Who Hates the Public Option?

I don’t really know how I feel about the dispute between Jon Chait and Glenn Greenwald as to whether or not it’s correct at this point to say that the White House doesn’t “really” favor a public option. The metaphysics of the matter, however, aren’t really that important — faced with an uncertain-but-nonzero chance of getting a public option through congress, the White House has decided not to try.

I do think, however, that it’s important that people understand exactly which interest groups have been surrendered to. Greenwald writes that the public option “would provide real competition to the health insurance industry and is thus vehemently opposed by the industry and its lobbyists.” And of course it’s true that the public option is opposed by the insurance industry and its lobbyists. But it’s important to understand that everyone else’s lobbyists oppose it too. The American Medical Association opposes a public option as does the American Hospital Association, and as best I can tell all the other big interest group players.

I understand politics — if you want to attack people for doing the bidding of insurance companies and doctors, you castigate them for “doing the bidding of insurance companies” and just leave the doctors out of it. Which is fine, but the fact of the matter is that a public program’s biggest potential source of cost controls isn’t squeezing out insurance company profits, it’s the ability to reduce payments to doctors and hospitals by piggybacking on reimbursement rates. The only reason the public option is viable congressionally at all is that its proponents agreed to neuter it by creating a “level playing field” public option that can’t do the Medicare piggyback. Such a public option could still do a lot of good but it’s not a huge game-changer. What’s more, the interest groups all still oppose it anyway because a public option, once in existence, could be linked to Medicare down the road.

People need to understand this, because whether reform passes or not this basic fight is going to repeat again and again. If you want to create or expand new public insurance programs, you need to deal not only with the easily demonized insurance companies but also the harder-to-fight doctors and hospitals.