Three Reasons Why a Strong Public Option is Likely to be Part of Health Insurance Reform

Hasty headlines to the contrary, it is very likely that a strong public option will be part of a final health insurance reform bill when it finally passes Congress this fall. There are three reasons:

1). A Public Option is the most elegant and politically viable solution to a major practical problem. Three basic models have been adopted by Western industrial nations to provide universal health care to their populations.

The government can directly employ doctors and hospitals to provide service. That is the system they have in Britain where they spend 40% less per person on health care than in the U.S. and get pretty good reviews from their citizens. It's the same system that we use to provide health care to veterans through the Veterans Administration.

The government can provide heath insurance for everyone as it does in Canada - or as we do in the U.S. with Medicare. Medical practices and hospitals are in private hands, but the health insurance fund is managed by the government. Again, that system seems to work quite well and also does a good job at controlling costs.

The third approach is to require individuals and businesses to purchase insurance and leave it to private insurance companies to provide that coverage. The problem with this approach is that requires some mechanism to control costs. That is particularly true in the United States where insurance companies are one of only two industries (Major League Baseball being the other) that are excepted from the anti-trust laws that are aimed at insuring competitive markets. In fact, most major health insurance markets are dominated by two or three companies so there is no real competition -particularly with respect to price.

Once everyone is required to buy insurance, the companies can have a field day raising prices and profits using the government to guarantee they are paid - either through subsidies or the imposition of fines. You can see why, from an insurance company perspective, this would be a great deal.

But from the point of view of the taxpayers - and the insurance ratepayers - it would be a disaster. It would be like giving the insurance companies a license to take your money - with no regulation - all enforced by government edict.

This, of course, is basically what happened with the prescription drug benefit - Medicare Part D. But there is a big political difference. A huge percentage of the money used to pay the insurance and drug companies in Medicare Part D comes from the taxpayers (or deficits). Most of the money that will go to pay for health insurance in a new system will come from ratepayers - individuals and companies who will feel the sting of rate increases directly.

What politician in his right mind would pass a law that requires individuals and businesses to buy products from companies who can then charge whatever the traffic will bear -- especially in an industry where premiums have increased three times faster than wages, and profits keep heading skyward even in the worst recession in 60 years? Once government requires you to purchase a product, it has to provide some means to guarantee that the price is fair.

There are only two real practical solutions to this problem. On the one hand, you could set up a public health insurance option that does not have the same incentives to increase profit or CEO salaries and would compete against the private insurance companies and keep them honest. That is what President Obama has proposed. Or you could regulate health insurance rates.

Now rate regulation is not a crazy idea. It's been done for years in segments of the insurance market at the state level. But if you think the private health insurance industry is fighting tooth and nail to stop a Public option - wait to see what they would do to stop rate regulation.

A public option has none of the bureaucratic complexity of rate regulation and uses competitive forces to keep rates down. It is simple and elegant.

That's why the President and his top advisors support a public option.

2). The politics of Congress and the White House. There are a couple of political givens:

* Both the White House and Democratic Leadership understand that they must pass health insurance reform. Defeat is simply not an option. Both the Carter and Clinton administrations foundered because they proposed major policy initiatives and failed to achieve them. The effect was to depress overall support for the President and Democratic Party. In 1994 it cost the Democratic Party the control of Congress when large numbers of Democratic Members (mostly moderates) lost their seats in the mid-term elections. These defeats crippled their ability go back to the political well for subsequent big initiatives.

So far this White House is batting 13 for 13 in major initiatives - but health care is by far the biggest of them all. The White House and Democratic Leadership will do whatever is necessary to win. Health care is their signature issue.

* Finance Committee Ranking Member Charles Grassley has made it increasingly clear that he will not support any "bi-partisan" measure that is not endorsed by a majority of Republicans. That means that the likelihood of a "bi-partisan" deal are about zero.

This leaves two other approaches to victory. First is a strategy that works to get all Democrats and a couple of Republicans to vote for cloture, but not necessarily for a final bill. Second is the budget process known as reconciliation under which the bill could pass with just 50 votes (plus the Vice-President). Either of these options will make possible passage of a public option in the Senate.

* There are at least 100 Democrats in the House who would have to be dragged kicking and screaming to vote for health insurance reform that does not include a public option. In fact, it is hard to see how a bill could pass the House without a public option.

3). Inclusion of a public option is necessary to assure a mobilizable base to counterbalance a highly-motivated right wing and make passage of any health insurance reform possible. The public option has become an iconic symbol for Progressives. Without it, many would lose the passion that sends them to town meetings, phone banks and demonstrations. Without a public option to fuel this passion, the forces for reform would likely be overwhelmed by the shock troops of the right wing.

When you put all of these factors together, it is very likely that later this year President Obama will sign a health insurance reform bill into law that will indeed include a strong public option - not simply because the President clearly supports it, but also because of the practical policy and political considerations that make it critically necessary to success.

Robert Creamer is a long time political organizer and strategist, and author of the recent book: Stand Up Straight: How Progressives Can Win, available on Amazon.com.

