It’s a feature, not a bug

IT’S A FEATURE, NOT A BUG…. The New York Times had an item over the weekend on the inclusion of a public option in a health care reform. The piece was primarily about the existence of state-based plans in which employees are given a choice “between government-backed insurance options and a menu of commercial policies.” Though the comparisons are imprecise, as the New America Foundation’s Len Nichols noted, the state plans are “proof of concept” that governments can maintain fair competition.

But the article also noted the principal criticism of a public option.

[C]ritics argue that with low administrative costs and no need to produce profits, a public plan will start with an unfair pricing advantage. They say that if a public plan is allowed to pay doctors and hospitals at levels comparable to Medicare’s, which are substantially below commercial insurance rates, it could set premiums so low it would quickly consume the market.

Yeah, don’t throw us in that brairpatch.

Josh Marshall added, “As [Jon] Taplin suggests, these ‘problems’ sound remarkably like ‘the point’ of the whole exercise. Most of the argument here is that a big government plan would just provide the insurance ‘service’ much more efficiently and cheaply than private carriers. And that the private carriers wouldn’t be able to make any money off selling the service any more. But this is the argument that single payer advocates routinely make — namely, that a lot of the money that goes into private health insurance goes to paperwork, much of which is tied to finding ways to deny people coverage. That, and the need to earn profits on providing the service.”

For a while, it seemed the right tried to argue that a public option would be awful because no one would want to sign up for it. Such a system, they said, would force Americans to accept rationing, long wait times, a labyrinthine government bureaucracy, etc. Except, that never made any sense — Americans who are already in such a system tend to like it (the VA system, for example), and for that matter, there’s no reason to think consumers would voluntarily sign up for an awful system.

So, now the right is arguing that a public option would be too popular. Insurance companies want consumers to think that private coverage is already so inadequate, Americans will flee, if given half a chance, to a public system that’s more efficient and costs less. If there’s a competition, conservatives and the industry expect the public option to win.

In turn, they want government to, above all else, protect the insurance industry’s flawed business model. It’s not exactly a persuasive pitch.