All Life Is Problem Solving

Well, maybe not “over” as in “there will be no legislation passed in this session that contains the phrase “public option.” Perhaps there will still be legislation that has a provision with that label. But it will bear no resemblance to Jacob Hacker’s original design for a public option plan, and it won’t provide a public option that can provide any real competition for private insurance companies.

Kip Sullivan’s post of July 20, entitled “Bait and Switch: How the “Public Option” Was Sold” shows this very clearly. Sullivan makes the case that the House version of the public option plan, the strongest public plan being considered has a chicken-egg problem. On day 1 it will have no enrollees, and it can’t successfully market insurance to people, unless it has a provider network that will treat them when they fall ill. However, on day 1, they won’t have a provider network. If they try to sign providers up and create such a network, they’ll have to get them to agree to a discounted pay schedule relative to what private insurers offer them. If they don’t get such a pay schedule, they probably won’t be able to attract people to the public plan. But why should the providers give the public plan a discount greater than they give to the insurance companies unless the public plan can offer them the inducement of a large number of patients they do not have? And that is the chicken-egg problem besetting the most robust public option yet proposed by the Congress. Because of it, the public plan may never be able to get going at all.

If it is able to get started however, CBO forecasts (and I don’t know why anyone should believe this) that membership in the plan would reach only 10 million. If CBO is right, and since the plan is limited to covering uninsured and employees of small employers only, its estimate is probably very generous, it’s pretty clear that it still won’t have the market power that was originally envisioned for “the public option” by Jacob Hacker. So, there’s no reason to believe that it will be able to use market forces to reduce health care costs. But what good is a “public option” plan that won’t reduce health care costs? It’s just “window dressing,” “kabuki,” another PR version of “reform’ that our legislators these says seem to specialize in.

Hacker’s original design for the “public option” had a certain plausibility, which is why it was able to get support in the progressive community at the expense of single payer plans. However, without arguing as Sullivan does, that even Hacker’s original version of single payer would not work to reduce costs very much, we can easily accept Sullivan’s analysis of the vast difference between Hacker’s “public option” plan and the House bill. Specifically, the Hacker “public option” required: pre-populating with tens of millions of people; substantial subsidies to individuals for buying insurance, but no subsidies to private insurers; availability to all non-elderly Americans; authority to use Medicare’s provider reimbursement rates; and private insurers must offer the same basic benefits as the public option. Only the last of these five requirements is fulfilled by the House bill. The House bill provides for no enrollees to begin with, much less tens of millions, it fails to provide exclusive subsidies, it’s available to only a small proportion of non-elderly Americans, and it can’t charge Medicare reimbursement rates, but must be satisfied with 5% above Medicare rates. Without these other four criteria fulfilled and, in addition, permission to use the Medicare provider network from day 1, it is hard to see how the House bill can experience the market impact envisioned by Hacker and the consequent reduced costs for the health care system.

Since the House’s “public option” is so far removed from the original “public option” design and therefore won’t work as advertised, is there any possibility that the Bill can be changed in the coming weeks and that something in the form of a Hacker-type “public option” can get through a conference committee of the two Houses? I think the answer is “no.” the current framing of the political debate over health care reform won’t allow it. Perhaps if Obama had come forth with a single payer plan, mobilized the progressives and the public around it, and fought for it, a compromise at a “public option” that would work might have been something the health insurance companies would have accepted out of fear. But his strategy of letting Congress work out the details in multiple committees, staffed by people of varying ideological persuasions, and highly vulnerable to industry lobbyists, was a sure recipe for producing a Bill that would produce neither single payer, nor a “public option” that can really impact the market. Also, the debate over the bill is now cast within an ideological framing that has left single payer “off the table” and avoided fighting the battle over whether single payer or a good public option are “socialized medicine” or not. That means it is very difficult to introduce and educate the public about single payer during the next couple of months. The House bill is the most progressive of those being considered by the committees, and as we have seen, it is nowhere near an approximation of Hacker’s design and cannot be expected to produce its predicted impact, even if its predictions were true. Also, there’s a good possibility still that no bill, or a bill without a public option will be the result of Congressional maneuvering, and almost no possibility that a more progressive bill than the House Bill will be seriously considered without a change in the ideological framing that has settled in.

In other words, this effort at a health care reform that would solve our national health care problem is already “over.” The only way to possibly change this verdict is for progressive organizations to admit their mistake (at least to themselves) in putting forward the “public option” idea, and to conduct an all-out and well-funded campaign supporting single-payer health insurance designed to break the frame of the debate. A “grass roots” and “net roots” campaign over the next month including country-wide peaceful street demonstrations, could change the frame enough to get single payer back on the table. It would be a tough fight, but if progressives lose it, at least we’ll have bought some education and put forward the clear view that the plans the Administration and Congress appear willing to compromise on won’t solve the health care problem, and that the country will have to revisit the issue again in the very near future.