Admit It: A Robust Public Option Is Dead

The hard truth is that a robust public option is already dead. Dedicated activists like Jane Hamsher and conscientious public servants like Rep. Anthony Weiner deserve props for continuing to fight the good fight for a robust public option (particularly since in their heart of hearts they really support Medicare-For-All), but their fight is largely quixotic.

With a robust public option dead, the real question is can a health care reform bill worth passing still be salvaged? As detailed below, if government regulation of insurance rates and a trigger on individual mandates are added, a bill which bans insurance companies from rejecting customers for pre-existing conditions might still be worth passing. Otherwise, it's little more than a massive government subsidy of the insurance and drug industries and it ought to to be defeated.

The New York Times and the Associated Press made clear this weekend that the Obama White House and leading Congressional Democrats are hard at work on a political strategy to kill the public option outright by substituting toothless triggers or coops to satisfy Blue Dogs and one or two Republicans like Olympia Snow and keep the backroom promises the White House made to the insurance, pharmaceutical and health care industries in exchange for campaign contributions.

But even in the unlikely event something called a "public option" somehow makes it into the final legislation, it might as well be dead--the versions of the "public option" that are still on the table in Congress have already been so compromised as to be all but meaningless. They are drastically watered down from the robust version that was presented by the likes of Jacob Hacker, Health Care for America Now and Move On as a "pragmatic" alternative justifying progressives negotiating away Medicare-For-All in advance. Their original public option plans were projected to cover over 125 million Americans, be the default option for all of the uninsured, be available to employers, require doctors who accept Medicare patients to accept patients from the public plan, and use negotiated Medicare rates to keep costs down.

None of these requirements for a robust public option remain on the table in Congress. The public option, as passed by the Committees in the House and the HELP Committee in the Senate, don't require Medicare doctors to accept patients from the public plan, don't use Medicare pricing but require the plan to negotiate rates on a provider-by-provider basis, require consumers to opt in rather than opt out, and bar employers who currently provide health insurance from switching to the public option over private plans. Even before the House dropped Medicare pricing, the Congressional Budget Office projected that this type of public option would have at most 10 million customers 5 years from now under the House bill and 0 (that's right 0) customers under the Senate HELP bill, and wouldn't materially lower insurance costs. (For a brilliant critique of the watering down of the public option, see "Bait and Switch: How the 'Public Option' Was Sold" by Dr. Kip Sullivan.)

With a robust public option dead, what we're left with is a massive Democratic-sponsored taxpayer bailout for the insurance and drug industries and a back-door tax on the uninsured middle class. The plan may ban insurance companies from rejecting people with pre-existing conditions (a good thing), but it places no limits on how much they can charge.

Health insurance premiums have skyrocketed by 87% over the past 6 years and now average $6,000 for individuals and $14,000 for families. 94% of insurance markets are highly concentrated and monopoly/oligopoly pricing have enabled the largest insurance companies to increase their profits by 428% from 2000-2007 while paying their CEOs an average of $11.9 million apiece. If the government mandates that the nearly 50 million uninsured buy private insurance or be fined as much as $3800 a year by the IRS (while providing hundreds of billions of dollars in taxpayer-funded premium subsidies to the less well off), insurance companies are all but certain to jack up their rates even further, keeping health insurance unaffordable to the middle class and breaking the federal budget with ever-increasing subsidies.

With enough arm-twisting from the White House, such a bill may squeak through Congress. But when it's fully implemented and the American people discover the burden it places on them as consumers and taxpayers, it could turn millions of people who elected Obama and a Democratic Congress against Democrats for a generation. Perhaps that's why Obama proposes to delay implementing many of these provisions until 2013, after the 2012 elections.

Many Democrats, including Barack Obama, Rahm Emanuel, and Congressional leaders seem to think passing any bill that's called "health care reform", no matter how flawed, is better than passing nothing. They fear, with some justification, that if, having taken control of the Presidency and both Houses of Congress, Democrats can't pass something called "health care reform", voters will conclude that Democrats are unable to solve serious national problems. On the other hand, passing a bad bill could have an even more negative long-term impact on Democratic prospects.

