferable to a trigger that is never pulled. But fer gawd's sake, just once, would you consider what it would mean to millions of Americans to get a strong public option with Medicare negotiating rights? To have health care -which for a family of four is now just as expensive as the cost of owning and maintaining their two cars - at 30% cheaper?

Can you get that through your head? Or do you just not care about people below your income level?

Posted by: Dollared | September 14, 2009 3:00 PM | Report abuse

"If people in TX want to get ripped off, they can pursue their wild fantasies of fighting commies. If people in NY and CA can be adults, then they will enjoy the benefits. We've all suffered from the pol's that TX gives us, it would be up to texans to correct thier own mess under this idea."

That's an awfully convenient thought when you don't have to live with the consequences. But, hey, healthcare is important, the public option isn't everything, sure, cut us loose.

"Use it as an organizing tool to get adults into office."

I thought that's what we were supposed to be doing with Obama.

Posted by: adamiani | September 14, 2009 3:02 PM | Report abuse

And what compromise in favor of powerful, entrenched interests gets you qualified as a "smart reader" by Mr. Klein?

I think the smart people are trying to figure out how to overcome the corrosive effects of those interests on the daily lives of Americans, not facilitate clever ways to allow their continued successful rent seeking behavior.

Posted by: Dollared | September 14, 2009 3:04 PM | Report abuse

How are the public options doing in CA and NY now?

Posted by: kingstu01 | September 14, 2009 1:04 PM | Report abuse

don't know but in Oregon you can win the lottery and get healthcare in their plan if not you're SOL:

And in Tennessee in 2005 170,000 people who were not Medicaid eligible were removed from the plan and benefits were trimmed.

so the experience basically is that we can cover almost everyone but we just can't pay for it.

Posted by: visionbrkr | September 14, 2009 4:18 PM | Report abuse

Your smart commenter isn't the first to suggest that, House Majority Whip Jim Clyburn made that proposal.

Posted by: rjw88 | September 14, 2009 6:14 PM | Report abuse

Your smart commenter isn't the first to suggest that, House Majority Whip Jim Clyburn made that proposal.

Posted by: rjw88

Clyburn isn't remotely close to suggesting that the *entire* states of California and New York be pilot programs for the Public Option.

There's pretty much 0 chance of such an idea getting through the Senate. Anyone want to put odds on ConservaDems being willing to pay for a Public Option funding in CA & NY. None, zero, zip.

The PO would get tested in Wymoing or some other backwoods where the entire process will be games. Big Health will take a loss leader to remain "competative" in those states, proving that it's not needed.

People need to stop being creative with this. Big Health is smarter than all of us combined in being able to buy off Congress to game out "creative" ideas. It's why they're fighting the simple things that go at their heart.


Posted by: toshiaki | September 14, 2009 8:07 PM | Report abuse

This makes alot of sense.. especially considering that the states that would choose to bring in the public plan/mandate are the largest in population and thus creating the largest risk pool.

We need to take over the language of the Co-op. Call this a public Co-op plan, were states can sign on to the Co-op (which comes with the mandate).

i think this is great...

Posted by: technokrat | September 15, 2009 3:07 AM | Report abuse

Not politically possible. Only practical in 3 large states. Otherwise I see no problem.

But seriously, even Obama's plan isn't going to work in California or Texas. It's going to be completely unaffordable. People aren't being honest about the true costs.

Posted by: bmull | September 15, 2009 5:17 AM | Report abuse

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