The Infinite Complexity of A Trigger For The Public Option

The idea is that a public option would only be triggered at some point in the future by some failure in the private health insurance market. The trigger has little broad support but is still readily defended by Republican Olympia Snowe. It now appears that the only way health care reform will be passed under regular order is with almost all the Democrats, the two Republican senators from Maine, and at most one or two other Republicans. While I think the likelihood of the trigger option being included is small, the fact that it is supported by Olympia Snowe and Rahm Emanuel means it deserves closer scrutiny.

One of the biggest problems with the trigger idea is that there is no one trigger proposal. If there are dozens of ways to construct a public option, there are thousands of different ways to construct the trigger. Finding a single trigger option that can get broad support seems an impossibility.

The trigger is a simple sounding idea that in fact is an issue with an infinite level of complexity. The trigger has five main variables: the what, when, why, where, and how. Each variable has dozens of possibilities.

What – What public option will be triggered?

I wrote earlier about how there is no one public option but in fact a whole spectrum of different public options. They run the gambit from a robust Medicare buy in to a very weak semi-independent non-profit company. Determining which type of public option would be triggered is only step one.

When – When could the trigger first be pulled?

The idea of the trigger is to give the private insurance market some period of time to fix itself in a new, more regulated marketplace before introducing new competition in the form of a public option. What would need to be determined is how long before the public option could be triggered. Would the private insurance companies get -- one year, two years, five years, ten years before they needed to worry about the trigger? When the trigger could first be pulled is an important variable.

Why – Why would the public option would be triggered?

I believe this is the most important variable. There are two main reasons why a public option could be triggered. One is the lack of competition trigger, and the other is the growth of premiums trigger.

The lack of competition proposal is the idea that the public option would be triggered only if a certain area lacked a sufficient number of competitors. This can take the form of a simple number of competitors (example: if an area has three or fewer competitors the trigger is pulled) or are market share issue (example: if any one or two companies control more than 80% of the market the trigger is pulled). The lack of competition trigger is a bad idea. The important issue is the exploding cost. A lack of competition trigger could end up make the problem worse by encouraging collusion. It creates a perverse incentive to not cut rates and try to drive out inefficient insurers.

The growth of premium trigger is a much better idea. It is triggered if over some period of time premiums increase too quickly. It can be a flat percentage increase, tied to the growth rate of Medicare, or tied to consumer price index. This trigger could in theory at least put some downward pressure on premiums.

Where – Where would the public option be available?

The where question is two parts. First, what the size of an area examined to determine if the trigger conditions are met? Is it a city, county, region, or state? The other issue is when the conditions are met, where will the public option be available once triggered. (For example if the conditions are met in Albany would the public option be only available in Albany, the surrounding counties, all up state NY, or statewide?)

How – How is the trigger pulled?

I've heard of two possible ways about how the trigger would be pulled. One is the automatic trigger. If conditions are met the public option becomes immediately available in that area. The other idea I've heard suggested is the congressional pre-approval trigger. If conditions are met that triggers an immediate up or down vote in Congress to decide to implement a public option.

A trigger in theory could be constructed to have a positive effect at controlling the exploding cost in health care. It would need to be a growth in premiums trigger, for a Medicare buy in public option, which would be automatically pulled nearly immediately. It is easy to also design a trigger that would be worthless or even counter-productive.

The trigger idea may to some seem like a useful political compromise. There might even be an incredibly strong trigger plan which progressive might reluctantly accept, but the people in Congress who oppose a public option will likely equally oppose a strong trigger. There are thousands of ways to design a trigger plan, and finding a single consensus would seem an impossible goal. Pursuing the trigger idea will only lead to new riffs and infighting.

Note: If politicians have trouble explaining the public option, explaining the trigger will be a near impossibility. An option which is likely to make all sides equally angry.

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