So the question is, assuming the public option is dead, are there other alternatives--as Obama said in his Congressional speech that he's open to considering--that could make a health reform bill worth passing? As a long-time Medicare-For-All advocate, I'm tempted to say "no". But as a political pragmatist I've got some key suggestions:

1. REGULATE INSURANCE RATES: It's a bit amazing that while liberals have been fighting for the leftover crumbs of a feeble public option as the way to "keep insurance companies honest" and prevent them from overcharging, no one on the left has suggested the more vigorous solution of rate regulation. If the government is going to force citizens to buy a private product like heath insurance and taxpayers are going subsidize the premiums of lower income purchasers to the tune of hundreds of billions of dollars, then the government has to regulate the rates that insurance companies can charge. This is what virtually every state does when it mandates that every driver buy auto liability insurance, which is far less expensive than health insurance.

Congress should require that health insurance premiums, and all increases thereto, be regulated by state insurance regulators. But since many state regulators have proven to be overly sympathetic to the insurance companies they regulate (a phenomenon social scientists call "regulatory capture") the federal government should place strict criteria on such state regulation. Among other things, at least 85%-90% of every premium dollar and income from investing premiums must go towards paying for health care with no more than 10-15% allowed for insurance company overhead, marketing, executive salaries, and profits. (Ideally, it would be even better to adopt the Swiss system where private insurance companies are banned from making a profit on a basic health insurance package and can only make a profit on supplementary policies for things like private rooms and cosmetic surgery, but that's not likely to happen.) In addition, if insurance companies are going to benefit from government subsidies, then insurance company executive should receive compensation of not more than $1 million a year. If the government is going to mandate that people buy private insurance and subsidize premiums with taxpayer money, then average CEO salaries of $11.9 million are unconscionable.

2. PUT A TRIGGER ON IMPLEMENTING INDIVIDUAL MANDATES UNTIL INSURANCE PREMIUMS ARE AFFORDABLE: If we're going to discuss triggers for the public option, we should be discussing triggers for individual mandates, postponing their implementation until insurance is affordable to average Americans. Without a strong public option that can reduce insurance premiums on day one, mandates are nothing but a giant government subsidy for the insurance industry and a back-door tax on middle class consumers. Economist Dean Baker forcefully made this case in his Huffington Post article, "Are Mandates Mandatory?" "If we can't get a public plan in this round, why should progressives be pushing for a regressive tax that will go into the pockets of the insurance companies and the overpaid CEOs?"

Postponing implementation of individual mandates is consistent with Obama's Presidential campaign where he campaigned against Hillary Clinton's support of individual mandates, arguing that there should be no mandates unless health insurance costs are first brought down to affordable levels. To quote directly from the health care plan Obama proposed during the Democratic Primaries: "Key differences between Obama's and Clinton's proposals: no individual mandate." Obama circulated a mailer which criticized Hillary for supporting individual mandates, showing a photo of a couple sitting at a kitchen table, stating "Hillary's health care plan forces everyone to buy insurance, even if you can't afford it". The Obama campaign stated, "Barack Obama believes the reason people don't have health care is that they can't afford it, not that they need to be forced to buy it...Obama strongly believe that meaningful cost reduction measures must take effect before a federal individual health insurance mandate can be considered." This is one of the elements of Obama's campaign that helped him defeat Hillary with the support of liberals and progressives. He's now flip flopped.

Since Obama made his campaign promises, insurance premiums have become less affordable, not more affordable, Without a robust public option and without vigorous government regulation of rates, an individual mandate requiring 50 million more Americans to buy private health insurance is all but certain to motivate insurance companies to raise rates even more. Supporting such a mandate is political suicide for Democrats. When the government gives a family making about $65,000 a year the choice of spending over $15,000 a year for a private health insurance policy or paying a fine of $3800, they're going to blame the Democrats.

To prevent political disaster and implement simple fairness, Obama should keep his campaign promise that there will be no individual mandates unless and until health insurance is affordable. No American should be forced to buy insurance or pay a fine to the government unless good insurance policies with reasonable co-pays and deductibles are available for no more than 10% of their after tax income.

