Should We Scrap The Public Option?



Dave Mann

The New York Times on Sunday ran a wonderfully contrarian take on health care reform.

Paul Starr, Princeton University professor, argues that the so-called public option should be the least of our concerns.

Starr contends that the version of the public option in the current House and Senate bills is so limited and narrow in scope that it’s impact will be minimal. There are bigger fish to fry.

He writes:

As the health care debate enters its decisive stage, liberals in Congress should be ready to trade the public option for provisions that will actually make the reforms succeed.Discussion of the public option — a government insurance plan that would be offered to individuals and small businesses buying coverage through new insurance exchanges — has been dominated by ideological politics. Conservatives claim it would amount to a government takeover, while liberals imagine that it would radically alter the insurance market by providing better protection at lower cost.As it now stands in Congress, however, the public option would do neither.

What are these bigger fish? He contends that liberals should surrender the public option as part of a deal that strengthens the health care reform in Two critical areas. One key issue is how strictly insurance companies will be regulated in the proposed health care exchanges:

The basic aim of reform is to create a more efficient and equitable system for health insurance and health care and to provide subsidies so everyone can afford coverage. Those who obtain insurance individually or through small businesses now get a rotten deal in the market. Out of every dollar in premiums they pay, nearly 30 cents goes for administrative overhead (as opposed to about 7 cents in large-employer plans). And those in poor health may be denied coverage for pre-existing conditions or be charged astronomical rates for insurance…..

For these reforms to succeed, there needs to be effective regulatory authority to prevent insurers from engaging in abusive practices and subverting the new rules. The bill passed by the House would provide for that authority and lodges it in the federal government, though states could take over the exchanges if they met federal requirements. The Senate bill would leave most of the enforcement as well as the running of the exchanges to the states.

Another key issue, Starr writes, is when the bill goes into effect:

Accelerating the timetable of reform ought to be a priority. Although the legislation calls for some important interim measures, the Senate bill defers opening the exchanges and extending coverage until 2014. By comparison, when Medicare was enacted in 1965, it went into effect the next year.For Congress to put off expanding coverage to 2014 would be asking for a lot of patience from voters. It would also give the opponents of reform two elections to undo it. President Obama would have to run for re-election in 2012 defending a program from which people would have seen little benefit.To speed the process, the legislation ought to give states financial incentives to adopt the reforms on their own as early as mid-2011. A state like Massachusetts, which already has a working exchange, could move expeditiously to qualify for federal money. The final deadline for the federal government’s expansion of coverage should be no later than Jan. 1, 2012.

He concludes:

Let the moderate Democrats who oppose the public option say they stopped a government takeover. Liberals should be prepared to give up what is now a mere symbol for changes in the bill that would deliver affordable insurance more effectively and quickly to the millions of Americans who desperately need it.

As the Senate begins a marathon debate on health care, this piece is a must read.