Problems for the Public Option

The House released a final version of the health reform bill. It has a public option all right, but not the robust version progressives were hoping for. The public plan would only cover 2% of Americans and premiums will cost more than anticipated.

Meanwhile, Sen. Joe Lieberman (I-CT) continued to threaten to join a Republican filibuster of a health care bill with a public option. A lot of people still think he’s bluffing. Realistically, the public option probably faces more serious threats from inside the Democratic caucus. It’s been whittled down at an alarming rate.

Nick Baumann of Mother Jones asks “What now for the public option?”

The Congressional Budget Office has estimated that public option premiums will actually be higher than the premiums for private plans on the health insurance exchanges. That doesn’t mean it’s going to cost the government more money—the public option is paid for by premiums, not taxes; it actually cuts the deficit. But it will be more expensive than some private plans. Wasn’t part of the point of the public option to prove that a government-run program could compete successfully with privately-run plans? Well, yes, but here’s the problem: that was all based on the idea that the public option would pay health care providers at Medicare rates.

Baumann predicts that insurers will do everything they can to drive the sick people off private insurance onto the public plan, a phenomenon known as “adverse selection.” Hopefully some of the proposed insurance reforms will curb their worst excesses, like kicking people off the rolls for misspelling their preexisting conditions on their application forms.

Mike Lillis of the Washington Independent reports that the House health care bill would eliminate the popular and cost-effective Child Health Insurance Program (CHIP) and shift its low-income beneficiaries onto private health insurance exchanges.

This looks like a stealthy preemptive strike on the prospect of single-payer health care. CHIP is a single-payer program that progressive health policy types envisioned as a prototype for a future single-payer system for all kids, or even eventually for everyone.

As Lillis points out, abolishing CHIP is also a gimme to insurance companies. Generally speaking, kids are cheap to insure because they’re healthy. Private insurers would love to stock their risk pools with kids on federal subsidies. It’s like getting paid to stock your pond with delicious trout. We worry about adverse selection making the public plan more expensive. Well, CHIP is the reverse of that because this public program is keeping the good risks for itself.

Suzy Khimm argues at TAPPED that killing CHIP could be a good thing, provided the kids continue to enjoy the same legal protections that they get under the public plan. Khimm suggests that moving low-risk kids into insurance exchanges could help keep costs down for everyone by making the risk pool healthier on average:

That being said, if CHIP’s dismantling ended up moving more folks into the health-insurance exchange, it wouldn’t simply be a boon for “the insurance lobby and moderate Democrats.” It could strengthen one of the most fundamental parts of the Democratic reform package — a robust insurance exchange with a pool of participants that’s large enough to drive down costs precisely because insurance companies have an incentive to jump in and compete for customers. Moreover, folding CHIP into the exchange would add a younger, healthier pool of participants to the exchange, offsetting its potential of becoming a dumping ground for the sick and elderly. Finally, CHIP has always suffered from under enrollment — about 6 million children aren’t insured in the program who should be — and by bringing whole families in under the same plan, more children will be covered.

That’s a nice idea, but it seems foolish to scrap one a popular and successful social program in favor of an untested insurance exchange system.

The frustrating thing about so-called health care reform is that legislators don’t really want to change the system. They want to make the system work better while catering to all the established interests that made it suck in the first place.

Politicians aren’t the only ones to balk at fundamental change. The Real News Network interviews Sam Gindin (video below), a former assistant to the Canadian Auto Workers Union, now a professor at York University. Gindin says that, over the years, labor conceded too much on health care and thereby failed to reestablish itself as a leading force for progressive change in the United States. Helping elect Barack Obama was a step in the right direction for labor, he maintains, but it’s not nearly enough.

As John Nichols of the Nation put it, when the House finally wrote the bill, the compromise was even more compromised than expected.

This post features links to the best independent, progressive reporting about health care by members of The Media Consortium. It is free to reprint. This is a project of The Media Consortium, a network of leading independent media outlets.

Andrew Alifera on Flickr via Creative Commons
By Lindsay Beyerstein, Media Consortium

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Marion Y.

1:04PM PST on Feb 16, 2010

The Public Option LIVES!!!!

For months now D.C. insiders and T.V. blowhards have said the public option is dead, but Senator Michael Bennet (CO) just proved them wrong and Senators Kirsten Gillibrand (NY), Jeff Merkley (OR), and Sherrod Brown (OH) have already stood up to join him.

These four Senate Healthcare Heroes are circulating a letter calling on Majority Leader Reid to use reconciliation to pass healthcare reform with the choice of a public option.

CLICK HERE TO SEE A SAMPLE SCRIPT AND REPORT YOUR CALL
http://act.boldprogressives.org/cms/call/bennet_letter/?source=dfa1

Thanks to your hard work, 120 House Democrats signed and delivered the Polis/Pingree letter to Harry Reid a little over a week ago.