3. GIVE MEDICARE THE POWER TO NEGOTIATE FOR LOWER DRUG PRICES: Congress must reject the backroom deal that the White House made with big Pharma to continue to ban Medicare from negotiating lower drug prices. This deal will cost taxpayers hundreds of billions of dollars and directly contradicts numerous Obama campaign promises. As Obama told cheering supporters during the campaign, "We'll tell the pharmaceutical companies, 'Thanks, but no thanks for overpriced drugs'. Drugs that cost twice as much here as they do in Europe and Canada and Mexico. We'll let Medicare negotiate for lower drug prices." The Obama campaign's health care plan promised that it would "Allow Medicare to negotiate cheaper drug prices...Barack Obama and Joe Biden will...use the resulting savings, which could be as high as $310 billion, to further invest in improving health care coverage and quality."

The Obama's administration's flip flop on this campaign promise is perhaps the most egregious of all and will cost taxpayers hundreds of billions of dollars in exchange for a promise by big Pharma to make campaign contributions to Democrats. It flies in the face of everything Obama campaigned on. Any reasonable health reform bill must allow Medicare to negotiate for lower drug prices. If Congress stands firm, Obama will just have to tell Bill Tauzin and big Pharma, "Nancy Pelosi made me do it".

4. ENSURE THAT DENNIS KUCINICH'S AMENDMENT ALLOWING INDIVIDUAL STATES TO EXPERIMENT WITH A SINGLE PAYER SYSTEM STAYS IN THE FINAL LEGISLATION: Canada's single payer system started in one province--Saskatchewan--and was so popular and successful that it spread to the entire country. If national single payer has been taken off the table, States should at least have the right to try it out, if they choose, and demonstrate whether or not it's better than reforming private insurance.

On balance, if the final health reform legislation effectively regulates insurance premiums, puts a trigger on individual mandates until insurance is affordable, lets Medicare negotiate lower drug prices, and allows states to experiment with single payer system, then despite it's serious flaws, it's probably better for Democrats to pass it than do nothing. Without these changes, health care "reform" is little more than a huge government subsidy for the private insurance and drug companies and a back door tax on the middle class and should be defeated. If so, without a robust public option and without these changes, let's hope at least 39 members of the House Progressive caucus have the courage to stand up to pressure from the Obama White House and keep their promise to block passage of this massive piece of corporate welfare masquerading under the name of "health care reform".

Comments

[aurum79]

Insurance companies and big pharma are going to kill the goose that layed the golden egg by working behind the scenes to frighten the semi-insured, corrupt the democratic process and deny the majority of Americans (as evidenced in the recent NYT poll) true reform. I can only assume that like the banking industry and manufacturing sector, they are gambling that the developing world is where the future is, and are squeezing the last $ they can out of fearful, misinformed and inward looking Amercans. Since the average age in the rest of the world is about 20, and since these young people will need a lifetime of affordable health care, since our relatively rich old folks will not be around for long, the strategy of trying to scare old farts like me who already have health care is very short sighted. Young people in the U.S. need to get off their butts and ally with those in other, more progressive nations, to fight for their right to affordable care. They need to visualize what taking care of each other collectively might look like.

[goldfinger007]

Glen Beck for President in 2012!!!!!!!!!

[ThomasMc]

Admit it: Obama will not bring change.
All he cares about is making Republicans happy.

[Jason369]

Dems have large majorities in the House and Senate and still can't get the legislation they want passed. Pathetic.

[DeWayne]

I had no expectation of seeing Single Payer or Public Option of any serious benefit to American citizens passed by the DEM controlled Congress, Pres-Obama rhetoric was in words only was expected, and Congressional silent fear made this clear we still have a Corp-Gov.

I do not expect things to change in the near future or after new elections, not from American citizens finally rising to the challenge, but I do see in the future US citizens rising in revolution and drastic changes of what we laughingly call a Republic and Democracy.

[jmpurser]

A "robust public option" was never more than an oxymoron in the first place. Obama created the "public option" to give a sliver of cover for killing real health care reform. The fact that we're not even going to be allowed to pretend this bill was good for Americans just tells us how far our nation has fallen. And we're not going to recover by electing corporate yes men and market worshipers like Obama. We need real liberals and progressives in office and not these DLC DINOs.

