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A Public Option Compromise That Might Actually Work?


Sam Stein reports that the Democratic leadership is considering a public option compromise that actually sounds pretty good:

Senate Democrats have begun discussions on a compromise approach to health care reform that would establish a robust, national public option for insurance coverage but give individual states the right to opt out of the program. ...

But instead of starting with no national public option and giving state governments the right to develop their own, the newest compromise approaches the issue from the opposite direction: beginning with a national public option and giving state governments the right not to have one. ...

How such a system would work is still being debated, according to those with knowledge of the proposal. But theoretically, the "opt-out" approach would start with everyone having access to a public plan. What kind of public plan isn't yet clear. States would then have the right to vote -- either by referendum, legislature, or simply a gubernatorial decree -- to make the option unavailable in their health care exchanges.

That gives you an essentially national administrative structure, but also gives states the right to reject the option entirely. It means, in other words, that the blue states get the public option at full strength and the red states get to ignore it entirely.

That's a real improvement over Tom Carper's proposal allowing individual states to create their own public options, which would would be quite a bit weaker than a national program. It also creates a neat policy experiment: We can see, over time, what happens to state insurance markets that include the national public option and compare them with those that don't. We can see whether the worst fears of conservatives are realized and private insurers are driven out and providers are forced out of business due to low payment rates, and we can see whether the hopes of liberals are right and costs come down and private insurers become leaner and more efficient. Or both, or neither. It's an opportunity to pit liberal and conservative policies against each other, rather than just pitting liberal and conservative congressmen against each other.

Photo credit: AP Photo/Pablo Martinez Monsivais.

By Ezra Klein  |  October 8, 2009; 9:28 AM ET
Categories:  Health Reform  
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It will also take an act of State representatives to actively take away a federal benefit to their residents. It also takes the decision making out of the hands of the (potentially) more extreme federal legislators and in the hands of the local reps, many of which have constitutional obligations to balance budgets, and reduce costs wherever they can.
I was going to say, I doubt Repubs, would buy it, but they're not going to buy anything, so I guess this is aimed at Snowe, Lincoln, Nelson and Pryor (and the blue dogs in congress).

Posted by: ChicagoIndependant | October 8, 2009 9:45 AM | Report abuse

I would also love to see a red state governor (rick perry if he's still there) opt out of the public plan and then turn over the state house to a democrat in the very next election. Its almost guaranteed to go down that way - and it would show the emptiness of the whole tea party "movement."

Posted by: eglabe19 | October 8, 2009 9:55 AM | Report abuse

and the politics of it are pretty robust too. It's reinforcing the individual OPTION by creating a state OPTION too. It's logical and easy to understand and defend. And given how popular the PO is in many states, if opponents mount campaigns to drop it, there will probably be some pretty interesting referendums battles. That's a much clearer and easier fight to win when your neighbors in, say, CA or WA or IA seem to be very happy with their OPTIONAL public coverage.

Posted by: andrewlong | October 8, 2009 9:56 AM | Report abuse

Terrific post, Ezra; thanks.

Posted by: scarlota | October 8, 2009 10:01 AM | Report abuse

I suggested this as a compromise on 'Talk of the Nation' a month ago, and Matt Continetti of the Weekly Standard told me it would never work because people in Washington like to take credit for things, and this wouldn't allow them to take credit. Christopher Hayes of the Nation was almost as dismissive, and seemed to think that this would mean individual pools for every state.

Posted by: flounder2 | October 8, 2009 10:15 AM | Report abuse

The one condition I would demand is that the legislature and governor have to agree to put the referendum on the ballot for a vote by the general electorate in a presidential election. State legislatures are too easily manipulated to make this decision. Forget about letting governors decide it. If the people are going to make this decision, it should be at a time when voter turnout is highest.

Posted by: marvyT | October 8, 2009 10:15 AM | Report abuse

"How such a system would work is still being debated, according to those with knowledge of the proposal. But theoretically, the "opt-out" approach would start with everyone having access to a public plan. What kind of public plan isn't yet clear."

Still being debated and not yet clear, but what a great idea!

