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Is the weak public option bad politics?

The public option written into both the House and Senate bills is a pale shadow of the policy many liberals initially envisioned. Cut off from Medicare's payment rates and networks and limited to the small sliver of Americans eligible to use the insurance exchanges, the Congressional Budget Office predicts the public option will actually cost a bit more than competing private insurers.

That's not because the public option will do a poor job. Quite the opposite, actually. The public option will be cheaper than private plans for what it offers and whom it insures, but CBO believes it will end up with a somewhat sicker clientele, and it will be less restrictive than private insurers, and the two will combine to hike its premiums about 5 percent higher than the private plans it's pitted against.

As time goes on, you could see this playing out a couple of different ways. One potential path is expansion: The public option might secure a reputation for offering a kinder, gentler form of insurance, and with the policy's popularity assured, another Democratic majority might eventually pair it with Medicare in a bid to save money.

But another potential path is that it discredits, or strikes a blow against, the idea of public insurance. If the public option costs more and, for that reason, performs poorly, it will be hard for future liberals to argue that the problem with the insurance market is a surfeit of for-profit competitors. Conservatives will point toward the anemic public options and brand that idea a decisive failure, and intricate arguments about risk selection and bargaining power will be cold comfort for liberals and too complex for the country. Indeed, it's evidence of how much of this debate is philosophical that conservatives haven't recognized the opportunity embedded in a crippled public option.

Then, of course, there's the third path, which I regard as the likeliest of the three: The public option doesn't do much either way, and for all the hubbub it's attracted this year, it's largely absent in the public debate come 2016, or 2019, when it's serving a mere percent or two of the country and hasn't performed well enough or poorly enough to serve as the centerpiece in anyone's argument.

By Ezra Klein  |  November 23, 2009; 9:18 AM ET
Categories:  Health Reform  
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you're forgetting path 4. It doesn't survive this time thanks to moderate Dems.

If it does survive I predict path 2. Once it starts paying for things that private insurers won't pay for and the public option has NO utilization review the costs will be greater as time goes on. One of the other things that doesn't get talked about is that the people available for the public option are many times the most sick (individual market) It will certainly be much greater than 5%. Everyone will see it as a place to go if they get horribly sick because the public option would never say no to anything for fear of backlash as conservatives and liberals and they both will watch it closely for this.

Once again proving the age old axiom "you can't have your cake and eat it too"

The good thing is that private insurers are already lining up their systems and streamlining to compete against a potential public option on efficency to prove the comparison of medicare to be more efficent that private insurers false. This is one of the few positives of this debate. Now if they'd only re-think the idiotic deals with Pharma that were made, the ridiculously conservative MLR ratio, the ultra-weak individual mandate penalty and the crappy free-rider provision, stronger move towards capitation of providers we might actually have a bill worth talking about.

Posted by: visionbrkr | November 23, 2009 9:39 AM | Report abuse

visionbrkr has it right. There appears to be no way an actual public option passes the Senate now that Reid has ruled out reconciliation and at least 4 nominal Democrats say they will filibuster a public option bill. The best case scenario seems to be some kind of weak trigger which would replace Lieberman's vote with Snowe's while keeping the others. Of course if that happens, the likelihood of the trigger ever triggering is slim. It would seem to be unfortunately that public option is an idea whose time has not yet come thanks to Democratic fecklessness. We'll likely have to see how well a regime of subsidies and regulation will work for a few years. If it fails, then maybe a decade from now we can come back and implement a strong public option.

Posted by: redwards95 | November 23, 2009 9:52 AM | Report abuse

Ezra - this whole discussion is beside the point. the public option is dead. Has been dead for some time. You might get a trigger but that's it.

even if it survived in its current form, it will likely lose money and be forced to raise rates. Doctors and hospitals will soak it for all it's worth.

Posted by: MBP2 | November 23, 2009 9:55 AM | Report abuse

I think you're all overestimating the relationship between how a public option performs in practice and how the public feels about public insurance. The successes of Medicare and the VA system haven't stopped Republicans, conservative Democrats and a good portion of the masses from believing that healthcare affiliated with the government is a death sentence. The story would be the same regardless of what actually happened.

Posted by: cog145 | November 23, 2009 9:58 AM | Report abuse

A "mere percent or two" is 3-6 million people. That's some rigor you have in your analysis, giving yourself a 100% margin when making a prediction.

The iPhone has 1.5% of the mobile phone market. Is it "absent in the public debate" on mobile technology or central to it? Does it have influence on other producers who imitate it's product that far outstrip it's own market share?

Your DNA is a mere 2% away from being a chimpanzee's DNA but the difference is significant, at least in most posts.

Posted by: jamusco | November 23, 2009 10:38 AM | Report abuse

I'm hoping that the public option as now constrained (and further marginalized before the final vote) is absent from the final plan because it is a false hope that it can make a difference. They've cut the achilles tendon on the quarterback, broken the arms of deep ends, crushed the hands of the center.

What remains is so pitiful, it deserves the euthanasia that a starved dog with missing legs and bowels run over by heavy vehicle traffic. Put is out of its misery.

The Democratic party is two parties that should be divorced for the children's sake. The 'moderates' should get no help whatever in their reelections from Dem. progressives (even their votes). B. Nelson, Lincoln, Bayh, LIEberman and Landrieu (and others of their ilk) no longer exist for me.

This bill seems very marginal to me, in total. I'd gladly settle for a set of mandates/restrictions on who must be insured by private insurers in a nationwide community rating pool. Intelligent/rational national legislation is beyond the reach of the current congress. We have to fail bigger before the people finally face whether they want the current non-system or a revolutionary change.

Posted by: JimPortlandOR | November 23, 2009 11:01 AM | Report abuse

I don't disagree with the analysis that the public option is so watered down that potentially its life or death is meaningless. I do resent the role that many bloggers (Ezra included) played in not fighting for the robust Hacker-style public option (with 100 million potential enrollees) and ignoring the glaring evidence of failure in the private health-care market. Single payer? Don't expect him to advocate for it and its obvious success in major industrialized countries. Congratulations, dude - you've certainly earned the right you're enjoying this morning of tossing some dirt into the pitiful grave of the public option and of other efforts to escape our health-care industry overlords. Thanks!

Posted by: redscott | November 23, 2009 11:03 AM | Report abuse

"hasn't performed well enough or poorly enough to serve as the centerpiece in anyone's argument."

This would actually be a plus for the future prospects of a public option, because then the Democrats could say, look, we've had a public option for years and the sky didn't fall in, we didn't become communists, it hasn't been a problem, now let's improve it by...

Posted by: RichardHSerlin | November 23, 2009 10:01 PM | Report abuse

The risk adjustment in this bill is too weak to keep the PO solvent unless there is a grassroots movement to encourage high cost individuals to use private insurers. Welcome to the politicization of health care.

Posted by: bmull | November 23, 2009 10:43 PM | Report abuse

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