[tompoe]

Agree. Single Payer or don't run for office.

[fflambeau]

Excellent post jmpurser and superb column. Miles your analysis is the best I've seen of this horrid situation and thanks for calling out Obama on his flip flops. But you missed an even greater one by Obama: remember his promise to hold all health care reform meetings in public and televise them live on C-SPAN? What a whopper of a lie that was. Those in favor of real progressive legislation must realize that Obama and Rahm are not progressives (and in fact are against a progressive agenda). The Minnesota Poll, just released, showed Obama's approval rating at only 51%; this after all of his recent speeches and a visit there. Minnesota is one of the most liberal states in the country. Obama has failed on health care reform, he's failed on the jobs front, and he handed out trillions in bailouts to banks and Wall St. That's not why lot's of us voted for him.

[Liberal Angel]

This whole nonsense going on about reform reminds me of the tale of the scorpion and the frog. You know, the frog carried the scorpion across the river with the promise the scorpion wouldn't sting the frog. Well this tale can be looked at as a metaphor for Obama's "bipartisanship" craving. Let's face it, we know the Republicans are only trying to strangle his presidency, but he's acting like they aren't, like you can trust a scorpion (Republicans) not to sting you. But I also think it applies to the insurance rackets. The insurance rackets are of course the scorpion. Obama is still the frog. The way the tale goes, the scorpion just needed to cross the river, but we don't really know why. The answer is simple, he was running from something. That something is a rising river. The rising river is the support for a public option. That frog Obama actually trusts that insurance scorpion isn't going to sink him, but it is. The public option will sink the insurance rackets, but only float Obama because it is something said is necessary for real reform. If only we had an alligator.

[Awake-and-Sing]

Let's not forget that while Congress is corrupt, our President is weak. He may give great speeches that he may or may not believe. However, at no time did he draw a line in the sand for a robust public-option. His weakness of character caused him to focus more on being liked by people who hate him and getting something "bipartisan" rather than getting something effective. Our President was either a fraud on the campaign trail last year or a coward in office this year.

Historians will write about "a new President with enormous political capital and a filibuster proof majority in the Senate who threw it all away under a meaningless and pathological need for "bipartisa­nship"."

That Congress is corrupt from top to bottom is not new news. Campaign finance reform seems to be the fundamental reform that underlies all other reforms.

In any event, it is time for a genuine progressive with courage to start getting organized in Iowa and New Hampshire to challenge our feckless, not stand up and fight for anything, President in the 2012 Democratic Primaries.

Time for primary challenges to the Blue Dogs or any Democrat who takes corporate cash beginning next year.

[Liberal Angel]

Totally agree.

[JuniperSunshine]

Well, I for one am not surprised that, with health insurance lobbyists outnumbering congressmen 4 to 1, we are "moving towards" just letting them continue to murder people for money. I think single payer was never an option, the public option was never a real option, and this is all a scam.

Not unlike Bush's nod to the pharmaceutical industry previously, a la, Medicare part D. Gosh, $2500 a month is too much for Grandma's meds? That's OK, let's just force the young folks to pay for it. Problem solved. Now when $20,000 a year is too much for the rest of us to pay for premiums, we'll get a "tax break" of $25. Or we'll just tax the healthy young folks, and force them to pay more than everyone else in this country. Meanwhile, no one can switch jobs for fear of angering the Insurance Ogre.

Open your eyes, people. This "reform" will only benefit Corporate America.

[pontesisto]

If you would like to help pressure Congress to pass single payer health care reform (medicare for all) please join our voting bloc at:
http://www.votingbloc.org/Health_Bloc.php

[ouroborous]

You present a false compromise. By agreeing that the public option is dead -- and I assure you, it is only dead if "we, the people" let it be dead by our apathy or ignorance -- we create a self-fulfilling prophecy.

Of COURSE nobody in congress wants the public option. Of COURSE President Obama doesn't want the public option (speeches notwithstanding).