Posted by: ostap666 | October 8, 2009 10:21 AM | Report abuse

i still don't see how any Republican agrees to this (including Snowe) and how any moderate backs it either. The problem is still getting to 60 and this makes it harder to get to 60 not easier.

Posted by: visionbrkr | October 8, 2009 10:21 AM | Report abuse

And for the people in red states that decide to opt out -- that are required by law to pay for crappy private insurance that they cannot afford -- they just suck out? Maybe if you combine this with Cantwell's amendment for better exchanges I could be sold. But with the weak exchanges and weak subsidies that we are likely to get out of the Baucus bill? Forget it! Without assurance that the exchanges will provide robust coverage for an affordable price, a real public option is a must. So pair this with something like Cantwell's amendment and we might be going somewhere. Otherwise, we can not leave folks who live in Red States high and dry. Health care is a right, not a privilege. What if states that are most likely to opt out are also be the states with the least market competition (with near monopolies in the private insurance market)? I'm not so sure this is a great compromise.

Posted by: supag32 | October 8, 2009 10:25 AM | Report abuse

This is a terrible idea for one reason, the states that need competition (e.g. the public option) the most will be the states that opt-out. All the states down south (Arkansas, Alabama, etc.) that have insurance markets dominated by a single company will continue having that monopoly and health care priced way too high due to lack of competition.

Isn't one of the points of this reform to show that a moderate increase in government can actually help people? What is the point if we restrict reform to blue states? Then you have a large number of people in red states, bitter that for all the talk of reform nothing has changed in their state. The optimist would say that this would motivate these people to oust their state legislatures, but instead I see these populations just becoming more insular and separated from the rest of the country. Just what we need right now.

Posted by: mayorm | October 8, 2009 10:26 AM | Report abuse

wouldn't this introduce major volatility based on changes in the statehouse? If the idea is to help people have some sort of assurance that they'll have and be able to keep the health insurance they have/want, this could be rather disruptive.

Posted by: qkanga | October 8, 2009 10:28 AM | Report abuse

It's a crazy-dangerous idea! A similar measure was tried in regard to slavery, with disastrous consequences: the writings of Jefferson Davis offer historical context. In addition to having the effect of forcing objectors to (unwillingly) subsidize participants, an opt-out arrangement has a unnatural chilling effect on debate.

It would, however, be a great bailout for the failing Massachusetts health care system.

Posted by: rmgregory | October 8, 2009 10:31 AM | Report abuse


Again, the national vs. state option does not impact provider negotiations, only purchasing of medical supplies (drugs, durable medical equipment, medical devices).

A doctor or hospital in Pittsburgh doesn't care that the national plan covers millions of patients on the West Coast-- or even New York for that matter.

Posted by: wisewon | October 8, 2009 10:40 AM | Report abuse

Very few states, if any, would opt out. Yes, I know there are some conservative state governments, and yes, it's possible the insurance agencies will turn their guns (or, more accurately, their money) on state legislatures to get them to opt out.

But the fact that you would have to affirmatively opt out means the state governments would have to DO something, they would have to buck the status quo. Governments as a whole find that very hard to do (otherwise, we would've passed HC reform by now). We'd see the anti-PO forces tripping over the exact same veto points that the pro-PO forces are tripping over right now, and they'd have far less resources to overcome them with. Combine that with most states' requirement to balance the budget and save money, and you're looking at a very nearly nationwide program.

If there are any benefits to the PO, the few states that opt out will see them and get on board. If there aren't, well, then it doesn't matter anyway.

And I think this does help us get to 60; it's not like the moderate Dems are really pushing for the substantive things they talk about; if they were, they'd all support single payer. They just want to be able to say, "I made them do X with the bill", and this would allow that.

Posted by: colby1983 | October 8, 2009 10:40 AM | Report abuse

*In addition to having the effect of forcing objectors to (unwillingly) subsidize participants*

This is an exceedingly stupid argument.

Posted by: constans | October 8, 2009 10:41 AM | Report abuse

I love this opt out idea.

States get the health reform they want (more or less), better reconciling the tensions between liberty, self-government, and life (or health) as a pre-requisite for both. People in Red states will have access to more expensive health insurance but won't have to worry about the horror of accidentally choosing to purchase public option insurance and then regretting it (or something like that) or the smaller profit margin for insurers in their states. People in Blue states get the choice of insurance without paying a corporate tribute and lower premiums.

