The Many Possible Public Options

In the heated debate over the public option what is often overlooked is that there is not any one “public option.” There are in fact several different public options being proposed. They run the gambit from the very robust to the weak and nearly useless. I'm going to try and explain the different configurations of the public option proposals and place them on a rough robust-to-weak continuum. The continuum does not just represent a left/right divide on the issue, but also a divide on their potential cost savings. The more robust public option the more money it will save the government and the consumer.

Medicare Buy In

The strongest and most robust public option proposed is the straight “Medicare buy in.” It would simply allow individuals under the age of 65 to buy Medicare at an actuarially sound premium level. The option would provide the greatest cost savings to the government and the consumer. Senator Rockefeller's “Consumers Choice Health Plan” would be a Medicare buy in for the first few years. After that establishment period, the plan would progressively become weaker in several ways.

Medicare Rates Plus

A slightly less robust way to construct a public option is some form of a “Medicare rates plus” option. Doctors who accept Medicare would need to accept the public option, but it would pay Medicare rates plus anywhere between an additional 1%-20%. The higher the additional reimbursement rates, the less robust (and more expensive to consumers) the option would be.

Medicare Rates Plus With Opt Out

The next step down is a “Medicare rates plus with opt out” configuration. This is very similar to a “Medicare rates plus” option but providers who accept Medicare would not need to accept the public option. This configuration becomes less robust depending on the additional reimbursements and how easy it is for doctors to opt out. The original public option in the House bill which passed the House Ways and Means Committee and the House Education and Labor Committee include this style of public option. It would pay Medicare rates plus 5% and allow doctors who accept Medicare to opt out of the program.

Level Playing Field

A “level playing field” option was first proposed by Chuck Schumer in an attempt to win over moderates. The government would create a new government run insurance company. It would behave like private insurers and directly negotiate payments with providers. It would not be allowed to piggy back on Medicare's rates. Depending on the details, it would either allow providers accepting Medicare to opt out or require the plan to create a new network from scratch. The public option compromise in the House Energy and Commerce Committee and the public option in the Senate HELP Committee bill are both “level playing field” style public plans.

National Semi-Independent Non-Profit

The absolute minimum that I would classify as a public option is a national semi-independent non-profit. The government would provide money and expertise to establish a new national non-profit health insurance company. It would not be a government entity and its employees would not be federal employees. It would be highly regulated and have direct government oversight. The top level of the organization (top management, CEO, and/or board members) would be appointed by the federal government. They would be appointed by either Congress, the president, the secretary of HHS or some combination of all three. The single national cooperative compromise Schumer offered Grassley and Conrad would be an example.

I left off the continuum Conrad's idea of small regional co-ops. In no way, shape, or form are they a public option or would they fulfill the goals of a public option. Not only would they fail to fulfill the goals of a public option, but the severe restrictions placed on them means they would be unlikely to ever even get off the ground. An issue I did not deal with is whether the public option would be open to all businesses or only offered on the new exchange. Opening the public option to all would make it more robust, but it seems the overwhelming political consensus is to make it only available on the new exchange.

There is currently no one public option. There is not even one robust public option and one weak public option. There dozens of ways to configure a public option in discussion. Each change effects a plan's relative “robustness.” Some options would even start off robust then become weak. Beyond the buzzwords of “public option” and “robust” there is an ocean of nuance.

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