The Republicans don't want ANYTHING that can be called reform, much less actual SUCCESSFUL reform that really improves the lives of millions -- they know how successful Medicare is and are terrified of a repeat coup by the Democrats.

The Democrats, on the other hand, already have their hands dirty to the elbows from lobbying money, and don't want to -- or can't -- renege on the deals that they've made with AHIP and PhRMA.

So the bottom line is that NOBODY of consequence -- and I apologize in advance to Mssrs. Grijalva and Weiner -- wants a public option in congress. But WE want it -- the public supports a PO by an overwhelming margin. If we can make it clear to our representatives that it will be politically painful for them -- via primary challenges -- if they continue down the path they're on, we just might yet win the day.

If we give up, we are guaranteed to lose.

[Yermammy]

I agree. It ain't over until it's over and if there's no strong public option than it's REALLY going to be over for Barack in 2012. Guarandamned teed.

[sytgrl]

Well said. Thank you.

[tbone99]

With the presidents promotion of "Coops " in 2013, it really is all over. That was him telling the Dems what he considers e acceptable "public option " . And with veto power he will be able to block other alternatives and deliver the 50 million new customers to the insurance companies through use of financial penalties.

I agree that wthout a true public option which involves govenment subsidizing of those who who are un or underemployed the bill should not be passed. The insurance companies should be investigated for gross negligence instead of being rewarded with billions , which will just strengthen their power and fill their coffers for even more lobbyists

[ouroborous]

Actually with Roland Burris (who'da thunk it?) pledge to vote against any bill in Senate that DOESN'T contain a public option, the tables have turned drastically. Now, the only number that matters in the Senate is 50+1 for reconciliation, since (or course) there's no way we'll get Republican support on a public option, and no way we'll get cloture without a public option.

Off topic: Rahm Emanuel must be spitting mad today. Oh to be a fly on THAT wall...

Bottom line is that if Burris keeps his pledge to vote down anything without a public option, the narrative just changed from "ding, dong, the public option is dead" to "okay, we're going to get a public option or bust."

The big question, of course, is what SORT of public option will we get?

And, do you think the President will REALLY veto a "health reform" bill that the public likes and has passed both houses of congress (a minor miracle in itself)? Really?

No, Obama will be eager to sign ANY "reform" bill that crosses his desk and go down in history as the President who "fixed" health care. That's why we have to fight twice as hard to make sure that any bill that crosses his desk is a GOOD bill.

[wildedge]

No, I reject your compromises - a mandated health insurance without a public option is NO health care reform at all and must be completely rejected.
Without a public option, I can't afford health care, and I can't afford your fines an penalties - what nex, arrest me? Your choice - but that's not what I voted for last November.
No public option? then no health care reform this year, not until we elect 'change we can believe in.'

[vanmungo]

According to the CBO, the version of the public option being proposed by the mainstream Democrats in HR3200 and the Senate HELP bill will do nothing to control costs--that's just a marketing claim with no foundation.

You should read the following:

"Bait and Switch: How the Public Option Was Sold"

http://pnhp.org/blog/2009/07/20/bait-and-switch-how-the-%E2%80%9Cpublic-option%E2%80%9D-was-sold/

[vlm1948]

I totally agree. No reform is better than more give-aways to the insurance companies. I hope all the Progressives will stand by their promise to vote against any bill that does not have a strong public option.

[Miles Mogulescu - Huffpost Blogger]

The House Progressive Caucus has already folded on its promise to vote against any bill that does not have a "strong" public option. As my blog describes, the public option is the House health care bill, HR 3200, the strongest public option still on the table in Congress, is weak teat that has already been so watered down that it will cover few people and will have no impact on lowering insurance premiums. Government regulation of insurance premiums might actual have a greater chance keeping private insurance companies from gouging consumers and the government on rates. It's a close call whether a bill that regulates rates and puts a trigger on individual mandates is better than no bill at all. But don't be so attached to the words "public option" that you can't recognize that the public option that's still on the table in Congress is all but meaningless and might as well be dead.

