The Necessity of the Public Option

Ezra Klein on the Washington Post recently argued that progressives should bargain away the current version of the public option [1] in pending health care legislation in exchange for other reforms such as bigger subsidies, tougher rules on demographic discrimination and a more accessible insurance "exchange" -- a marketplace of good quality plans.

Similarly, Jonathan Cohn of The New Republic proposed that a well-designed trigger [2] leading to a stronger version of a public option could also be a desirable compromise.

Jon Walker of FireDogLake criticized Klein's proposal [3] specifically, arguing, "What Klein does not realize is that this is not about compromise; this is about power [3] ... If progressives are forced to surrender the public option, to try to “trade” it for something better, then they must officially admit that Ben Nelson, Blanche Lincoln, Mary Landrieu, and Joe Lieberman are the infinitely more powerful bloc."

I don't agree with the suggestions for further compromising of the already compromised public option, but I also don't agree that this is primarily a question of power. This is primarily about policy.

Even a relatively weak form of a public option at least embeds in the health care system the framework that can be improved upon over time -- a framework where a public option can keep in check the worst tendencies of private insurance.

Similarly, all the items that Klein pushes for, if they cannot be achieved initially, are also elements that can be enhanced as the reform process continues -- no one believes the job will be done after this bill passes.

The trigger deal Cohn envision has merits on paper -- either private insurance gets its act together or we get a very strong public option, a win-win scenario.

But as Cohn concedes [2], making sure the trigger actually gets pulled, and actually triggers a good plan, is hard to write into law:

What conditions would cause the trigger to be pulled--lack of affordable insurance, higher-than-expected cost growth, some combination of the two? And for those states that end up with a public plan, because the trigger gets pulled or because they choose to opt in, what does the public plan look like? Will government merely provide the start-up funds--or actually get the plan started, perhaps tapping into Medicare’s provider network, just so it’s established? Would the plan get to use the same sorts of innovative payment schemes Medicare will be introducing, in order to foster more efficiency? Would it be a national plan, with various states participating, or a bunch of separate state plans? And who, exactly, would be running it if not the government? ... Answer [those questions] incorrectly and you end up with a mush. Or worse.

So even though such a trigger can look good on paper, it's an extremely dicey proposition in practice.

Of course, there are risks with any strategy. The major risk in enacting an imperfect version of a public option is that it won't work well and will unfairly sully the whole idea of a stronger government role in providing quality, affordable health insurance.

But we face this risk to some degree regardless of what compromises we accept. Adjustments will be needed, and we will only have the opportunity to make adjustments if the public maintains trust in progressive government beyond this presidential term. (That is a matter of power, but not one that will be resolved in the context of this health care debate.)

As the Congressional Budget Office has concluded that even a weak public option would have a positive effect on reducing the cost of private insurance, I would argue we will be in a better position and need to make fewer adjustments with some version of a public option in place from the beginning.