Insurance companies won't like it because most people live in blue states and they don't want real competition. But ... who else cares.

Posted by: jefft1225 | October 8, 2009 10:43 AM | Report abuse

It gives cover to the blue dogs not to filibuster (in addition to the threat of their losing chairmanships if they do. It undermines the GOP argument about this being forced on states that don't want it. It sets up a policy competition. Politically it's good. In a humanitarian sense it's bad.

Posted by: cmpnwtr | October 8, 2009 10:51 AM | Report abuse

Awesome -- screw everyone in a red state!

Oh, wait...

-in AZ

Posted by: AZProgressive | October 8, 2009 10:52 AM | Report abuse

let's also watch the doctors flee the blue states for the red ones. Practicing in NYC takes on a whole new and more difficult meaning. Not only would they have the high cost of living but also they get medicare rates to pay for it all!! YAY!!

Posted by: visionbrkr | October 8, 2009 10:54 AM | Report abuse

It does kind of mean that those of us in red states miss out on the benefits of living in a blue country. But, hey, we're Americans, not like we've ever gone in for concepts like "solidarity."

Better than nothing, I suppose.

Posted by: adamiani | October 8, 2009 10:55 AM | Report abuse

and let's see if we can top the 7 hospital bankruptcies NJ had last year. I'm betting we can get to 10 if we try real real hard.

Posted by: visionbrkr | October 8, 2009 10:57 AM | Report abuse

*let's also watch the doctors flee the blue states for the red ones. *

Isn't this the interesting thing, though? States are free to decide for themselves what tradeoffs they want to make an deal with the consequences. States who opt in to the public option are free to make the bet that covering all their residents is important and that doctors will be willing to work within the new system (particularly given that doctors will have more patients who are able to pay). Red states can chose for their residents to remain in hovel-like conditions with respect to public amenities on the bet that people will want to live in these pre-modern conditions for the possibility of making more money. The residents in those states can decide how well that works out for them (and they have been deciding: NC and FL went blue in 2008, for example).

And in any case, which states are top in per capita physicians? DC, MA, NY, MD, CT, RI, VT, NJ, and PA. At the bottom? UT, AR, WY, NV, OK, and MS. It's not like Blue States have a shortage.

Posted by: constans | October 8, 2009 11:04 AM | Report abuse

visiobrkr: doctors have voted with their feet to live in NJ. The *complaint* you hear from doctors is that some hospitals are flooded with so many patients who can't pay. Not that the insurance reimbursement is too low, but that there are so many *uninsured* that they can't keep up. If it were medicare dragging things down, then Florida would be hospital-less.

Posted by: constans | October 8, 2009 11:09 AM | Report abuse

The problem is that states where one company dominates are the ones that will opt out, since local legislators are probably the most vulnerable to campaign cash.

Posted by: michaelbindner | October 8, 2009 11:31 AM | Report abuse

And from the small business perspective? I think the public option is a boon to small business and the states that keep the public option will have the economic boost of being small-biz friendly.

Where will small-biz go for start up? Where will they avoid?

As for the health care community: more low-income indivduals will be covered by the PO and that will stabilize revenues for doctors, hospitals, etc.

Any state that eschews the PO probably has a state government in the thrall of a dominant (single) insurance company and large corporate for-profit hospital system.

Posted by: jshafham | October 8, 2009 11:35 AM | Report abuse

You people just watch how fast these so-called "conservative" red states latch onto this public option once its available with both hands and both feet. This is a wonderful proposal.

Posted by: zeppelin003 | October 8, 2009 11:44 AM | Report abuse

As zeppelin says, the so-called red states will latch on to this as fast as they currently do with stimulus money.

Posted by: flounder2 | October 8, 2009 11:50 AM | Report abuse

If the objective is to have a national public option, and this "opt-out" provision is a way to sidestep the Blue Dog resistance then I say it's a great idea.

But let's just hope they (or ultimately, their constituents) don't see right through it. Clearly, despite the opt-out provision, few if any states would choose to drop out.