[vanmungo]

HuffPost's Pick

Here's the sad reality: few people who use the terms "public option" or "robust public option" have any idea what those terms mean, or what the real-world legislative correlates of those terms entail. Those terms have become a sort of MSM mantra vaguely meaning "something like Medicare," even though the pub-op proposals on the table are nothing like Medicare--not even close--and have been cynically neutered to present no conceivable threat to the HMOs or to offer any path to single payer.

The corporate elite plays for keeps--they are always at least a dozen strategic steps ahead of the tepid opposition. They feign apoplexy over the public option even though they have, behind the scenes, worked to reduce it almost to a harmless nullity that will not threaten them.

Heads they win, tails we lose. That's the reality of health-care reform at this sad juncture in lobbyist-run Washington, DC.

Here's detailed documentation and scholarsihip on the foregoing, from Physicians for a National Health Plan:

1. "Bait and Switch: How the Public Option Was Sold"

http://pnhp.org/blog/2009/07/20/bait-and-switch-how-the-%E2%80%9Cpublic-option%E2%80%9D-was-sold/

.2. "Does the Congressional Progressive Caucus Care About Its Progressive Principles?"

http://pnhp.org/blog/2009/07/28/does-the-congressional-progressive-caucus-care-about-its-public-option-principles/

3. Reply to Critics

http://pnhp.org/blog/2009/08/08/reply-to-critics-of-%E2%80%9Cbait-and-switch-how-the-%E2%80%98public-option%E2%80%99-was-sold%E2%80%9D/

[sarawaters]

Without a robust public option, I have no doubt that what comes out of Congress will be a "massive piece of corporate welfare masquerading under the name of 'health care reform'."

Thank you for getting that in print.

I also have no doubt that without heavy regulation, private insurance companies will manage to manipulate premium pricing to their advantage and have both the American taxpayer join their policy holders in paying for their continued ridiculous profits. And if we think the insurance companies ration health care now by denying and delaying claims, I can hardly wait to see how they handle policy holders who are forced to participate in their programs, who have no real alternative. Delaying claims until a policyholder dies, they do now. Just wait for mandated health insurance.

Obama is selling his supporters down the river to the same corporate interests that permeated the Bush years. I can almost respect Bush. At least he was honest. He never pretended to be anything but the friend of big business. Can't say the same for Obama.

[SeattleDeadhead]

More bad ideas from the left. Their whole mantra in health care "reform" is "get the ins cos. While that may be appealing to the "base" of libs who are economically challenged (in that they do not understand basic economics) none of what the author said will do anything to cut costs or improve health and is therefore a complete waste.

Whatever happened to portability? A real issue that has bipartisan support. How about allowing a real market for insurance by allowing policies to be sold across state lines--like every other form of insurance.

Sure, go ahead and pass "something" and call it "reform". What a crock! Medicare is going broke and now the Dems are whining that they cannot spend even more money they don't have.

The idiotic Republicans won't have to do a darn thing and they will pick up 30 seats or more next year, just because the left has no clue whatsoever about what actually needs to be done. Insurance should be used to pay for preventative care or basic things to keep us healthy. The way we use insurance now is ridiculous--and costly.

The only intelligent thing the author said is not to go forward with an individual mandate.

[Raul Garcia]

I wouldn't be writing off the public plan so soon.

First and foremost our health costs are significantly higher than any other industrial nation, with the general consensus being that 30% of our health care costs are being wasted in administrative procedures. I disagree with the argument administrative costs are at the core of the problem.

If we look at our Medicare, Medicaid, and VA, government fun health care programs, we find these programs, though currently running in the red, are much more cost efficient and we also find those who provide the services in these systems are much more in tune with the needs of the patient while maintaining their focus to provide the best care at the best costs.

When we look at our current private health care system, we find it is driven by profits, and practicing best costs policies is converse to their profit margins.

Therefore, a expanded government system would be the best way to drive down costs while focusing on care and improving the system for all Americans.

Health care should be considered a public service not a private commodity.

http://madashelldoctors.com

[Palito]

Those are the things insurance should not be used for. basic things should be cheap and affordable for everyone. insurance should be only for major surgeries, catastrophic events, chronic diseases. even the few remaining thinking conservatives agree on that..