Mechanics of the Senate Public Plan

I still haven’t seen this question answered yet, but Robert Pear and David Herszenhorn’s article in this morning’s New York Times offers a pretty good hint at what the “opt-out” mechanism of the Senate’s public plan will look like.

His proposal came with an escape hatch: A state could refuse to participate in the public insurance plan by adopting a law to opt out. Even so, the announcement was a turning point in the debate over how much of a role government should play in an overhauled health care system, and it set the stage for a test of Democratic party unity.

If this is the case, it’s pretty good news for reformers. If a Governor could unilaterally act to opt-out of the public plan, it’s likelier that conservative Governors could withdraw without much fear of electoral backlash. But if opting out requires that a bill pass both houses of a state legislature and be signed into law by a Governor, the process becomes much more difficult, and much more responsive to hyper-local politics.

That said, it seems the public option that’s emerging from the Senate really won’t be the fantastic price control mechanism reformers hoped for. Check out Igor Volskly for more on this, but one important thing to note would be that since the Senate bills don’t create a national exchange, it’s likely that the “public option” would in fact be 50 or so different public options administered at the state level. And since the plan will be a so-called “level playing field” option (and thus unable to piggyback off Medicare rates), it’s unlikely the plan will be able to successfully exert downward pressure on private plans on the exchange. Still, by excising some administrative costs and cutting profit margin, it will save somewhere around the $25 billion over 10 years the CBO estimates for the public plan in the Senate HELP legislation.

Finally, it’s important to stress that the Senate public option is still very much in its infancy, and CBO scores could push political will one way or the other, but I’d expect the plan to look very close to the “level playing field” option outlined above. Moderates have been tepid at best to even the most neutered plans, so I don’t see how the vote counters predict continued support with a plan that’s more liberal than what’s been proposed from the outset.

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One Response to “Mechanics of the Senate Public Plan”

  1. Kvatch Says:

    That said, it seems the public option that’s emerging from the Senate really won’t be the fantastic price control mechanism reformers hoped for.

    No doubt because, with the ‘opt-out’ in place, the plan isn’t likely to achieve the critical mass necessary to give it the clout required to force cost controls. (JMHO)


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