Public Option More Important Than The Level Of Subsidies

Kevin Drum of Mother Jones does not seem to understand the reason progressives are fighting hard for the public option. He wrote,

And on a slightly different topic, I'll add this: I sure wish that overall subsidy levels in the current healthcare bills produced the same kind of uproar as abortion and the public option. In terms of real-world effect on real-world people, subsidies are the biggest issue by a mile. But not a very sexy issue, apparently. That's too bad.

The problem is Drum is completely missing the point on the public option. The fight for the public option is inseparable from the fight for better subsidies and affordability. The weaker public option selected by the House saves the government $25 billion. If the House had been able to pass the public option tied to Medicare rates it would have saved $110 billion. To give you an idea, only $602 billion will be spent on exchange subsidies and related spending. Including the weaker public option basically allowed Pelosi to increase subsidies by 4%. If progressives had been successful in getting the robust public option it would have increased subsidies by 18% -- a sizable increase.

Despite some incorrect reporting to the contrary, just over half of the people on the exchange will get affordability tax credits. Some people on the exchange will make over 400% of the FPL and roughly a third will be getting employer provided vouchers, not government subsidies, to buy their health insurance on the exchange. Increasing the size of subsidy levels will not help them. A public option, which the CBO said will reduce premiums across the board, will help them. (I suspect CBO is underestimating the ability of the public option to reduce all premiums on the exchange, but that is a different matter.)

The issue of subsidies is important but it is not as important as the public option. A strong public option would not only allow the amount of subsidies to be increased, but it would help make health insurance more affordable for the millions on the exchange who will not get subsidies. Throwing more money at the problem is a far worse way of making health care more affordable than creating tools which will actually reduce premiums. The public option importantly addresses affordability at its root and helps more Americans. Instead, just increasing the subsidies without the public option could just be putting more money into an unsustainable corporate welfare program.