Worse Than Nothing: Carper's “Alternative”

Since I got my hands on the one-page document outlining Carper's weird hybrid “alternative” I've had a chance to study the proposal in greater detail. After carefully examination I've determined that it would literally be worse than nothing.

To my understand there is currently nothing legally preventing the states from implementing any of the three possibilities right now. I've read for example that Maine attempted to create a form of quasi public health insurance plan. Iowa recently experimented with encouraging the creation of new health insurance co-ops. To my knowledge both ideals were failures. State sponsored health insurance purchasing co-ops have been tried in the past and do not reduce premiums.

The Carper amendment wouldn't permit anything which is not currently allowed; so it appears that Carper's amendment would then be worthless. . . but take a closer look, and you will see that it is worse than worthless. Carper's plan would, in fact, restrict what states currently could do.

The amendment says:

This would allow a state to offer a state public option; however, both the executive and state legislature would have to agree.

Most states (I believe every state) allows a law to be passed over the veto of the governor if it can get a super majority in the state legislature. By requiring both the executive and state legislature to agree, the amendment is placing an even higher standard than what is current law in order to create a state public option.

The amendment would place restrictions how the public plan could be run.

Regardless of the mechanism chosen, the state would be bound by the same insurance regulations and benefit requirements as private plans in the exchange. The mechanism would have to be completely self financed, aside from initial seed funding, and would be required to have a reserve fund in the same manner that private plans have. The mechanism could not explicitly require doctors to participate, nor use provider participation in Medicare or other public programs to force participation. Additionally, the state could not use Medicare or Medicaid style price controls or rates - they would have to negotiate rates.

If a state started a public plan today they would not be required to follow all of these restrictions.

Finally, Carper's amendment would strongly limit who could uses this new state public plans or co-ops.

The state mechanism would only be open to individuals who were eligible to acquire coverage through the exchange.

Once again, states can already help create insurance co-ops. They don't need to restrict who can sign up for insurance co-ops. There are currently non-profit health insurance co-ops in this country which are able to sign up everyone, not just people on the individual or small group market.

Carper's Amendment does not increase a state's ability to encourage greater competition, it cripples them. The amendment says it would provide seed money for co-ops. It is unclear if it would also provide any (or sufficient) seed money to start the state-based public plan. Seed money is the only possible advantage in the amendment, but probably couldn't make up for the crippling restrictions.

I would like to congratulate Senator Carper. He managed to come up with an “alternative” to the public option that could literally be worse than nothing at all.