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If you give away the public option, what do you get?

Most of the energy in the Senate right now is being directed into a mad rush for compromise proposals on the public option. This reflects the sense that the right compromise on the public option is a compromised public option. That's true to an extent, but you can define the public option so far downward -- a state-based, opt-in, trigger-dependent, nonprofit option, for instance, is seriously under consideration right now -- that you'd be better off trading it away for something that's more meaningful.

Candidates on that score would be a few hundred billion more in subsidies, a national exchange that's open to larger businesses, and tighter rating rules governing how much insurers can discriminate against people of different ages and demographic characteristics. The first would do more than a really weak public option to increase affordability, the second would do more to increase choice, and the third would just be a good idea. Having something called a public option is not, in the end analysis, as important as achieving the goals of the public option, and at this point, the policy itself is getting so watered down that it might be worth attempting to achieve its goals in a more straightforward fashion.

So far, I've not heard anyone discuss a deal along these lines. The horse-trading over the public option is taking place entirely in terms of the public option, and not in terms of the broader health-care bill. That strategy made sense for trying to keep the public option alive, but if the votes aren't there, that may not be the right strategy for letting it die.

By Ezra Klein  |  December 2, 2009; 1:40 PM ET
Categories:  Health Reform  
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I'd much rather have a national exchange open to everyone than even the very strongest public option.

Posted by: MyrtleParker | December 2, 2009 1:52 PM | Report abuse

What good would it do any of us if we had the strongest possible public option, but the exchange was so small that only a relatively few people could sign up for it.

Get rid of the employer based insurance model through a national exchange open to everyone where the offerings are tightly regulated. All private insurance, but very heavily regulated and then concentrate on reforming the pay-for-treatment nature of doctor's reimbursement.

This would directly impact more peoples lives and leave us off better than where we are now.

Posted by: MyrtleParker | December 2, 2009 1:54 PM | Report abuse

An exchange open to everyone and crazy-strict regulation of health insurance would be okay by me - but what are the odds of that happening? We went with a public option b/c we can't get effective regulation passed. Maybe having the public option's foot in the door is the better way to go.

This is so painful to watch.

Posted by: eRobin1 | December 2, 2009 1:58 PM | Report abuse

That's because the people doing the horse trading wouldn't favor any of those things. They're all "fiscal conservatives" which means they won't vote for a deficit-reducing bill if it's anywhere close to the word "trillion". Raising the cost of the bill in a deficit-netural manner is a non-starter.

The current interst group compromise is predicated on segregating the exchanges. If they weren't segregated, large business would be worried about losing control of esi. Further rate regulation ... is that really worth canning the public option?

The way to think about this is the DSLP. The Direct Student Loan Program was actually pretty poorly run for a while. The customer service wasn't very good. But it proved so much cheaper that even good customer service doesn't outweigh the extra expenditure for taxpayers and students.

Posted by: NicholasBeaudrot | December 2, 2009 2:00 PM | Report abuse

I agree, Ezra, you can get a lot for the public option.

I'd start by changing the Senate's rating rules to that of the House and of Massachusetts -- scrapping the smoker rating and limiting the age rating to 2:1. With the individual mandate, the smoker rating will never, ever work in practice: everyone who gets their health insurance on the Exchange -- be it a 62-year-old or a 12-year-old on their parents' policy -- will be required to take blood test every single year, or at least every time they or their parents change policies. That's a recipe for political backlash.

If you want to penalize lifestyle choices, sin taxes are a much, much better way to go than the underwriting process as they also, unlike underwriting, penalize by the level of consumption. An increase in the cigarette tax, for example, penalizes people more for smoking two packs of cigarettes a day than for smoking one cigar a week; a smoker rating penalizes these two people equally.

Also, allowing insurers to vary premiums by lifestyle choices leads to a slippery slope. Procreation is clearly more a lifestyle choice than, say, obesity. Why should married couples who choose to get sterilized have to subsidize other married couple's pregnancies? That's where the debate is headed when you allow insurers to vary premiums by lifestyle choices.

On age, it's hard enough for a 64-year-old, empty-nester Bostonian couple to afford health insurance with a 2:1 age rating on the Connector. For an empty-nester couple of this age living in Boston, a 93% actuarial value policy costs between $1,800-$2,000/mo. on the Connector. For a 64-year-old Bostonian, a 93% actuarial value policy costs between $1,000-$1,100/mo. for just one person. I can't imagine how affordable health insurance would be with a 3:1 age rating -- let alone a 1.5:1 smoker rating if these people are smokers.

Increasing subsidies for those earning below 300% FPL is another place I'd go. But in order to remain revenue neutral, that would also involve increasing the revenue raised from the excise tax on Cadillac plans back to at least where it was under the Finance Committee plan.

Increasing the minimum actuarial value would have to also involve increasing the income exemption from 8% to a much, much higher number. Otherwise, many, many young, healthy people living in high cost-of-living urban areas will be exempt from the individual mandate, and with the insurance regulations, choose to go bare -- leaving everyone else with much, much higher premiums.

