The Case Against Including An Opt-Out Public Plan In The Senate Bill

Most news outlets are reporting that Majority Leader Harry Reid (D-NV) may include an opt-out public option in the merged Senate legislation. “Mr. Reid met with President Obama at the White House Thursday to inform him of his inclination to add the public option to the bill, but did not specifically ask the president to endorse that approach, a Democratic aide said.”

Here the reports diverge. The NYT is reporting that Obama “asked questions” about the opt-out, “but did not express a preference at the meeting.” POLITICO quotes a ‘Democratic source’ as saying that Obama “appeared” to prefer a trigger option. And The Plum Line’s Greg Sargent clarifies, via a White House response, that “Reid was specifically raising the possibility of a public option with an opt-out clause as one potential route.” “Reid has not made a final decision to take this route,” Sargent reports.

At this point, Reid may not have the votes to move a national opt out off of the floor; he is introducing a national opt-out with the understanding that it would become a state-based ‘trigger’ when the Senate formally takes up the measure. The maneuver is meant to satisfy progressives — Congress tried — but the final bill will include a mechanism that triggers a state-based public option if a certain affordability threshold is not satisfied (if 5% of the state population does not have access to at least two “affordable” options, for instance). The policy will then be presented as ‘the best deal we could get’ and embraced by both Reid and the White House.

But a state-based approach won’t have the ability to significantly lower health care costs or change delivery patterns. Progressives point to existing state-based employee ‘public options’ or Medicaid programs that contract out to private insurers and thus don’t provide a meaningful alternative or competition. A state triggered public option, would lead to the same outcome, they argue.

To avoid this scenario, the White House needs to stop sending clarification statements to Sargent and stake out a firm position — they will never find the votes if they don’t whip them. Why not start on higher negotiating ground and embrace the HELP bill’s (relativley) strong public plan (it establishes state-based public plans that are controlled by the Secretary)? If Reid was to include the HELP bill’s plan in the merged Senate legislation, he could conceivably negotiate it down to an opt-out public option with a trigger — ensuring that states could only opt out of the public option if the private market offers meaningful and affordable coverage. Similarly, the public plan could start paying providers at market rates but convert to Medicare-like reimbursements if costs don’t decrease.

That kind of compromise preserves the integrity and goals of the public plan and presents the final product as a compromise of warring factions. That kind of compromise lowers the cost of the bill and makes coverage more affordable for families. It becomes ‘the best deal we could get’ and it’s better politics and policy. It scores better and it looks better (Congress made coverage more affordable and struck back at insurers and their self-serving reports). Starting the debate with the state-based approach cedes too much ground and does very little to improve the actual policy in the bill.

Of course, all of this is based on the premise that the public option is subject to change. Some observers believe that Reid won’t have enough votes to amend the public plan during floor debate. They think that whatever he inserts into the bill will stay there. Then the question becomes: will the national opt-out sink the entire effort?

The policy is still up in the air, but so far, the opt-out is winning mixed reviews from moderate Republicans and centrist Democrats:

Ms. Collins, Mr. Nelson and Ms. Snowe said they did not like the idea of a uniform government-run insurance plan even if states could opt out.

Sen. Mary Landrieu (D-LA): “I am pressing to get a government-run, taxpayer-supported public option out of the bill. I want to rely on a reformed private marketplace.”

Sen. Susan Collins (R-ME): “There are a lot of senators from both sides of the aisle who have a sense of unease about all the bills that have been reported out of committees thus far. In a 60-vote scenario, it is the centrists potentially who will hold the balance of power.”

Sen. Olympia Snowe: (D-ME): “A public option at the forefront really does put the government in a disproportionate position with respect to the industry.”

Sen. Kent Conrad (D-ND): “I’ve been assured it would not be tied to Medicare rates.”

Sen. Tom Carper (D-DE): “I think there’s interest in seeing if we’re going to have some kind of national plan run by a nonprofit, which would be a level playing field in nature,” Carper said. “There needs to be — we’ll call it a trigger for now — there needs to be some way to signal which states would participate.”