CBO: Dumping Public Option For Co-Ops Does Not Save Money

The Congressional Budget Office gave Sen. Max Baucus' bill the best scoring yet for a health care bill. But his removal of a public health insurance option in favor of seed money for non-profit co-ops has nothing to do with it.

Baucus' bill costs less in the eyes of the CBO because 1) Baucus covers less people than the other proposed bills [1] and 2) CBO really likes the tax on generous insurance plans [2]. (And as I noted before, CBO is biased against crediting new ideas with generating savings [3], short-changing the other bills.)

But none of that has to do with the debate between a public option and co-ops.

In fact, CBO didn't think much of Baucus' co-op proposal, concluding: [4]

The proposed co-ops had very little effect on the estimates of total enrollment in the exchanges or federal costs because, as they are described in the specifications, they seem unlikely to establish a significant market presence in many areas of the country...

Whereas, the CBO responded to a public option query from GOP Baucus Caucus holdout Sen. Mike Enzi and said the public option wouldn't change federal spending, while lowering insurance premiums for individuals: [5]

...a public plan as structured in the introduced bill would probably attract a substantial minority of enrollees (in part because it would include a relatively broad network of providers and would be likely to engage in only limited management of its health care benefits). As a result, it would add some competitive pressure in many insurance markets that are currently served by a limited number of private insurers. That competitive pressure would probably lower private premiums in the insurance exchanges to a small degree ... net federal outlays on health care would not be appreciably different...

For those so-called moderates who claim this is all about spending and cutting the deficit, and who bow to the CBO in making such determinations, there is no reason to reject the public option on those grounds.