Posted by: BradGabel2002 | December 2, 2009 2:06 PM | Report abuse

I've never considered the "public option" as a path to anything but continued dysfunction as far as health care policy is concerned.

Get rid of the employer tax exemption for health benefits and include coverage in taxable income. Then give *every* individual a tax exemption (not deductible but exemption) for health insurance.

That would actually put us on a path to UNIVERSAL health care policy in this country.

Posted by: Athena_news | December 2, 2009 2:12 PM | Report abuse

The public option is like that war buddy that gets so badly shot up that everybody wants to leave him on the battlefield. No frickin way. If the public option goes, I support taking the whole bill down with it.

Posted by: bmull | December 2, 2009 2:18 PM | Report abuse

What makes you think liberals will get anything out of a compromise, Ezra? Given the politics of this so far, isn't the "benefit" you gain just keeping Ben Nelson & Joe Lieberman in play?

I also think bmull's comment is highly instructive. This has somehow become a line in the sand, and a lot of progressives are going to fight over the name instead of substantive policy benefits.

Posted by: NS12345 | December 2, 2009 2:32 PM | Report abuse

eRobin sez: "An exchange open to everyone and crazy-strict regulation of health insurance would be okay by me - but what are the odds of that happening?"

You'd think that free marketers would be happy to have all insurance providers competing openly in a single marketplace, and employers would be glad to get out of the health care administration business. But you're right, this won't happen. I don't get what the resistance to this is.

Posted by: AlanSF | December 2, 2009 2:47 PM | Report abuse

AlanSF, that reminds me of the plank number three of the Republicans upcoming "purity test":

(3) Market-based energy reforms by opposing cap and trade legislation;

Get that? These jokers want a "Market-based" alternative to cap and trade... which *is* completely MARKET BASED!

You can not argue with ignorant idiots.

Posted by: MyrtleParker | December 2, 2009 3:04 PM | Report abuse

I've been disappointed by the leading progressive voices because they haven't been pushing alternatives to the public option.

I don't quite know why the Swiss model wasn't explored more. I mean if Reed had taken the position that there would either be a non-profit basic plan, or a severely limited public option, I think that the public option would have gotten more traction. This could have been achieved while keeping single payer "off the table."

Posted by: brooklynpsu | December 2, 2009 3:23 PM | Report abuse

I'm in agreement with everything you've said.

It's not the public option that's important. Specially not the dinky thing we'll end up with, which will likely be detrimental to any future true public option.

Ezra, why don't you offer that as a suggestion to some of the folks up in DC?

Posted by: JERiv | December 2, 2009 3:30 PM | Report abuse

Ezra's post is the A-list "liberal" blogger negotiation strategy in miniature. Namely, we're asked to give up something small but tangible (ie a crappy and possibly fatally compromised public option, but something that could be built on as an alternative to our failed private system) in exchange for mystical pony-land benefits that we'll somehow obtain in exchange for this concession. That's how we got from single-payer to a Hacker public option to a "robust" public option to Medicare +5 to negotiated rates to opt-out to opt-in to trigger. "Smart" guys like Ezra told us this was the way to go, give up something now in the hope they'll give us something in exchange later. Except they don't. So Ezra enables the process of giving away the store to the insurance companies (hello, captive mandate market!) but we're left with no enforceable means of restraining the private market from looting us all. Pardon me if I don't leap at the chance Ezra offers of giving away even more.

Posted by: redscott | December 2, 2009 4:01 PM | Report abuse

"I don't quite know why the Swiss model wasn't explored more."

...or the German or French model. Employer coverage could have been protected through supplementary policies to the basic *universal* plan.

As you note, progressives got all hung up on single-payer without any exploration alternatives that would have had more public support.

Posted by: Athena_news | December 2, 2009 4:06 PM | Report abuse

I don't understand why narrowing the age bands is a good idea. All that becomes is a wealth transfer from younger generations to older ones. The facts are that older people consume more health care, so why is it considered "discrimination" that they are charged higher premiums?

Posted by: truth5 | December 2, 2009 4:13 PM | Report abuse

truth5, do you believe health insurance is a right or a privilege? If you believe it's a right, then you have to make health insurance affordable for everyone -- including those who are near-retirees. That involves taking money out of one person's pockets and putting it into someone else's pockets.

I'm 29, and I support narrowing the age rating, and scrapping the smoker rating. As a progressive, I accept the sacrifice that is necessary for the greater good. Please see my post upstream explaining why even the 3:1 age rating -- let alone having a smoker rating -- isn't going to make health insurance affordable enough for older adults.

Posted by: BradGabel2002 | December 2, 2009 4:23 PM | Report abuse

"...or the German or French model."

Just to continue on this train of thought, by mandating that all insurers carry a minimum, non profit policy, we probably could have saved significantly on subsides and either reduced the savings measure in Medicare or cut the deficit more.

How could Lieberman disagree with this? His specific objection is that we weren't addressing the problem through regulations, but by creating a government administered program. When he points out that the public option wasn't discussed on the campaign trail, which we can definitively prove as false, one idea that DOMINATED the Obama campaign was the promise of a frank and open discussion. Since then single-payer proponents were the only party shut out public option polarization has predominated the debate.