Medicaid, we should all remember, is an optional program, and any state at any time could opt out of it, and create its own method for covering -- and therefore paying for -- the healthcare costs of the poor. Or do nothing at all for the poor. Notice, none of them have done that.

Posted by: Rick00 | October 8, 2009 11:50 AM | Report abuse

No, no, no. I will not support giving the finger to uninsured red state residents. This is a MORAL issue, and political payback is way down the list of priorities.

Posted by: uberblonde1 | October 8, 2009 12:02 PM | Report abuse

If this flies, I hope there's a provision that allows states that opted out to opt back in.

Posted by: your_meme_here | October 8, 2009 12:05 PM | Report abuse

An "Individual Opt-In Amendment" should be added to the bill that would allow citizens in states that "Opt-Out" to acquire insurance through the public option. Add both amendments to the bill with Wyden's amendment and dare the Republicans and the Blue Dogs to deny choice to their constituents.

Posted by: rdm_rdm | October 8, 2009 12:11 PM | Report abuse

I agree that it won't get GOP votes, other than perhaps Snowe & Collins. Those two are going to vote for or against the bill regardless of this. Frankly I think both have already made up their minds on which way they'll vote and at this point are doing little more than looking to water it down (and provide cover for things that ConservaDems and the White House want watered down or kept out).

I suspect it will put considerable pressure on the ConservaDems to stay in line with the Caucus on the Cloture vote. We already see there is growing pressure on that. There's little doubt that the only reason we "don't have the votes" is because someone such as Blanche has said she never, ever, never will vote for cloture on a bill that had the PO. I think we also know that there is growing pressure to twist her are on this, and find a PO that she can stay with the Caucus on. This... is a hard one for her to not stay with the Caucus on the Cloture vote.

As far as rolling it out to the states, I think it's not a bad idea at all if:

* it has robust rates (Medicare + 5%)

* it's not limited to just those without Healthcare

On the second, we really need to get to the point where people with Private Insurance can opt-in. If that's not in the bill when it's launched, it really needs as low threshold that backdoors us into that.

On whether Red States will opt-out, clear some will. There are some flat out insane legislatures down south, and they'll do it in Tea Party hysteria. The funny thing is... their Tax $$$ are going to help pay for it in other states. They're not going to be opting out of that. I'm not sure that they get that, and it will be interesting to see whether GOP Strategists start pointing that out.

One of the beauties, or potentially negatives, of the opt-out is that you're going to see a rather drastic bit of "migration" going on in this country if it happens. If this is tied to a Mandate, and we continue to see rates increase, we're going to see people moving from Opt-Out States to ones that didn't.

My thought is that the GOP won't mind initially: they will be the Uninsured a/k/a/ The Poor a/k/a Those Damn Democrat Voters. They'll be happy to shift those "freeloaders" off to other states. And turn their states even Redder.

Long term they'll notice that their states seem to be losing the number of Representives they have in Congress relative to Opt-In States.


Posted by: toshiaki | October 8, 2009 12:22 PM | Report abuse

This is a very good idea, providing the public option is a good plan in its features and coverage.

It is a good idea for the same reason that allowing individual states to opt out of the 2009 stimulus package was good. There, the state legislature's had the ultimate call to accept the stimulus, and NOT ONE REJECTED THE STIMULUS. Some governors, Sarah Palin, I'm looking at you, said no, but were overriden by the legislatures.

But this approach may have some bad effects in rejectionist states. But that is a price to be paid for getting a good plan for those accepting, and I'd bet the rejectionists will soon get on board if the plan is good. I'd allow a statewide vote concurrent with a presidential election to override the decision of the legislature (if a state has previously opted out).

A small, weak, winter ray of hope that something good might come out of this legislative sausage-making dominated by nay-sayers.

Posted by: JimPortlandOR | October 8, 2009 12:23 PM | Report abuse

rdm_rdm @ 12:11 PM:

"An 'Individual Opt-In Amendment' should be added to the bill that would allow citizens in states that "Opt-Out" to acquire insurance through the public option. Add both amendments to the bill with Wyden's amendment and dare the Republicans and the Blue Dogs to deny choice to their constituents."

