Cantwell's “Basic Health Plan”, A Better Exchange But Not A Public Option

Cantwell's has an amendment which would have states create a “basic health plan” from individuals making less than 200% of the FPL but more than 133% (the new cut off for Medicaid eligibility). The idea is modeled after the basic health plan in Washington state which has been around for about 20 years. While a good idea, it is in no way a public option.

In essence, what Washington state does is define a basic health plan--it sets the deductible, out of pocket limit, co-pays, drug cost sharing, and defines exactly what must be covered. Private insures bid to be able to offer basically this exact same plan. A few private insurers are qualified; there are small differences in the basic health plan depending on the insurer the individual selects. Premiums are subsidized by the state to make the plans affordable.

This is not a public option. It is not a health insurance company run by, managed by, or directly overseen by Congress. What Cantwell's “basic health plan” is is simply a better way to run an exchange. This is closer to how more market-heavy universal health insurance systems are run in other countries (Switzerland, Netherlands, Beligium). The government defines the basic health care plan which must be covered, and companies mainly compete on price of premiums and provider network. In those systems, you can buy supplemental insurance which covers what is not covered by the government-defined minimum benefits package. The idea is also similar to Medicare Advantage without the choice of Medicare.

This is a much better way of running an exchange, in contrast to vague categories of what must be covered and policies sold at different actuarial levels. (The current framework of the exchanges in the Baucus bill is just asking for confusion, bureaucratic red tape, and abuse.) However, it is still just a better exchange, and would still greatly benefit from having a public option as one of the qualified insurance providers.

I see two problems with Cantwell's amendment. The first is that the basic plan is restricted to only those people making between 133%-200% of the FPL. It should be open to everyone or the whole exchange should be run this way. This would depopulate the original state-based exchanges, reducing the market power and increasing the price for individuals making above 200% of FPL. It makes some people better off, but others considerably worse off.

The other problem is that Cantwell is trying to sell her idea as a public option--and it is not a public option . It is still not a bad idea--it would be an improvement over Baucus's plan for people making below 200% of FPL (not hard to do)--but it is not a public plan.

My message to Cantwell is simple: Don't hand progressives a daffodil and try to call it a rose. It discredits you and it discredits a reasonable idea.