But then again, if we can't even mandate banks to offer "vanilla" financial instruments, even though they weren't obligated to advertise them, what hope do we have of mandating a "vanilla" heath insurance policy.

It is hard to maintain "hope" when there is so much cause for cynicism.

Posted by: brooklynpsu | December 2, 2009 4:28 PM | Report abuse

Note to burglars: if you're planning on robbing Ezra's new digs, call him in advance and say you're planning to strip it down to the floorboards and wiring.

He'll happily arrange a time for you to pick up his appliances and furniture.

Posted by: pseudonymousinnc | December 2, 2009 4:36 PM | Report abuse

truth5 hit it right on the nose. You are wrong, BradGabel2002.

High risks should pay higher premiums than lower risks. In auto insurance, life insurance, and medical insurance.

Look, if you want to help the poor and downtrodden, healthcare reform is the worst way to do it. First work on income inequality. Once that it is addressed, then everyone might be able to purchase affordable coverage. You can't use healthcare reform for wealth redistribution: it's inefficient.

Posted by: RandomWalk1 | December 2, 2009 4:46 PM | Report abuse

"Look, if you want to help the poor and downtrodden, healthcare reform is the worst way to do it."


Oh, and the "once that is addressed" bit? Deceitful BS.

Posted by: pseudonymousinnc | December 2, 2009 5:09 PM | Report abuse

Seriously though, if we can actually gain something SUBSTANTIVE from giving this hollow shell of a public option, that is totally fine. Great, in fact. A working nonprofit or co-op would be way better than a pointless, highly restricted, dysfunctional program with the words "public option" stapled to it.

But if it's just "give this up and we'll continue to consider voting on the bill" then screw 'em. We have seen how much promises of good faith are worth at this point.

Posted by: NS12345 | December 2, 2009 5:31 PM | Report abuse

In other words, Randomwalk1, you don't view health insurance as a right. I do. I believe as a matter of fundamental justice, the government should provide that nobody has large medical expenses, and is shielded from its consequences (i.e., bankruptcy, death). You don't.

And even in the House bill, older people -- who on average have higher medical bills than younger people -- pay more than younger people. It's just the amount which insurance companies/public option can charge older people is limited.

But getting back to my core point, this debate is entirely about values. What do you see as injustice? What must be done to rectify this injustice? These are questions we must answer as a nation. It is, my late Senator wrote, entirely about the "character of our country."

Posted by: BradGabel2002 | December 2, 2009 5:32 PM | Report abuse

Also, RandomWalk1, the uninsured and underinsured don't mostly comprise of the poor. Over 80 percent of the uninsured have at least one parent working. These people are waiters and waitresses, hotel workers, real estate agents, etc. These are middle-class people.

Whether you are poor, middle class, or even wealthy, once you are uninsured and get cancer, have a really bad accident, or give birth to a child with diabetes, you are going to be hit with large medical expenses. You may have to file for bankruptcy, or forgo treatment, and work through pain or even die because of these large medical expenses. What Democrats have fought for the last 60 years is shielding Americans from these kinds of uncertainties becoming realties. That is what universal health insurance is. That is what I believe our nation can and should do for people at their most vulnerable moments.

Call me a socialist or whatnot, but those are my values, and the values of the Democratic Party.

Posted by: BradGabel2002 | December 2, 2009 5:44 PM | Report abuse

Sure. Get me an offer that secures something meaningful.
Until then, we're going for a public option.

Posted by: adamiani | December 2, 2009 6:52 PM | Report abuse

I agree with the post.

The problem is, if there's no public option, Jane Hamsher doesn't get to say that she "won." And that's a deal breaker all around.

Posted by: sanelib | December 2, 2009 7:15 PM | Report abuse

yes. i want to go there.

Posted by: schaffermommy | December 2, 2009 7:25 PM | Report abuse

Amazing how money can be the source of all these fights. people are dying from lack of healthcare, and its comes down to the bottom line.

poor people are not worth caring for. this is not a society that believes in society. If you don't have money for healthcare, pay to the mighty lords of insurance, pharma, et al., then hurry up and die as Mr. Grayson said.

some society this is. untold trillions to destroy and build other countries, but the poor and unfortunate in America had better die quickly. they wont get any help.

Move to Iraq or Afghanistan. you have better shot of getting American help there, instead of here. McChrystal's coin might help you there. Here you die, profit matters most.

Posted by: BernardEckholdt | December 2, 2009 9:49 PM | Report abuse

The final answer to Ezra's question is, you get nothing, as experience would tell him or anyone awake enough to notice.

Posted by: redscott | December 3, 2009 8:32 AM | Report abuse

The only real chance for meaningful improvement in our current Byzantine health care system is SINGLE PAYER. The "public option" in all it's many forms does NOT do what it's supposed to do, which is to help the average citizen have better, cheaper and more accessible health coverage than is presently available.
We may need to start all over again, if this process doesn't work this time around and if so, removing lobbyists, their money and our gov't officials who act more like prostitutes from office would be a good start.

Posted by: kladinvt | December 7, 2009 12:59 PM | Report abuse

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