Brilliant. Mr. Klein, et al., READ THE ABOVE AND SHOUT IT FROM THE ROOFTOPS (sorry about the caps). Here in Texas Perry has already screwed state and local employment by refusing stimulus money; he's all-freak-all-the-time now that there's a credible challenger. Hutchison would be saner, but by how much? As a blue stater in a wingnut state, then, in theory I like the "opt-out" idea, but if I get stuck with mandate or penalties and no cost control mechanism I'm going to be pissed. Politically, unless the Dems want to kiss EVERY vote in crazyland states bye-bye an individual "opt-in" measure MUST accompany an "opt-out" bill.

Posted by: sblaisdell | October 8, 2009 12:44 PM | Report abuse


FL went blue in 2008? Maybe in the presidential election but the govenor is Republican, one Senator is Republican and another is a conservative democrat. Not really a good shade of blue if you ask me.

And the blue states have a large amount of docs because of the high per capita income of that area. Once that is choked off if this ever got off the ground you could see how many would flee if they're not getting what they consider appropriate reimbursement.

Posted by: visionbrkr | October 8, 2009 12:46 PM | Report abuse

++It also creates a neat policy experiment: We can see, over time, what happens to state insurance markets that include the national public option and compare them with those that don't.++

I see dead people. In the red states. Unfortunately, that includes me in Texas.

When ARE these people going to realize the citizens of places like Texas are also citizens of the US and really don't deserve to be treated like the red headed stepchild.

Gods above. What moronic plans these people keep coming up with. Sheesh.

Posted by: doxytoo | October 8, 2009 12:55 PM | Report abuse

What is needed to balance states which do not take PO is part of the money which otherwise goes to create PO. Nationally crated PO needs federal money, kind of subsidy. States which do not participate in PO need to get their fair share of PO building subsidy. Otherwise it is blatantly unfair to Rick Perry of Texas.

The reasons Dems need to go for compensating States not in PO are:
- it is national money / debt to be shared equally by everyone;
- I am confident that even after Texas getting this compensation there is a strong chance that Dem can mount the political challenge to Perry to participate in PO; and
- finally America needs to have this policy experiment as well as backup plan / insurance so as politically course correction can happen down the line.

Those who comment that is a terrible idea because same was tried with Slavery are relating two actually 'unrelated' things.

This is the right track Congress needs to travel. Problem - time is running out and we need to finish this bill early. Congress folks are not known for 'late night hard work'. Meaning sufficient vetting of the idea may not happen.

Posted by: umesh409 | October 8, 2009 12:59 PM | Report abuse

i love it when morons equate a public option with preserving life thinking no other factors are involved. Such small minded thinking is scary.

how about the obesity population in one state vs another. how about the number of murders in that state vs another. how about the number of preemies born in that state vs another (hence many preemies die). there are so many statistics that play into this its like taking a blade of grass from a field and say that this blade impacts the color of the entire field. Very short-sighted.

Posted by: visionbrkr | October 8, 2009 1:22 PM | Report abuse

"It also creates a neat policy experiment: We can see, over time, what happens to state insurance markets that include the national public option and compare them with those that don't."

Up to a point. It's clear that a public option--or any significantly large group with bargaining power and little profit-incentive--will pull down costs. This will (and should) affect providers' salaries, as well, and even though we all know that it won't lead to doctors receiving wages akin to bricklayers, it will still create an incentive for doctors to practice in states that have opted out of the public option. The result would be lower-quality, lower-cost providers in public option states, with specialists and other high-end providers in non-public option states. Accordingly, who knows what a state-by-state comparison would show.

Posted by: doomisnervous | October 8, 2009 1:26 PM | Report abuse

doomisnervous, well, the irony here is that doctors in states more willing to opt in to the public option have a large surplus of available doctors, which pulls down salaries. The states less likely to be interested in a public option are ones where there are few doctors available at all. If your state has a good standard of living, lots of opportunities to practice, and a wealthy population, your state will be attractive to doctors to be in. For decades, MA has been known as a place whose regulations kept doctors' salaries lower than they were elsewhere. What was the result? One of the top states in doctors per capita.

*i love it when morons equate a public option with preserving life thinking no other factors are involved.*

Availability of health care is involved.

