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The Public Option Compromises: An Interview With Sen. Maria Cantwell

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Sen. Maria Cantwell (D-Wash.) sits on the Finance Committee. She voted for Jay Rockefeller's public option, only to see it lose. She voted for Chuck Schumer's public option, only to see it lose. Now she's proposing a compromise of her own, patterned from a successful program in her home state. I spoke to her this afternoon.

Tell me about your compromise proposal.

I think we’ve hit the sweet spot. Everybody says they want to have private providers and we’re saying fine. Let the states negotiate on behalf of a population in your state to drive down your costs. Don’t just give subsidies to insurance companies for expensive insurance. This takes about 75 percent of the uninsured and puts them in the program. If some Republican governor somewhere wants to spend more money, fine. But this is a way to drive down costs.

What’s the exact population states can negotiate on behalf of?

People between 133 and 200 percent of poverty. We think that 75 percent of the uninsured population is under 200 percent of poverty.

Why only go up to 200 percent of poverty? A lot of the concern right now is for people between 200 percent and 400 percent of poverty because they don’t have as much in the way of subsidies.

Because right now, that’s where 75 percent of the uninsured population lives. They need the health insurance. You create models within our system that are efficient. I’d be willing to do more, but that’s a different question.

What about me? I make more than 200 percent of poverty. What if I want to join your plan?

That’s for another day, Ezra. This is a big mountain to climb. We’ve got to get a foothold and this is the foothold.

How will the plan work?

The federal government would give money to the states. States would be able to negotiate at local rates. It’s not Medicaid. People didn’t want it to be Medicaid in Washington, either. But the states can use their bargaining power on behalf of that population. We have found in the state of Washington that we have saved around 35 percent of what those same benefits would cost on the private market.

Would the states run the plans, too? Or are they just negotiating prices?

They would do the price negotiation. They would also have to offer two plans. There are four in our state, and people can choose between them.

What do insurers get for participating?

It’s a population of 100,000 people or 40,000 people of whatever a state puts together that is packaged. And when that many people are packaged up, people want to cover them.

Why have private insurers in here at all? Why not just do it like Medicaid, but call it something else?

Because you want to have competition to drive down the price. You want innovation. You have the ability to get people to agree that it’s worth having a public plan. You could get private insurers to cover this population, but you couldn’t without giving the population leverage in the marketplace. We have 20 years experience doing this in Washington, and we’ve achieved these goals.

So the state would say how much it will pay for an MRI?

The state says I want a plan, and here’s what I want in my plan. I want to get this much coverage to these people. Who will provide it for me? I can deliver 50,000 people as customers, but you need to give me a discount. What’s the discount going to be? If we pass this, it will be the first time we’ve allowed states to attain leverage against the insurance industry by negotiating in bulk.

So the idea is, this population suddenly becomes a bloc.

Yes.

Can they opt out?

States can opt out.

But can individuals leave if they want?

They don’t have to be part of this. They can’t go get the tax credits outside of it because we want them in a bloc. But they can say no to the plan.

Photo credit: By Alex Wong -- Getty Images

By Ezra Klein  |  October 1, 2009; 3:05 PM ET
Categories:  Health Reform , Interviews  
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Next: The Many Public Option Compromises

Comments

This really isn't a "public option". It's private insurance on the Exchange with Uncle Sam picking up the tab. Basically contracted out insurance. We've seen how well contracting saves Uncle Sam $$$.

I just don't get why we need the middle man of insurance companies for *this*. We already are giving them the Mandate and pushing to have companies provide plans. We're funneling millions of new customers into their waiting arms. Why contract out the subsidized people as well?

Seriouslly... let's just privatize Medicare if we're going this route. Take Cantwell's arguments and apply it to Medicare, and they would make the same (lack of) sense.

This, like triggers, is another way for the Pro-PO people to be able to say they got a "win" while selling out to Big Insurance.

We know there isn't going to be a true PO. That deal is done. So the Senate spare us the b.s. of trying to con us with a "compromise".

John

Posted by: toshiaki | October 1, 2009 3:32 PM | Report abuse

Indeed leaving the deal to States is ‘the way go about’ in this case. If California wants to set up the Public option, let it go whereas Rick Perry from Texas thinks it is Socialism, let there be no Public option in Texas.

Primarily it is an intelligent way to suck the air out of the criticism of 'Obama Health Care as Socialism'. People do not like what they (having or missing a Public Plan); go talk to your State folks.

That lousy Governor Sanford of S. Carolina; in the end had to accept Recovery Act money under the public pressure. Bobby Jindal, another stupid one, did all 'show' about the money but in the end accepted it.

Put these Republican fools on the spot and make their own voters 'bell the cat'. Why should Dems in Congress and White House take the heat for 'misguided campaign of Socialistic Health Care'?

On the other hand, if California goes more into the funk due to failed Public Option; other states would have got the warning and the debate would die out. Republicans would claim the victory and Dems would move on saying 'we never forced it and in wisdom allowed States to do the experimentation'.

We keep harping about our Union structure, but this kind of delegation to States and autonomy, loose coupling; all that indeed can be exploited in this case.

