Monday, December 7, 2009

The Latest Version of the Public Option—The Democrats Could Have Saved Us Lot of Time If This is What They Call a “Public Option”

If the latest version of the public option is something that will give its proponents reason to argue they still have a way to "make the health insurance market much more competitive," then a motor scooter is a Ferrari.

The details are still fuzzy but the word is that senators are working toward a compromise over the controversial public option that would create something that:
  • Would be run by the Office of Personnel Management (OPM), which already runs the Federal Employee Health Benefits Plan (FEHBP).
  • Would take bids from existing not-for-profit health plans which would then be offered as one or more choices in the insurance exchange open to small employers and uninsured individuals.
  • Would attempt to take advantage of OPM’s experience in negotiating health plan premiums in order to offer small business and consumers the best possible rates.
  • Would continue to have an insurance exchange, that in addition to the OPM product, would offer other both for-profit and not-for-profit health plans separate from the OPM offering.
This scheme would not involve the earlier proposals for a public option that enabled a government run health plan to require all providers to participate and would pay them Medicare-like rates—the “robust” version.

And, this idea would not be anything like the latest version included in both the House and Senate bills that would direct the federal government to set up a government-run insurance plan that would be required to negotiate provider rates instead of dictate them and could not mandate providers to participate. This newest scheme would replace the current version in the Senate bill.

In earlier posts I have referred to the latest version in the House and Senate bills as the “neutered” public option for its inability to really drive any costs down. The CBO has said that this version of a public option would likely only attract a few million customers and have rates actually higher than the general health insurance market.

I’m not quite sure what to call this latest version being negotiated by the senators. It strikes me as almost a redundant exercise. At least a scooter being passed off as a Ferrari.

The insurance exchange would already include all of the not-for-profit health plans operating in the market. These plans would already be under competitive pressure to offer their best rates—that is supposedly the point of the insurance exchange. Heck, the whole idea of an insurance exchange came from the FEHBP plan in the first place. The notion that adding the OPM to the equation--something that was based on the OPM model in the first place--will somehow drive costs down even further is hard to understand.

But let me tell you what this scheme would do.

It would give Democrats something they can call a “public health plan option” and declare victory.

If Democrats were going to buckle--really entirely capitulate--to this extent on their centerpiece health care issue they could have saved us a lot of time and aggravation by doing it a lot quicker!

I would add one concern. You might recall that the CBO said they thought that the public option in the Senate bill could attract a disproportionate number of the sickest people. As the details for this scheme emerge, I hope the Democrats don’t go so far as to create something that would set up the not-for-profits to get a disproportionate number of sick people and ironically relieve the for-profits from their share of that burden.


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