Posted by: constans | October 8, 2009 1:45 PM | Report abuse

Having spent about 300-400 hours reading, thinking and writing on health care/insurance reform, let me say I do like this idea quite a lot, even though I'm sure if Perry is reelected here in Texas, we won't get the public option. But, hey, maybe Kay will win (she's considerably more rational).

My interpretation of the original federalism of the U.S. is exactly that states have some ability to be different from one another in non-trivial ways, though not all ways.

Having said that, let me offer something even more important to the legislative success:

Posted by: HalHorvath | October 8, 2009 1:56 PM | Report abuse

If there will be some red states who will opt-out, will (neighbouring) states who do have the public option be compensated for healthcare shopppers from the red states?

I forsee a lot of people - hit with a healthcrisis in their family and without insurance - move to a ‘blue’ state, take up residence there, participate in the public plan, and get treatment. I say good for them, but I see an extra financial burden on the public option in blue states, especially the ones bordering on red states.

Posted by: wimprange | October 8, 2009 2:35 PM | Report abuse

I do find it extremely funny that conservatives have become de facto "union leaders" who fight for the doctors' wages.

Where are your freemarket instincts? When doctors would flee to the redstates for higher wages and the supply of doctors in bluestates would go down, that would cause a gap between the supply and demand which means wages for doctors would go up in bluestates. Isn't that exactly the competition you so desire?

Posted by: wimprange | October 8, 2009 2:44 PM | Report abuse

if the choice is between a weak "public option" and a strong public option with an opt out i say go with the strong one. this is the best (and so far only really acceptable) compromise yet offered.

but one question for us denizens of the colonial city: how is DC treated in this compromise?

Posted by: PindarPushkin | October 8, 2009 4:02 PM | Report abuse

I'm a lib from red Mississippi, and I think it's a great idea, even if my state rejects it initially. It will put incredible political pressure on the Conservatives nationwide when the benefits become clear for all to see in early adopter states. I also love the idea of an "individual opt-in" coupled with the state opt-out. But surely that is wishful thinking. To my thinking, the state opt-out is equal parts health insurance reform and political (Dem) power play. Go for it.

Posted by: Hhomba | October 8, 2009 4:42 PM | Report abuse

Bravo, go for it! This is the best idea I've seen out of Congress since January.

Posted by: hoos3014 | October 8, 2009 4:59 PM | Report abuse

Boy, this would really put the heat on corporate panderers. Politicians are playing it safe when they pander from Capitol Hill. Quite another story to be pandering from Main Street. (Makes you look like a bum!)

Posted by: crystalseashore | October 8, 2009 8:05 PM | Report abuse

Has anyone actually committed to vote for this plan who wouldn't otherwise vote for the Public Option? When that happens it's big news. Until then the preponderance of the evidence suggests that the White House has sold us out.

Posted by: bmull | October 8, 2009 9:33 PM | Report abuse

I'm sure that the Missouri Compromise seemed like smart politics to many in Congress in 1820. But eventually that policy tore the Union apart, and remains an enduring stain upon this country.

A state opt-in for the public option is bad, bad policy. The rationale behind it seems punitive, an outgrowth of red vs. blue thinking. And the liberal arguments I've seen for it are very close to Republican arguments against, say, the time extension for unemployment benefits in Rust Belt states: that under the burden of enough unaddressed poverty, the economically weak will become modern-day Joads and pack up for higher-employment states.

"It's your fault for suffering if you won't elect enough liberal Democrats."

It's embarrassingl, INFURIATING, that so many on the left are comfortable with this revolting proposal, which is more vile than the "welfare reform" that was Bill Clinton's only significant domestic policy accomplishment.

Imagine if, during the civil rights battle, liberals said, "we don't need a federal law to protect minorities in the south. We'll allow southern states to OPT OUT of anti-Jim Crow laws and the Voting Rights Act. After all, if those black people were unhappy enough, they would move to more progressive states!"

Completely revolting. If you would consider such a policy a victory, shame on you.

Posted by: Mastodon_Juan | October 8, 2009 10:17 PM | Report abuse


Actually, it is exactly what we need. For thirty years the conservatives have dominated the discussion with their paeans to the unregulated and omnipresent "free market" (which basically just means "control by corporations").