Jury is out if this proposal would have any legs here. It deserves a serious chance.

Posted by: umesh409 | October 1, 2009 3:45 PM | Report abuse

Let's assume for the sake of discussion that a state plan can lower costs as much as a federal plan (it can't). Let's also incorrectly assume that progressives would accept the paltry subsidies she's talking about.

The fact that states can opt out should be a deal breaker for any Dem that truly cares about health care reform. The two that I've heard pushing this proposal are from fairly progressive states that are likely to take advantage. Those in the poorest Southern states are likely to get left behind.

To their detriment, and ours, these folks are bending over backwards to avoid reconciliation. An up and down floor vote is an easy sell if Dems would only go on television and make it.

Posted by: cjo30080 | October 1, 2009 3:56 PM | Report abuse

cjo30080 says "Let's assume for the sake of discussion that a state plan can lower costs as much as a federal plan (it can't)"

False. Some states have populations greater than that of many European nations whose health care systems work quite well.

The largest problem is the potential for population migration between states (similar to current Canadian border crossings for lower prescription drugs). States with socialized medical programs would tend to attract aliens and deadbeats... and the citizens of the state have no particular desire to pay for such burdens.

Posted by: rmgregory | October 1, 2009 4:39 PM | Report abuse

I live in a red Southern state run by neanderthals (to borrow a phrase from Congressman Grayson).

I also worked and contributed to elect a Democratic President and a Democratic Congress (and, to no avail, a Democratic Governor and Democratic state legislature), in part, because I wanted health care reform.

Supporters of these opt-in "compromise" proposals seem to live in progressive states or regions and appear to be taking the attitude that if you happen to live in a red state or region, you're screwed--but "I'll be fine, and that's what's important."

If so, then thanks for nothing.


Posted by: cjo30080 | October 1, 2009 4:53 PM | Report abuse

rmgregory,

Your evidence does not disprove my assertion. And, of course, it assumes that states opt-in.

Posted by: cjo30080 | October 1, 2009 4:57 PM | Report abuse

This sounds like it is quite similar to DC's Alliance program, which covers populations not covered by Medicaid. The Districts contracts out to three companies to run Alliance, and those companies also get to have a share of the Medicaid market. Ezra, perhaps you could outline DC's system from a policy standpoint?

Posted by: DavidMNDC | October 1, 2009 5:02 PM | Report abuse

I'm not sure what to think about this Cantwell's plan:

-It's obviously a tactic to keep the bill's cost below $900 billion by limiting poor families' choices.

-Medicaid HMOs already exist and I understand they don't save a lot of money.

But IF the coverage is significantly better in Cantwell's program than in low cost plans on the exchange you might start to see people agitating to join Cantwell's plan, and that would be a good thing for reform. But it's a big IF.

The health care industry can't be too happy about this new wrinkle. It will be interesting to see how this affects the bought-and-paid-for bloc. I'm already getting the sense that Snowe will vote against the bill.

Posted by: bmull | October 1, 2009 9:35 PM | Report abuse

I lived in Washington state for about 8 years, and during most of that time, I was covered under the Basic Health program (on which Cantwell's bill is based). For what it's worth, I found it to be a very good program. It has a sliding income scale that determines how much you pay each month. You have a choice, as Cantwell says, of four different health care companies. Each company clearly spells out what is covered, and it's roughly the same as if you bought private insurance on your own. For years I've been telling my friends in other states about Basic Health, and I'm glad that something similar is at least on the table for the national conversation about health care.

Posted by: margphil | October 2, 2009 2:41 AM | Report abuse

I'm not sure that this will hold up but I think that it has potential since it's already working. States won't have the sway of a national purchasing program but 40000 or 70000 will constitute a solid pool to negotiate from. It's MUCH better than a co-op (what is that again?) and/or a trigger (health care is rising exponentially faster than inflation. That IS the trigger!)..Snowe and Lincoln voted against it so we'll have to see if it survives. In some ways, I like it better than a national public option since it does not require as much infrastructure and bureacracy.

Posted by: TruthHurts2 | October 2, 2009 4:32 AM | Report abuse

Wow, once again I'm out of luck. As someone who is between 200 and 350 poverty line, I ALSO DO NOT HAVE INSURANCE because of pre-existing conditions. So I'm just screwed. If states are only negotiating for below 200 that means I'll be at the mercy of the insurance companies again--just like with the high risk pool which is WAY above my income. (Currently, it would be 1/3 of my income to enroll in the state high risk pool. Why bother when the deductible is so high, I'd never be able to use it.)

Wow, I give up. Screwed all around apparently.

Posted by: aka3000 | October 2, 2009 7:22 AM | Report abuse

yeah, real successful.

from Huffpo:

"Several readers noted that when you go to the plan's website, you're greeted with this: "To stay within the appropriated budget, Basic Health is no longer processing incoming applications to determine eligibility and has officially implemented a waiting list. New applicants will be placed on a list behind those already waiting. When space becomes available in the future, Basic Health will release names from the list in date-received order and notify applicants."

Posted by: aka3000 | October 2, 2009 7:34 AM | Report abuse

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