Four Senate Healthcare Heroes saw that leadership and your hard work -- and aren't sitting around and hoping for change -- they're taking the lead and making it happen.

Think of it this way: if this was a football game, House Democrats threw the Senate a Hail Mary pass and these four Senators just caught it. But now, they have to score the touchdown. That means we need to call on other Senators to join them.

So today, members of Democracy for America, Progressive Change Campaign Committee, CREDO Action, and MoveOn are calling their Senators and demanding they sign Senator Bennet's Public Option letter too -- and join these Healthcare Heroes in fighting for real reform.

We won't quit until we win.

Charles Chamberlain, Political Director
D

send a green star

Matthew H.

5:14AM PST on Nov 9, 2009

We pay a hourly wage premium for medicare, those on medicare pay premium. Why do you have to get old or terribly sick??? Medicare for all, other countries have a public option and or private insurance. Can American companies, no longer stand free markets???

P H.

7:05AM PST on Nov 8, 2009

As long as the insurance model is used to deliver health care there will be no real reform. The model is the problem. Legislators are not interested in biting the hand that feeds them. Big pharma and the insurance industry are large donors and pay lobbyists large amounts of money every year.

We need a new model to rival the insurance model.

Paul P.

2:47AM PST on Nov 6, 2009

Just thought of another thing that hasn't come up. When my ex-mother in law moved here from Jersey it took her 6 months to find a doctor who was accepting medicare patients. Many of the seniors that I know are getting offers from their doctor for concierge care, where the doctor charges a flat annual fee, like $5k, that covers everything that they need from the Dr for the year and the Dr pulls out of the regular medical system. Do we plan to force Dr's to work? Yes, I know the AMA has endorsed the plan. What will it's membership be in 1 year?

Dee B.

7:24PM PST on Nov 5, 2009

Do any of you know anyone on Medicaid? If you do, then that is the kind of health care you can expect from the government. What they should be doing is requiring employers to furnish health care to their workers. My husband's employer does and it has been great. If this health care thing goes through, I don't think ours is going to be worth a s**t. I don't believe the government should step in and take control of the whole damn thing. I don't want to have to answer to the government for anything; that includes which doctor or hospital I can go to.

Barbara V.

6:02PM PST on Nov 5, 2009

I hope I'm wrong, but this insurance reform situation via the gov't is looking a bit wilted. I rather imagine how it started out as Mr. Obama's conception, and how it's ending off after the incredible amount of Republican, Limbaugh (et al) and lobbying opposition isn't going to be much of an advantage for Main Street after all. This is sad, but it's also our fault for voting in derelicts and pure corruption over the years. Oh, and LETTING Bush and Cheney get by with stealing the presidency. And by the way, Ms. Carol H., Obama did NOT run the country into the ground. That was already accomplished by the "administration" before his. Don't make blanket accusations without true facts behind them.

2:46PM PST on Nov 5, 2009

The thing that amazes me about all of the threads on the public option is that everyone seems to assume that all health conditions will be covered if it is the gov't running it and not private industry. As bad as it is, and I've been declined twice by Aetna and Optima, I believe the Gov't option in any form will be worse than the current system. Just my opinion as always.

Carol H.

12:29PM PST on Nov 5, 2009

I don't trust BO in the least everything he says is a lie no matter what he says he has no idea how to run himself much less this wonderful Country. He know how to run this Country into the ground but that is about it.

Marilyn K.

11:40AM PST on Nov 5, 2009

The only problem with a Public Option is that we might not get it. Republicans and Lobbyists for the Insurance Industry are spreading malicious lies about this plan. These are men and women who are supposedly educated and while making promises to represent their constituency, they take away the rights of the individual, middle class to choose. The public option is choice and competition for the insurance industry. Why should the government subsidize a private industry that is making billions of dollars in profits while limiting the health care of their customers (that they got by misrepresenting their services)? If I want more and better care for my money, I should have a choice. The Republicans have been very direct in their desire to cater to the insurance companies that supplies them with campaign money while they get the finest health care on the tax payer dollar!

10:50AM PST on Nov 5, 2009

Boy-Howdy, after reading this article, initially one would think what a blithering mess and for good reason, for it appears the only concessions are going to be the ones that gave overall American healthcare some backbone and teeth.

But once all the stirring dust has settled, even a skeletal outline of healthcare reform legislated into law will be an humongous event. Hopefully from that point on ammendments can be ratified to improve upon it.

So, lets see what comes out in final form. For without a doubt for those that say America cannot afford healthcare reform, I counter that it can no longer afford not to have healtcare reform...