Friday, November 13, 2009

The End of the "Robust" Public Option and the Potential for "Robust" Cost Containment?

Two things happened this week that in tandem have the potential to lead to a compromise over a health care bill.

First, there are unconfirmed reports that Senate Majority Leader Reid is leaning toward offering the neutered version of the public option like that in the House--not tied to Medicare rates, providers not required to participate, and provider reimbursement rates negotiated.

The second development is the growing call for a bipartisan commission to offer solutions to entitlement spending (Medicare, Medicaid, and Social Security) that the Congress would have to vote up or down via a super majority vote.

No health care bill will pass either the House or the Senate with a robust Medicare-like public option--as I have been telling you since spring. But this neutered variety, which the CBO said would likely develop rates higher than in the commercial market, has passed the House (by a very slim margin) and could potentially pass in the Senate. That is by no means certain with at least a couple of the Senators Reid needs to get to 60 votes indicating they wouldn't support most if not all versions of a public option.

The other growing discomfort with the current health care bills--particularly among the Democratic moderates and conservatives Reid and Pelosi need on their side--is the lack of any cost containment in the bills. That anxiety probably has more potential to derail a health care bill than anything else.

But now at least 15 Democratic Senators are saying they will not vote to increase the federal debt ceiling without an entitlement commission.

With the Congress facing the need to vote an increase in the federal debt ceiling by mid-December, we could see such a commission enacted before any final vote on health care.

I will suggest that if we had that entitlement commission in place many Democrats would be far more comfortable voting for a health care bill. While I doubt many Republicans would be enthusiastic about the health are bill itself, they would feel a lot better if there were such a commission.

Of course, all of this depends upon just how robust that entitlement commission would really be. There are few if any details now on the table. It would also depend upon the final details in any public option--there are still fears even the more neutered variety could have unfair market advantages or later be converted to the more powerful model.

Would such a commission be more focused on tax increases to narrow the entitlement programs' impact on the deficit? How much power would it have to implement systemic health system change? Would it end up being a one-time effort or more focused on the likely need for ongoing systemic change as it became clear what was working and what was not?

And so far Pelosi and her powerful House committee chairs have been more than just unenthusiastic about the ceding a huge part of the federal budget to an independent entitlement commission (not to mention losing a source of lots of campaign contributions).

In the end, a health care bill might just hinge more not on how "robust" the public option would be but on how "robust" an entitlement commission would be.
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