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The Many Public Option Compromises

This is all getting a bit hard to keep track of. First there was Olympia Snowe's trigger. You remember. "This amendment establishes a non-profit government corporation through which a ‘safety net’ plan would be provided in any state in which affordable coverage was not available in the Exchange to at least 95% of state residents." Yeah? Yeah.

But then the Finance Committee voted down both the Schumer and Rockefeller public options. And so the Democrats began developing their own compromises.

Maria Cantwell is advocating a plan that allows states to negotiate with insurers on behalf of people between 133 percent and 200 percent of the poverty line (interview here). This seems like a perfectly fine policy idea. But it's entirely orthogonal to the public option debate. It doesn't create competition or transparency or experimentation. It makes health-care insurance cheaper for a small slice of people, but that's really it. Worth doing, but not an answer for those who want to see a public competitor.

Tom Carper's proposal is more interesting. It's gone through a couple twists in the past 24 hours (including the addition, and then welcome removal, of a trigger), but in its current form, each state would have the option to:

1) Participate as grantees in the CO-OP program and apply for seed funding.

2) Open up that state’s employee benefits plan.

3) Create a state administered health insurance plan with the option of banding together with other states to create a regional insurance compact.

Each state would, in other words, be allowed to create a public option. And states could band together to give their public options more bargaining power and efficiencies of scale. This would do a couple of things. First, it would give residents access to a public competitor. Second, it would provide an acid test of whether a public competitor substantially changes an insurance market. Does it force private insurers to bring their prices down? Does it create more competition and transparency? Are consumers more satisfied? And if all that happens, will other states really resist adopting the public option?

The problem with it is that it is, at best, regional. It doesn't have the buying power of a national public option. But that's a question of votes. If Schumer's proposal doesn't have 60 votes, which is what he's currently saying, this might well be a better option than Snowe's trigger.

By Ezra Klein  |  October 1, 2009; 3:48 PM ET
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati   Google Buzz   Previous: The Public Option Compromises: An Interview With Sen. Maria Cantwell
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Correct me if I'm wrong, but Ezra seems skeptical about reconciliation. He shouldn't be. Boisterous Republicans are nothing to be afraid of, but the wrath of the 65 percent of Americans who want and expect a strong public option are.

Progressive Dems (i.e., the large majority of Dems) should provide conserva-Dems with two options. A strong national public option if they vote yes on cloture or a stronger national public option if they don't (via reconciliation).

Posted by: cjo30080 | October 1, 2009 4:04 PM | Report abuse

The Carper idea has its advantages, and some of these regional plans could be pretty impressive--how about CA-OR-WA, for example, or NY-New England (with or without ME), and the Midwest Blue States. Look at what CA was able to do on vehicle emissions, especially when joined by NY and the New England states. And MT and UT and ND don't have to have one, unless of course the citizens demand it.

The real questions are how many people and how soon.

Good to see everyone streaming over, under around and through the Baucus Roadblock.

Posted by: Mimikatz | October 1, 2009 4:12 PM | Report abuse

Carper's plan could mean that states who adopt plans can bundle together to create a big power structure in negotiating. For example, if California, New York, New Jersey, and Illinois bundled together they could create a HUGE block that could really have negotiating powers.

Posted by: maritza1 | October 1, 2009 4:16 PM | Report abuse

This could work wonderfully for the heavily populated and liberal coastal areas of the country... "coastal elites" if you will... but royally suck for rural Red America... with states unlikely to want a public option, and no bargaining power even if the rare one does. I guess "federalist" health care reform might be the best we can do for now, but it's kind of sad.

Posted by: JWHamner | October 1, 2009 4:24 PM | Report abuse

Ezra - This is an interesting idea. But i can't help but wonder what expertise states have in running/managing health plans? The best case study for this would, of course, be the Medicaid program. States do a very poor job of managing utilization, paying providers efficiently, and controlling costs in this program. That's exactly why more and more states have decided to outsource the administration of their Medicaid programs to the private sector. More and more states outsource every year - recently: TN, GA, OH, and incremental additions in TX, FL, WI, and others. Well over 10 million Medicaid beneficiaries are managed by health insurance companies.

So, i guess my question is: what makes you think states could do a good job running a public plan when they haven't proven very effective at running Medicaid?

Also, what do you mean by point 2? That the uninsured would have access to the state's employee benefit plan? Or that the state employee plan would be run by the state insurance plan?

Posted by: mbp3 | October 1, 2009 4:27 PM | Report abuse

I think this is by FAR the best compromise yet. The red state Senators can say they battled back Socialism, and the Blue State Senators can bring home what their constituents want.

For Dems, you get
- a guarantee that the PO will become a reality (as opposed to the various triggers), and
- bargaining power (as opposed to "level playing fields") as the most populous states would band together.

Because it would likely succeed, the gripe that it would "royally suck for rural Red America" would soon be overcome by the cost savings and political popularity seen by their Blue State neighbors.

Or, if Blue States suddenly turn into a Switzerland-style Fascist dystopia (grannies unplugged left and right), then the Red States can keep trying to strive for no regulation-style economies w/o interference ()since that's worked out so well for them thus far in terms of infant mortality, life expectancy and other measures of health).

This is a win-win for everyone, giving people political cover and ensuring that there's some structure in place for future improvements.

Posted by: Chris_ | October 1, 2009 6:04 PM | Report abuse

: maritza1 |if California, New York, New Jersey, and Illinois bundled together they could create a HUGE block that could really have negotiating powers.

Thats scary for the outnumbered liberals like is in the Bible Belt,

Posted by: FebM | October 1, 2009 7:33 PM | Report abuse

How is this different from co-ops?

And what gives him credibility on health care reform? His vote for the unworkable Schumer PO? What a pragmatist!

Posted by: bmull | October 1, 2009 10:03 PM | Report abuse

I live in SC, one of those states that tried its best to turn down the stimulus funds. I seriously doubt they would take "seed" money when they would then be on the hook for continuing the program when the seed money runs out. This option is going to have the practical result of leaving out the states with the highest rate of uninsured.

This also does not address what the minimum benefits in such a plan would be. Being under-insured is better than being uninsured, but not by much.

Posted by: punchaxverulam | October 2, 2009 7:27 AM | Report abuse

"Each state would, in other words, be allowed to create a public option."

Correct me if I'm wrong, Ezra, but aren't states already allowed to create a public option?

What has Carper added here that doesn't already exist? And why haven't we already seen an explosion of public option plans in liberal states like New York, Vermont, Oregon, etc? Even Massachusetts didn't create a public option.

This won't get done at the state level. The public option will be resolved in the national debate or not at all.

Posted by: ericma | October 7, 2009 2:42 PM | Report abuse

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