What you are advocating is exactly what conservatives say they hate: "liberal paternalism". You're a nice person and you don't want anyone to be hurt. That's admirable and if there is something like the Heaven that we're taught, I expect you'll have easy entry to it.

But the people in the south don't want and especially don't appreciate your concern. So let them eat their own cooking. Remember horses and water. This is an opportunity for a teachable moment.

The only modification I would make to Senator Cantwell's proposal is that opt-out would not be reversible for five years. A state should have time to marinate in the results of its choice.

Posted by: anandakos | October 8, 2009 11:06 PM | Report abuse

@Toshiaki, Umesh,

You are confusing the Low-Income Subsidies with the Public Option. They are not linked, they occur independently. If a public option is adopted there will be low-income subsidy recipients in the PO and there will be members without the low-income subsidy. At the same time there will be members in the private plans which qualify for the exchange who receive the low-income subsidy and those who do not.

The public option is designed to be sustained entirely by premiums, like any insurance. It will save money three ways: there is no need to pay stockholders a dividend or increase profits to swell capital gains. There is no need for enormous bonuses for the officers, although it's obvious that the organization will need highly paid executives because of the enormous amounts of money passing through it. And third, it will be large enough to negotiate with the national hospital chains and pharmaceutical distributors for discounts.

Now I know that people are skeptical that it will live within its premium income; most Republicans claim that the PO will have to be topped up by the taxpayer because it won't manage its risks properly. If that is the case, the premiums will have to rise, and if it mucks up the job badly enough then everyone will transfer to the private plans in the exchanges. The Republicans will have been proven right and will probably win elections based on that for quite a while.

But DO NOT conflate the low-income subsidies with the Public Option. They are independent. The subsidies are necessitated because of the mandate to purchase insurance which must be provided because of the prohibition on existing condition exclusion. The only possible relationship between the PO and the subsidies is that if the PO works as hoped and planned by the Dems, it will mean that the low-income subsidies will cover a greater part of its premiums.

Posted by: anandakos | October 8, 2009 11:20 PM | Report abuse

"But the people in the south don't want and especially don't appreciate your concern. So let them eat their own cooking. Remember horses and water. This is an opportunity for a teachable moment."

I repeat:

Imagine if, during the civil rights battle, liberals said, "we don't need a federal law to protect minorities in the south. We'll allow southern states to OPT OUT of anti-Jim Crow laws and the Voting Rights Act. After all, if those black people were unhappy enough, they would move to more progressive states!"

Posted by: Mastodon_Juan | October 8, 2009 11:25 PM | Report abuse

Just to reinforce anandakos, it's extremely important to understand that the PO is NOT the subsidies. States that opt out will be stupid, but they will not be paying subsidies to other states. It's not like opting out of Medicaid.

@mastodon- Yeah. Imagine if, in the midst of the Civil War, the President had issued a proclamation freeing only those slaves in territory his armies did not control! Boy would that have been an immoral move which would be remembered as a shameful moment in our history.

Posted by: mbw1 | October 9, 2009 12:55 AM | Report abuse

MBW, the Emancipation Proclamation was a moral stain. It was issued with war goals in mind, not abolition. The main effect it actually had was to create a huge pool of labor to build fortifications (particularly in Tennessee) and cannon fodder for the Union Army, while leaving slavery intact within the Union itself.

Only after Lincoln's death was slavery abolished.

The better analogy is to the Missouri Compromise, in which political leaders divided the country in two, leaving millions of people living in unlucky regions in a greatly depleted state relative to the rest of the country. It was pure moral cowardice that exacerbated the divisions that eventually tore the country apart. And bloggers of the day would have hailed the decision as "threading the needle," I'm sure.

We have presented health care as a critical moral issue, and now we say "screw it"? Shameful.

Posted by: Mastodon_Juan | October 9, 2009 10:08 AM | Report abuse

For way too many years it’s been the “share the wealth” mantra. After all, us rich guys should be more companionate to those who have less. Now with this Health Care debate, it’s “share the liability.” You young health guys need to be paying (the little money that you do have) into the system so us older sick guys can have cheaper health care. Isn’t that also being companionate?

Posted by: sam42 | October 10, 2009 2:20 PM | Report abuse

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