Public Option “Deal” Does Not Yet Sound Like It is Even a Deal

Deal, or no deal? (photo: KamalSell)

Deal, or no deal? (photo: KamalSell)

Last night, Harry Reid announced that there would be tentative deal (or deals) on the public option. The deal has not been scored by the CBO and, in fact, the deal may only be a deal on what ideas they will have the CBO score, so that they then can than use that information to make the actual deal. Nor does it sound like the deal included the whole Democratic caucus, so this deal might not even have the 60 votes needed, thereby making it not really a “deal” at all.

What is in this deal that might not be a deal? The answer is that I don’t really know, and it seems like most of the Democratic senators don’t even know yet.

Medicare Buy-In

It sounds like the vague outline of the deal includes an early Medicare buy-in for some subset of people between the age of 55-64. (Whether this is a buy in for Medicare or for Conrad’s fake Medicare is not yet determined.) It at least sounds like this program might not be just a temporary stopgap, and will start in 2011.

That buy-in option would initially be made available to some uninsured people aged 55-64 in 2011, three years before the exchanges open. For the period between 2011 and 2014, when the exchanges do open, the Medicare option will not be subsidized–people will have to pay in without federal premium assistance–and so will likely be quite expensive, the aide noted. However, after the exchanges launch, the Medicare option would be offered in the exchanges, where people could pay into it with their subsidies.

Remember, the exchanges, at first, will only be open to roughly 10% of Americans, so it is only a very small group of 55-64 year olds who would have the option of buying in to Medicare. With this provision, the devil really is in the details. It could be done well, or it could easily devolve into a worthless Medicare buy-in in name only.

OPM national exchange within the exchanges

The deal also includes some form of the probably worthless national OPM-run, exchange-only, non-profit plans to be sold within the state exchanges. How this idea would work, or even if it could work, is a huge question mark. The OPM exchange sounds like it would be a better regulated exchange than the state-based exchange. Why insurance companies would submit themselves to increased regulation when they can get access to the same customers without following those regulations is unclear.

It is possible the incentive for the insurers to take part would be allowing them to sell across state lines. On a mildly positive note, it sounds like this national OPM exchange might replace the terrible “nationwide plans” proposal for selling insurance across state lines that was in the bill. That would at least put a national regulator in place for any national insurance plan.

Possibly, a worthless trigger

(Via Yahoo News)

Greater government involvement would potentially kick in if private insurance companies declined to participate in the nationwide plan, although details weren’t available. One possibility was for the personnel office to set up a government-run plan, either national in scope or on a state-by-state basis.

I really can’t imagine this trigger ever being pulled. The insurance lobby is very excited about the idea of selling across state lines, and many will probably take part. At the very least, a few health insurance companies would step up to offer some really unattractive plans in this OPM exchange to stop the trigger from being pulled. I’ve always maintained that any trigger would be a worthless fig leaf, designed to kill the public option. This proposal perfectly fits that description.

Increased regulations

There is also some vague talk about increased regulation on the insurance companies, including a medical loss ratio of 90%. It is unclear if that would be for all health insurance, only health insurance sold on the new state-based exchange, or only in the OPM national exchange.

Expansion of Cantwell’s basic health program

There are also rumors that Cantwell’s basic health program would be expanded from people between 133-200% to 133-300%. The Cantwell basic health program is not a public option, but a better-designed exchange that uses a captive market to get good prudent purchasing deals. The idea is not bad, but, unfortunately, it has two problems that will really cripple its adoption.

First, it requires states to opt-in to the program. And second, states that take part will only get 85% as much money from the federal government as they would have otherwise gotten for affordability tax credits on the exchange. That seems like an impossible political sell because it could be demagogued as a terrible deal stopping a state from getting its “fair share” of the tax credit money.

At this point, it is impossible to even evaluate this pile of vague ideas that may or may not be part of this “deal.” Some could be very good, some could be terrible, some could be worthless, some could be tiny improvments, etc. Regardless how good, bad, or neutral these ideas are, they are a huge political and policy blow to progressives who have fought for a real public option. It shows that consevadems have the power to hold the Democratic party, the American people, and the United State Senate hostage, all to defend the interests of insurance companies.

Without details, I personally will not get too excited or too angry (although I’m very disappointed about how an extremely popular cost-saving idea can be killed because the Senate allows a tiny handful of Democratic senators throw a temper tantrum). Fancy names like “Medicare buy-in” sound good, but it could easily be worthless subterfuge, just like the trigger. I recommend everyone stay very skeptical and hold judgment for a day or two until we actually know what we are dealing with.

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