Blue Dog Public Plan Ideas Are Not What Deficit Control Looks Like

Yesterday, the House Blue Dog bloc came out with a statement on the idea of a public option in health care reform. It’s supportive but not really, as per these bullet points from Igor Volsky:

— The plan would not disrupt the ability of families to keep their health care coverage and see their doctor.

Medicare payment rates should not be used as the basis for reimbursement.

– The public health care option would be financially stable, and that it be employed only in the absence of adequate competition and cost containment.

So the first point here is basically a red herring, but the Blue Dogs are welcome to this “concession” since nobody’s proposing anything different. The third point actually contains two different points. The point about financial stability, if I understand it, is a solid fiscal conservative argument that the public option should need to be able to float on its own bottom and finance itself out of the same premiums and subsidies that private plans work with, rather than tapping extra tax dollars. The second half of point three is this trigger business.


But it’s really point two that’s sort of at the core here. A big part of the appeal of the public plan is precisely that it would use Medicare payment rates or else Medicare-esque rates. The idea is that this would produce a plan that’s cheaper. At that point, in order to stay in business private insurance companies would either need to find ways to get costs down to Medicare-esque levels or else find ways to deliver a demonstrably higher level of quality. Now insurance companies don’t like this idea. Not, I should say, because they’re possessed by evil spirits. But because a big part of what businessmen do in the political arena is try to get the government to shelter them from competition. What progressives are pushing for in this case is for the government to create additional competition. Insurance firms don’t want that. And what the Blue Dogs are talking about here is a way to cripple the public plan’s ability to compete effectively.

There are some arguments out there for doing this on the merits. But it’s important to keep in mind that those most certainly aren’t fiscal conservative argument. If you want to expand access to affordable health care, but you’re also concerned about deficits, then clearly the best way to expand access is to ensure the existence of a low-cost public option using Medicare reimbursement rates. Both the trigger mechanism and the prohibition on using Medicare rates are “moderate” ideas, but they’re not ideas that promote the coal of fiscal austerity. They do the reverse. Which is fine. Politicians don’t need to make austerity priority number one at all times. But this reality ought to be an important part of the context as this debate plays out. Blue Dogs are basically saying they want to put aside one of our best available tools for cost control, while progressive members are fighting for measures that will keep total outlays in check.