Comments

[Schneb]

just FYI in case anyone missed it:

On Politico, Robert Reich called for a march on Washington D.C.--and in state capitals--to show support for a public option.

http://www.politico.com/news/stories/0809/26224.html

There's a facebook group/event/etc. for this, and a website too:

http://www.marchforhealthcare.com

(Note: I don't know anything about who is behind the facebook manifestations or the website)

Spread the word--

[marchforhealthcare]

I created. Need lots of help. Trying to make it grassroots. Every city, every state. We must demand a public option

[Bonobo]

Creamer confuses what should be with what is (much like the President). Those are reasons why the Democrats SHOULD hold firm on Public Option (or Single Payer, for that matter).

But they won’t, because the basic tenet of Clintonian Centrism is that compromise always produces the best result. This is so firmly embedded in their psyches, that they are mindblind to any other strategy. It is very similar to what the Bushies went through in Iraq when they were absolutely, sincerely convinced that the only problem there was lack of “Freedom”.

Republicans may cling to God and Guns, but just try prying compromise out of the cold, dead fingers of a Centrist.

[Ricardo01]

The Obama sleeper cells are about to get their instructions soon. After that, a tidal wave of real public opinion will be unleashed on America. Remember this time last year, waiting for Labor Day to pass?

Even Republicans know that you don't release a new product in August, including fake grass roots opinions.

[Alabama John]

PUPLIC OPTION = TOTAL DESTRUCTION OF CAPITALISM

Capitalism is the freedom to compete for excessive wealth and power. The reverse of democracy which is the freedom to have equal wealth and access to power.

Comes now a public option in healthcare, and it to destroy the freedom to compete for excessive wealth and power in the medical industry.

Not to say that democratic healthcare is impossible, just to say that it would bring about the total destruction of capitalism in America, now and forever, Amen.

[Ricardo01]

Your comment echoes Ronald Reagan's blast against Medicare before it was passed. Wrong then and wrong now. Readers owe it to themselves to listen to those speeches.

[Alabama John]

But Dictator Reagan was by no means a socialist.

For capitalism is the freedom to compete for excessive wealth, which makes a social democracy impossible.

[idest]

You don't read the articles here, do you?

"...insura­nce companies are one of only two industries (Major League Baseball being the other) that are excepted from the anti-trust laws that are aimed at insuring competitive markets. In fact, most major health insurance markets are dominated by two or three companies so there is no real competition -particularly with respect to price."

There's little to no competition NOW.

[Acharn]

Man, I'm so glad to see this. I figure that if I've read it, other people must have read it too. Where are they all? Why don't the White House flunkies get it that the Public Option is a must because it's the only way to create competition? There is no compromist from the Public Option -- the Public Option IS the compromise, since they took single payer off the table themselves.

Or, now that I think of it, there is a possible compromise: no public option, no individual mandate and no employer mandate! Regulation of "health insurance" companies' rates won't work -- we learned already that any regulatory agency will just be captured by the companies.

[Hugh-Leighton]

Finally, somebody with an operating brain, and a Formula 1 V-8 model at that. Please tell me there are more of you out there and active on this issue!!

[Stephen C. Rose - Huffpost Blogger]

A strong public option is definitely going to be part of the final bill.

Thanks for this convincing explanation of why this is so.

I see this as a season of silliness on all sides and we can recall with some confidence that the President, as a campaigner, scored several victories by capitalizing on the drama and angst and silliness that was emanating from all sides.

[Alabama John]

FALSE ASSUMPTION -- TWO PARTY POLITICS IN OPEN COMPETITION

Truth is, we have only one political party, a smoke screen party that blinds the mind by burning the emotions.

For this ungodly debate on healthcare reform is going to so burn the emotions of the public that they back away completely from it, and allow the supremely intelligent rich do as they please about it.

[Ricardo01]

Don't bring God into this. He wants His creations to be healthy and doesn't want someone getting obscenely wealthy by being a middleman.

[DaveCarroll4]

You know, this is not Nuclear Physics, we're all turned inside-out, about! It's not about socialism or communism or overthrowing private industry (that's never going to happen here)! No indeed, it's simply good, affordable health care for EVERYONE, that's on the table; what should be, in 21st century America, a basic RIGHT for every human being! If the major health care providers, 8 of which control nearly the entire field, cared about the people of this country, anywhere near as much as they do profit margins, we wouldn't need to be having this whole debate/battle, period. Everyone would already have health insurance that didn't bankrupt them! The money spent by Americans on health care should be able to provide coverage for EVERYONE in a country twice as populated, according to the statistics provided by the rest of the industrialized world. Those are the facts... they're the only facts needed... these simple facts say... something is broken... something is wrong... something has to be done... It's not debatable! The facts are the facts... the truth is the truth!!!

[Alabama John]

DARKNESS -- PRETENSE OF GOOD HIDING EVIL
You are right in saying that the public option is the best way to go forward. Problem is a majority of those in power, be their intent good or evil, are dead set against it.

So the real issue for us who know the good, is not how to proclaimed the good but how to overcome the pretense of good that has us enslaved in evil.

