Cantwell and Carper: Some good ideas, but no substitutes for the public option in the latest “compromises”

It seems there is a new "compromise" version of the public health insurance option cropping up every day now. Some of these are compromises pushed by Senators themselves and some of them are wedged into the compromise frame by the media, but none of them would fit the principles for a public health insurance option.

First, let’s consider Senator Cantwell’s amendment that passed in the Finance Committee yesterday. Igor Volsky at Think Progress runs down the policy:

States would use their purchasing power to negotiate for more affordable coverage options, improve efficiencies, and even lower the health care costs within the Exchange (by shifting lower income and disproportionately sicker individuals into the Basic Health Plan), but they would have to contract with private insurers. And there ain’t nothing public about private insurers. From the amendment:

Under this amendment, the federal government would provide funds to participating states in order to allow such states to provide affordable health care coverage through private health care systems under contract….State administrations would seek to contract with managed care systems, or with systems that offer as many of the attributes of manged care as are feasible in the local care market. A minimum medical loss ratio of 85 percent would be required of all participating plans….State administrators should seek participation by multiple health plans to allow enrollees a choice between two or more plans, whenever possible. A participating health care system can be a licensed health maintenance organization, a licensed health insurer, or a network of health care providers established to offer basic Health Plan Services.

In other words, the federal government would provide states with funds to establish Basic Health Plans for lower income Americans that would be completely run by private insurers. As Ezra Klein explains, and Cantwell freely admits during their interview, the proposal is “entirely orthogonal to the public option debate. It doesn’t create competition or transparency or experimentation.”

As Jon Walker explains, this is a good idea, though it’s not a public health insurance option:

This is not a public option. It is not a health insurance company run by, managed by, or directly overseen by Congress. What Cantwell’s “basic health plan” is is simply a better way to run an exchange. This is closer to how more market-heavy universal health insurance systems are run in other countries (Switzerland, Netherlands, Beligium). The government defines the basic health care plan which must be covered, and companies mainly compete on price of premiums and provider network. In those systems, you can buy supplemental insurance which covers what is not covered by the government-defined minimum benefits package. The idea is also similar to Medicare Advantage without the choice of Medicare.

While media reports have called this an alternative for a public health insurance option, or a "quasi-public option," Senator Cantwell herself believes that it’s not, sending out an email to her email list that read, in part:

While we must wait to fight another day on the public option, we did make real progress on other key provisions. Several amendments that I introduced did pass the committee – including one to make sure savings from negotiations over drug prices are passed on to consumers and NOT contributing more to pharmaceutical companies’ bottom lines and another to reward doctors for providing high quality care and make sure that doctors get paid more for keeping you healthy than for ordering duplicate tests – putting quality over quantity.

That’s exactly right. Cantwell’s amendment is good policy and worth supporting and making part of the final bill. In fact, it would be even better – as Senator Kerry has proposed – to extend the "active purchaser" authority to the entire Exchange. Either way, though, this isn’t a public health insurance option, no matter what the media claims.

And that brings us to Senator Carper’s idea, which is meant to be a substitute for a public health insurance option.

Here’s the policy and the problems with it, again from Igor at Think Progress:

Politico is reporting that Sen. Tom Carper (D-DE) is floating a new public option compromise that would “allow states to individually decide whether to create a private-insurance competitor such as a government plan and a nonprofit insurance cooperative, or to open up state-based insurance pools for government workers to every resident.” The option won’t come up during the Senate Finance Committee’s mark-up but may end up in the merged Senate bill or in an amendment offered on the Senate floor.

Large progressive states like New York and California will likely embrace this proposal; more conservatives states may wait to see if these public plans save money.

And it’s not clear that they will. State-based public options would enter concentrated markets (already dominated by one or two private insurers) and lack the market clout to negotiate significantly cheaper rates or institute reforms that change the way care is paid for. Existing state-run employer plans (and Medicaid in many states) have already given up on the ‘public’ aspect of their plans and outsourced the work to private insurers. As a result, they have failed to significantly lower health care costs or bring any real change to the market place. In other words, like Carper’s proposal, they are ‘public plans’ in name only.

The principles for a public health insurance option are simple – it needs to be national, available everywhere on day one, have enough clout to set rates with with drug companies and providers, and accountable to voters and to Congress. Carper’s idea, which would not be national, available on day one, or with much clout, fails this test. It is not a public health insurance option, and would not be an acceptable substitute for one.

If a proposal meets the above principles, it doesn’t matter what you call it. It’s a public health insurance option and is worth supporting. If it doesn’t, then it’s not, at least not as a substitute for a real public option to lower costs and keep the insurance industry honest.

(also posted at the NOW! blog)

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