Why The Trigger Is So Dangerous

It appears that Obama is trying to convince Republican senator Olympia Snowe to support health care reform by offering to support a trigger for a public option instead of a public option available from day one. The trigger option is incredibly dangerous and should make progressives very nervous. It is theoretically possible to get a “good” trigger that might help control cost, but even the smallest modifications could make it worse than useless. A bad trigger could actually do more harm than having nothing at all.

I have previously explained the many variables involved in a public option and will explain how a very small change could make a trigger useless.

A good (or one that might at least do something positive) trigger would need to trigger a public option based directly on Medicare. It would need to be either a Medicare buy in public option or Medicare rates plus public option. (a public option which pays providers Medicare rates plus some percentage.) Anything short of that would not work. A Medicare buy in public option would also save a lot of money and could be scored by the CBO. The CBO should be able to score a robust public option that could be triggered as saving money.

How to ruin it - Allowing Medicare providers to opt out or creating a “level playing field” plan cannot work with a trigger. Less robust public options could work only because they would be large national plans able to use their market share to keep rates low. Since the trigger might create a public option only in states where the private insurance companies failed it must piggyback on Medicare to be effective.

The trigger would not be able to be pulled very soon. It would not be able to be triggered, at most, until 2-3 years after the reform system goes into effect.

How to ruin it – If the time line for the trigger is too long it could result in higher, not lower, premiums. If the public option could only be triggered, say, eight years after reform started, it would create a strong incentive to dramatically raise premiums in the years leading up to the possible trigger date. Dramatically raising premiums before the trigger could be pulled would give the insurance industry large profit margins/cash reserves/waste/fat to whittle down for years while they keep premiums just below the level that could trigger the public option

The public option must be a growth in premiums trigger. My preferred trigger mechanism would be if average insurance premiums for any insurance grade, in any area, for any year, grow at a rate faster than rate of growth in Medicare or 140% faster than the rate of increase in the consumer price index.

How to ruin it – Setting the growth in premium rates too high would make the trigger worthless. Making the trigger a lack of competition trigger would make it counterproductive. By triggering a public option if an area had too few companies, it would create strong incentive for insurers to not reduce premiums in an attempt to drive less efficient companies out of business.

The insurance market should be monitored nationwide, state wide, region wide, or city wide to see if premiums grow too fast in any area that has more than 100,000 people. If premiums grow too fast in any area the public option must be triggered for that market.

How to ruin it – By making the size of the areas being monitored too large it could result in millions of Americans being ruined with out of control premiums. If the public option was only triggered if premiums grow too fast on a state wide average, people in Los Angeles could still face no relief from out of control cost if premiums in northern California were being held steady.

The trigger must be automatic. If conditions are met the robust public option must be available right away.

How to ruin it – One of the easiest ways to make trigger useless is by requiring an up or down congressional vote or a vote by the effected state legislature if the trigger is pulled before starting the public option. This congressional pre-approval provision would ensure the public option would never go into effect. It would also create a strong incentive to increase premiums dramatically while Republicans control one chamber in Congress.

Is it possible to create a useful trigger? Technically, yes. It would need to be a two year automatic trigger for a Medicare buy in public option if premiums grow faster than Medicare in any area for any one year.

What is so dangerous is that it is incredibly easy to make the trigger worthless or even harmful. Changing a few words in the legislation could strip the trigger of all its power. Understanding the difference between a good trigger and a terrible trigger is not easy. Don't expect the mainstream media ever acknowledge or even notice the difference.

The trigger would become the target of a quiet multi-million dollar all out lobbying assault and could be ruined at the last minute behind closed door with almost zero media coverage. Explaining how the smallest last minute change to the trigger had ruined the whole health care bill would be nearly impossible for progressives.

The trigger is so dangerous because it is so malleable. Progressive would need to guard it like a hawk and there would still be no guarantee that they would not be stabbed in the back at the last minute without media fanfare. If the Congressional progressives embrace a well designed trigger they are setting themselves up for a swift, subtle, and complete betrayal. The trigger could quickly go from a real tool to control cost to a fig leaf, or even a leaf poison ivy.

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