The pretense of good being the evil idea that capitalist medicine, the freedom to compete for excessive wealth in medicine, will somehow save us from a processed food industry that fattens us up like cattle for the slaughter.

[gfulmore]

I just started reading the book, "Health Care will not Reform Itself," by George Halvorson. He says we need to reduce that $12,500 per year for families down to about $9,000 as a starter. We can do this by signing everyone up for health care insurance, plus finding other savings in the system. He claims that $1,200 of the above will be saved because folks now without insurance will be signed up; thus, the rest of us will save $1,200 right there. Reducing/e­liminating medical practices that are unnecessary and/or ineffective is another area of huge savings. He says that per capita costs for doctors in the U.S. are about 15 times more than in Canada and that in Canada people see doctors more often than we do, per capita.
We are so silly to think that health care in the U.S. is efficient. Says the author, "Health care in America is comprised of hundreds of thousands of unrelated, unlinked, financially self-contained, self-focused, and self-optimizing business entities that are each set up to generate revenue and create financial success for themselves­." That is quite a mouthful, but it helps to explain why some of the elderly on Medicare end up with 10-15 doctors who communicate relatively poorly among one another. We have a long way to go to get U.S. health care on the right track. 2009 is the year to get this started!

[Donnie4488]

Economist Paul Krugman believes we'll likely follow the Swiss model of health care.I tend to agree. Of all the wealthy countries, the US is the only one not guaranteeing basic health care to it's people. In the British system, the government handles all health care matters and overall provides good care while spending only about 40% of what we do.The Canadian system, and in a better run model of that system, France, health care is in the hands of private companies,but the bills are payed,for the most part, by the government­.In the Swiss model, universal coverage is by private insurance companies,using a combination of regulation and subsidies ensuring everyone is covered.Gi­ven the opposition to a single-payer system, and the reluctance of the Dems to tell the Repups to take a flying leap,this is the one that makes the most sense.

[Bluedanube]

March on Washington for healthcare reform on Sept. 13th. Pass it along. The people united cannot be defeated.

[elfish]

The insurance company propaganda is completely distorting the picture. They pretend that government is going to interfere with the "Free Market" and ruin their business. The problem is that there is no Free Market in health insurance. These insurance companies have lobbied themselves into a position where they are monopolies. They are exempt from the anti-trust laws that insure competition and that every other business has to follow. They are selling a product that everyone needs for their very survival and most people will buy it even if it is too expensive. They spend $1.4-milli­on a day lobbying congress to protect their monopolies. They pay their CEO's, claims adjusters and doctors to look for every conceivable way to deny claims. They will even sue the pants off rating agencies if the rating agency isn't willing to lie:

http://www.moneyandmarkets.com/health-care-war-35069

[MorpheusXNYC]

Exactly. Excellent, spot on analysis.

[ObamacratInCA]

This comment is right on everything. Fanned and favorited.

[writerroz]

If all who shout and repeat the Limbaugh and Republican lies would get the facts straight (fact check), there would be no need to shout or to repeat the lies of Republicans. Don't you realize, the Republicans have NOT even read the Health Care Bill, but are so irresponsible that they pick up on Limbaugh and Palin statements. For instance, Charles Grassley.

[Susan Kovalinksy]

I agree that Obama needs to be publicly, solidly, and vocally backed, and that Change must be worked for. I do not believe that Obama ever truly acquiesces in his inward mind, but bides his time. The public option is indeed not a passing thought, but the core and crux of his mantra of reform. Robert Creamer is correct in saying that the public option is the most elegant and politically viable solution to a complex problem. And Obama has reason, and the ethics of reason, on his side.

[wrabbitt]

If anyone in office wants to be there after November of 2010 there needs to be!

[bobrobthomas]

Of course the public option is dead in the water in Washington only one small group (the American Public) support it. No group that matters does - the lobbying firms, big business, the Rebublicans or most politians who are not independently wealthy from any business not involved in healthcare support it. In Washington, the American public can go screw themselves as long as they are not the one's paying to reelect our "represent­atives." Once Blue Cross, HMC and Etna crush this faint attempt at democracy and kick the peons back into place, they can go back to making obsene profits running the worst most expensive healthcare system in the industrialized world. You want good healthcare go to the Dominican Republic, Cuba, Belize or literally anyplace other then Haiti in the western hemisphere.

[ObamacratInCA]

The public option is in five of the six bills being considered. It is not dead in the water contrary to media rumors.

The Senate Finance committee bill will likely have no public option or a co-op proposal. The House will profoundly reject that. The 5 House bills will be reconciled with the horrible Senate bill, then the final bill will have a public option which the President will sign and then it's on to the next battle.

[Alabama John]

WHY PUBLIC SO SUBMISSIVE TO THOSE IN POWER
Those in power use wars to defend their multinational corporations, their high finance just stole trillions of tax dollars, and the public shows not the slightest desire to rebel. and primarily because of capitalist medicine.

For our for-profit healthcare system is the greatest tool for keeping a people vulnerable, insecure, fearful and in submission to authority the world has ever known.