Three Public Options Amendments Submitted For Baucus' Bill

A total of three different public options have been offered as amendments to Baucus' bill. The three public option run the gambit from the robust to the weak.

The best and most robust public option is the one submitted by Senator Rockefeller. It resembles the robust public option originally proposed in the House. It would pay Medicare rates plus 5% for the first three years. Medicare providers would automatically participate in the public option unless they choose to opt out. There is no penalty for providers opting out of Rockefeller's public option.

The second public option is the one submitted by Senator Schumer and Senator Cantwell. It would add to the Senate Finance Committee's bill the same public option that passed in Senate HELP Committee. The public option in the Senate HELP Committee's bill is called the “Community Health Insurance Option.” This public option does not pay modified Medicare rates but its rates “shall not be higher than the average of all Gateway reimbursement rates.”

The final and weakest public option amendment was also submitted by Schumer. It would be his national “level playing field” public option. The government would only provide start up funds to help create a new public option that must follow all the same rules as private insurance companies. Like any private insurance company it would need to negotiate rates and create it's own provider network from scratch.

The Many Possible Public Options

In the heated debate over the public option what is often overlooked is that there is not any one “public option.” There are in fact several different public options being proposed. They run the gambit from the very robust to the weak and nearly useless. I'm going to try and explain the different configurations of the public option proposals and place them on a rough robust-to-weak continuum. The continuum does not just represent a left/right divide on the issue, but also a divide on their potential cost savings. The more robust public option the more money it will save the government and the consumer.

Medicare Buy In

The strongest and most robust public option proposed is the straight “Medicare buy in.” It would simply allow individuals under the age of 65 to buy Medicare at an actuarially sound premium level. The option would provide the greatest cost savings to the government and the consumer. Senator Rockefeller's “Consumers Choice Health Plan” would be a Medicare buy in for the first few years. After that establishment period, the plan would progressively become weaker in several ways.

Medicare Rates Plus

A slightly less robust way to construct a public option is some form of a “Medicare rates plus” option. Doctors who accept Medicare would need to accept the public option, but it would pay Medicare rates plus anywhere between an additional 1%-20%. The higher the additional reimbursement rates, the less robust (and more expensive to consumers) the option would be.

Medicare Rates Plus With Opt Out

The next step down is a “Medicare rates plus with opt out” configuration. This is very similar to a “Medicare rates plus” option but providers who accept Medicare would not need to accept the public option. This configuration becomes less robust depending on the additional reimbursements and how easy it is for doctors to opt out. The original public option in the House bill which passed the House Ways and Means Committee and the House Education and Labor Committee include this style of public option. It would pay Medicare rates plus 5% and allow doctors who accept Medicare to opt out of the program.

Level Playing Field

A “level playing field” option was first proposed by Chuck Schumer in an attempt to win over moderates. The government would create a new government run insurance company. It would behave like private insurers and directly negotiate payments with providers. It would not be allowed to piggy back on Medicare's rates. Depending on the details, it would either allow providers accepting Medicare to opt out or require the plan to create a new network from scratch. The public option compromise in the House Energy and Commerce Committee and the public option in the Senate HELP Committee bill are both “level playing field” style public plans.

National Semi-Independent Non-Profit

The absolute minimum that I would classify as a public option is a national semi-independent non-profit. The government would provide money and expertise to establish a new national non-profit health insurance company. It would not be a government entity and its employees would not be federal employees. It would be highly regulated and have direct government oversight. The top level of the organization (top management, CEO, and/or board members) would be appointed by the federal government. They would be appointed by either Congress, the president, the secretary of HHS or some combination of all three. The single national cooperative compromise Schumer offered Grassley and Conrad would be an example.


I left off the continuum Conrad's idea of small regional co-ops. In no way, shape, or form are they a public option or would they fulfill the goals of a public option. Not only would they fail to fulfill the goals of a public option, but the severe restrictions placed on them means they would be unlikely to ever even get off the ground. An issue I did not deal with is whether the public option would be open to all businesses or only offered on the new exchange. Opening the public option to all would make it more robust, but it seems the overwhelming political consensus is to make it only available on the new exchange.

There is currently no one public option. There is not even one robust public option and one weak public option. There dozens of ways to configure a public option in discussion. Each change effects a plan's relative “robustness.” Some options would even start off robust then become weak. Beyond the buzzwords of “public option” and “robust” there is an ocean of nuance.

The Long Arm Of Chuck Schumer

New York Senate Democrat Chuck Schumer is a natural deal maker. He is the type of guy who was born to be in politics. As health care reform moves forward, it is interesting to see how much he is shaping the debate behind the scenes. His public plan, his campaign language, and his strategy to promote reform are all slowly being adopted by the vast majority of Democrats.

A few months ago Baucus asked him to come up with a compromise public plan which could win over the conservative wing of his party. Chuck Schumer did as he was asked and created his “level playing field” plan. It would be a government-run plan but would not use Medicare's payment rates. I suspect Schumer worked with his party to find a compromise that would be acceptable to over 50 Democratic senators, but probably not all 60.

Senator Grassley threw a hissy fit over any public plan, so Baucus scrapped Schumer's well constructed compromise. Baucus than asked Conrad to come up with anything that would make Grassley happy, and he completely cut Schumer out of the negotiations.

Conrad created the idea of co-ops with federal seed money. Schumer told Conrad his idea was unacceptable, but would work with him to find a compromise of his compromise. He created an outline of a national co-op that might be acceptable to enough liberals. Reporting indicates that Conrad rejected Schumer's suggestions. Not surprisingly, there is now a near full blown rebellion against the Conrad's co-ops in the Democratic Party.

While Conrad and Baucus have remained cloistered in their secret meetings, Schumer's “level playing field” public plan has caught fire. The Senate HELP committee adopted a public plan nearly identical to Schumer's compromise. Not surprisingly, in the House the Blue Dogs and the Progressive Caucus have tentatively agreed to a public option nearly identical to Schumer's compromise. In fact Blue Dog Ross' amendment which changes the structure of the public plan used the subtitle: “Level Playing Field for Public Option.”

I expect to hear the phrase “level playing field” a lot in the coming months. Schumer was also railing against the insurance company villians long before it started getting fashionable.

Currently all the focus in the Senate has been on Senator Baucus because he is the Chairman of the Senate Finance Committee. But Baucus works in near isolation from his party and is sowing an incredible amount of ill will with the rest of his caucus.

All this time Schumer has been unusually quiet about an issue that he is personally invested in. Schumer got almost a fourth of all Democratic senators elected while head of the DSCC in 2006 and 2008. I'm very interested to see when and how he plans to weigh in on co-ops versus the public option. Indications are that Schumer could put together a large group to bring down the co-ops proposal.