Evolving public option choices

EVOLVING PUBLIC OPTION CHOICES…. If the policy choices boil down to a public option in the health care reform bill or a “triggered” public option, I think the choice is pretty obvious. As we’ve talked about before, the underlying assumption behind the trigger is that public option would help lower costs, expand access, and use competition to improve efficiency. But these improvements should be put off, the argument goes, as we wait to see if maybe private insurers can achieve these goals on their own.

Of course, as is often the case when debating health care, the details matter. It’s not just the public option vs. the trigger — we’re looking at a landscape in which watered-down versions of a public option are being considered alongside competing kinds of triggers.

On the spectrum of choices, I still think triggers are towards the “useless” end of the scale. That said, I can imagine a carefully-structured trigger that could work fairly well. Nearly all of the trigger ideas that have been floated thus far aren’t close, but that’s not to say it’s impossible.

With that in mind, the Urban Institute has a constructive idea to offer.

Democrats searching for a compromise on health care reform may find a little Thanksgiving light in a new policy paper out Wednesday: Skip a “weak” public option now in favor of a much stronger one that would kick in automatically if the health industry doesn’t meet its promises to slow the growth in medical costs.

The paper, from the Washington-based Urban Institute, offers a fresh look at the whole public option debate, casting the issue as “one of fiscal conservatism” — more about containing health costs than extending benefits to the uninsured.

Its authors accept the likelihood of a trigger as proposed by Republican moderates but suggest it be tied to proven government data on national health expenditures rather than some new index to measure the affordability of coverage. And, in effect, the health industry would be given a three- to four-year test period to show its ability to slow the growth in costs.

Failure would trigger a more powerful public insurance competitor than either the House or the Senate has yet embraced — one that challenges not just the market power of insurers but also providers, especially hospitals.

“A strong version is necessary because there is little else in health reform that can be counted on to contribute significantly to cost containment in the short term,” the authors write. A trigger means delay, but “even the threat of such a plan being triggered offers the potential to affect market dynamics between insurers and providers.”

By comparison, if only a watered-down public option survives and costs continue to rise unchecked, both insurers and providers face the prospect of even greater government regulation of private-sector prices, the authors warn. “Indeed, a strong public option competing on a level playing field with private plans paradoxically might be the best ‘last chance’ for competition to work.”

I maintain that Harry Reid deserves a lot of credit for sticking with the public option, and including it in the Senate bill that’s headed to the floor. But the remaining public option is not well positioned to deliver on the underlying promise of the idea. As Tim F. put it, “I hope that the rest of the health care bill is freaking awesome. I really do. Because without some major changes the public option is going to suck. What will stop insurers from dumping expensive undesirables into a public ghetto? A guilty conscience?”

Igor Volsky fleshed this out in additional detail, pointing to some of the shortcomings that have become more apparent as the public option has been watered down.

What’s more, Josh Marshall wrote earlier this week that what’s left of the public option is “measly,” and not worth delaying the larger reform effort over, because of very limited eligibility, and the likelihood that it would become “a dumping ground for what health care policy types call ‘creaming’ — health insurers wanting to maintain pools of the young and the healthy and dump responsibility for the aged and chronically ill on to public programs or on to nothing at all.”

Which brings us back to the question of what kind of trigger we’re talking about here. If Snowe and Nelson are thinking about triggering in state-based co-ops in 2018, then this is a rather pointless endeavor. But if there’s a possibility that trigger advocates are serious about crafting a meaningful policy — by no means a given — there’s an avenue that reform advocates might find appealing.