Blue Dogs Willing To Accept Trigger Public Health Option

Today, The Blue Dog Coalition — a group of fiscal conservative Democrats — “indicated it could accept a public health insurance plan but only if it is used as a fallback option in the face of inadequate competition and cost containment by private insurers.” In a statement, the coalition established certain conditions under which it would be willing to accept a public plan:

– 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

At quick glance, the plan resembles Sen. Chuck Schumer’s (D-NY) public plan framework. But the Blue Dogs are saying that if private insurers fail to lower the growth of health care spending, then the government would allow a public plan to compete with private insurers. Their public plan would look something like this: 1) it would be self-sustaining, 2) would not accept tax revenue or appropriations from the government, 3) would pay doctors and hospitals more than what Medicare pays, 4) establish a reserve fund, and 5) provide the same minimum benefits as private insurers. (For more on how the actual trigger would work, click here.)


Most progressive reformers would certainly argue that this kind of structure does not go far enough. That is, if one of the purposes of health care reform is to lower health care costs, then we should allow the public option to use Medicare leverage to negotiate lower rates with providers. In other words, every plan should use its inherent advantage (the public plan would rely on its lower administrative costs and bargaining ability, private insurers would use their provider networks and greater responsiveness to consumer demand) to provide applicants with the highest value services at the lowest possible prices. After all, if the public plan is forced to pay prevailing market rates and act like a private insurance plan, then why have it?

Moreover, Ezra Klein points out here, and I argued here, this is precisely the kind of competition that is (should be) at the heart of the Blue Dog’s conservative fiscal values. As Klein explains, “The idea here is that the public plan will adopt effective reforms that will then lower its costs and improve its quality. In response, the private market will follow suit”:

But this deal won’t be around forever. The public plan is an effort to institute reforms through a market mechanism. But if it fails, and the health industry doesn’t manage to bend the cost curve on its own, it’s fairly likely that it will end up on the business end of some serious new regulations. And at the point that costs become a crisis, those regulations will need to work fast. That means they’ll be implemented in the government’s way, not the market’s way.”


DownWithTyranny! highlights the fractures in the Blue Dog Coalition:

One, Maine’s Mike Michaud, immediately broke with the caucus’ approach and endorsed the need for the real health care reform that Obama and progressives are trying to pass. Another, Patrick Murphy (D-PA) also distanced himself from the extremist and corrupt Blue Dogs, putting out a press release reiterating that he “stands with President Obama in supporting the inclusion of a public option in health care reform legislation.”