Everett, Wash.
Published: Wednesday, July 1, 2009

Public option backers have a bigger goal

By Richard S. Davis

 Health care reformers have found a new defining issue, something they call the "public option." Simply -- and devastatingly -- they want Congress to establish a government-run health insurance plan to compete with the hundreds of private plans currently in the marketplace.

You can almost hear the plan's architects' chortling, "Let's give them a dose of their own medicine. They want competitive markets. Fine. We're in."

But the so-called "public option" will not be an option for long. If established, the public plan would soon be the only game in town. The government's advantages in any faux market competition are clear: Governments dictate the prices they pay providers and regulate their competitors.

Joining most Democrats in the congressional delegation in support of the measure are some 30 Washington legislators, prominently including state Sen. Karen Keiser, D-Kent, the chair of the Senate health care committee.

Although details are still under discussion, there's no question that it will be priced significantly below most private plans and quickly claim market share. In a widely cited study, the Lewin Group estimates that a public option mirroring Medicare payment levels and open to all employers would draw 119 million people from private carriers. That's a two-thirds reduction in the number of people with private coverage.

Eventually, says Lewin Group vice president John Sheils, "The private industry might just fizzle out altogether."

Over the weekend, New York Times columnist Paul Krugman, a strong advocate for single-payer, government-run health care, argued that the public plan must be part of any reform package. Favorably citing the Medicare experience, Krugman wrote that the public plan "would help keep costs down through a combination of low overhead and bargaining power." No mention of Medicare's inadequate provider reimbursements and looming deficit.

Three years ago Krugman and his colleague Robin Wells took a stronger stand in an article in the New York Review of Books.

"If U.S. politicians could be persuaded of the advantages of a public health insurance system," they wrote with a candor now in short supply, "the next step would be to convince them of the virtues, in at least some cases, of honest-to-God socialized medicine, in which government employees provide the care as well as the money."

Some critics fault the president and Congress for not pushing single-payer aggressively. Physicians for a National Health Program, for example, charges that the president is "caving in to corporate health care interests." The industry should be so lucky.

Support for the public option does not represent a strategic shift from proponents' long-term goal -- universal coverage through a single-payer, government-run plan. Rather, it's a tactical adjustment designed to advance the goal without inciting public resistance.

Less than a year ago, candidate Obama said, "If I were designing a system from scratch, I would probably go ahead with a single-payer system." He went on to explain what he saw as the obstacles, including HMO and insurance industry employment and the complex of health care institutions.

The public option finesses all that.

Jacob Hacker, a political science professor at the University of California at Berkeley, came up with the public option after analyzing the failed Clinton reform in the early 1990s.

In 2006, Hacker warned, "Alas, the left is…biting off too much" with its "Medicare for All" single-payer plan.

"There's much to be said for a single-payer system," he wrote in Slate magazine. But many Americans "remain stubbornly attached to employment-based health insurance, and proposing to abolish it entirely is likely to stir up fear as well as gratitude." That stubborn attachment shows up in polls demonstrating that most Americans are satisfied with their current coverage and oppose a government takeover.

With his plan, Hacker says, "… you can at least make the claim that there is a competitive system between the public and private sector." The apparent choice blunts the fear. Appeasing another source of opposition, the option may also preserve union-negotiated Cadillac health care plans.

But his allegedly competitive system is unsustainable. As the government plan crowds out private competitors, it ineluctably leads to single payer. That's why its backers are pushing so hard for the public option. It's their only politically viable path to government-run health care.



Richard S. Davis writes on public policy, economics and politics. His e-mail address is richardsdavis@gmail.com.
© 2009The Daily Herald Co., Everett, WA