Will There Be a Public Option?

I have waited a long time to even bother writing much about the "Public Option" because,

a) it may not even make it into a bill
b) will have minimal impact on most of us
c) you wouldn't know a) or b) going on the amount of news coverage about it

There are many really good as well as potentially problematic items that made their way into at least 1 of the 4 measures that were reviewed by the House or Senate. The "Public Option" has gotten a disproportionate amount of the coverage and most of it (on both sides of the issue) is misleading at best. I really don't think most of the public really understands much about the "Public Option", but be that as it may, according to a Washington Post/ABC News poll this week they are starting to become more in favor of it (whatever they believe "it" is).

Assume just for a moment that some form of a Public Option winds up being in the final bill signed into law by President Obama.

IF it winds up being "live" rather than waiting for a "trigger event"

IF it winds up being nationwide, rather than voted in or out on a state by state basis

It is still very unlikely that MOST Americans will have the OPTION of selecting the "Public Option" for their Health Insurance. It is very, very likely, that it will only be made available to those who do not qualify for insurance through their work or their spouse's employer. These people have already been able to get "private insurance", but in most cases it is very expensive. It is most likely that "Public Option" insurance will still seem expensive to those considering it, just less expensive than their other options.

A "Public Option" will NOT:

Incent businesses to drop their Health Care offerings (although the total upheaval of acquiring health insurance and making it more like auto insurance would dramatically reduce the overall cost).

Be selected by more than 10-15% of the populace.

Dramatically reduce health care rates (but it will keep them somewhat in check in future years)

Lead to the government takeover of the Health Insurance Industry

Lead to Socialized Medicine (if you hear anyone say this, remind them that the "Public Option" is for Health INSURANCE not Health CARE, and that they need to change the channel on their TV to something other than Fox News).

So, getting back to my topic today...Will there be a Public Option?

YES.

How we get there and what it will look like has very little to do with what is best for the country and everything to do with Politics and Money (this may be true about most laws).

The bill that passes in the House OR the Senate needs to have some flavor of the "Public Option" in it in order for the final law to have it. They do NOT both need to have it. In the final sausage making process of this law, the passed bills from the House and Senate get reconciled and as long as one of them have some language on a "Public Option" it is likely that the final bill signed into law will have something. So Harry Reid in the Senate and Nancy Pelosi in the House don't both have to be successful finding votes for the "Public Option", just one of them needs to get the right number of votes.

The Senate needs 60 votes to prevent a filibuster. There are 58 Dems, 2 Independents and 1 Mountain of Republican Snowe. There are a few conservative Dem Senators like Ben Nelson (NE) and Kent Conrad (ND) who are holding out on supporting a public option, mostly for the benefit of their political future. Harry Reid just needs to find a way of helping them keep face with their constituents. Enabling states to "Opt Out" will probably be enough for one or both of them. Senator Joe Lieberman (CT) the Independent who votes all over the place, but mostly for self-preservation, may not be as easily swayed since the Insurance Companies are clustered in his state. Which is why Olympia Snowe (R-ME) gets to control the final huddle in the Senate. Reid will giver her what she needs to vote for cloture and prevent a filibuster. Only 50 votes are needed for the bill once it comes to a vote (Joe Biden would break a tie) and I am guessing that some Senators (probably including Snowe) may vote for cloture to allow the bill come to a vote, but would then vote against the bill.

Pelosi needs about a dozen Blue Dog House members to vote for their bill (no filibuster in the House). It seems that it may come down to money as many Blue Dogs represent states with lower than average Medicare reimbursement rates - the guideline for payments in the currently proposed "Public Option" plan. Tweaking this or enabling hospitals to negotiate with providers could be enough to let out the Blue Dogs and get to the magic number of 218 votes. This Medicare rate issue is also probably the main sticking point for Senator Kent Conrad.

It takes money to make sausages.

Why Health Care Reform will Definitely Pass

Two big things have happened in the last 24 hours that basically bushwhack the way to getting some sort of Health Care Legislation to sit on the Resolute Desk by the end of 2009.

First, PricewaterhouseCoopers, who created a report sponsored by the insurance industry saying health care insurance premiums would rise faster as the result of Democratic reforms, put out a statement (thanks Politico) that let on that they weren't directed to evaluate the effects of the entire bill, just part of it. More specifically, just the parts that cost money, not the revenue generating portions to offset the costs. Oops! The fact that they are throwing their customer under the bus on this one means they are getting some serious pressure to come clean by the White House. If even a big accounting firm can't make your numbers look the way you want, you are out of luck. This 11th hour report seemed like it was going to cause a major problem with the passage of the Senate bill, but now it looks more like a desperate attempt by people who know they are on the wrong side of history.

Second, earlier today, Senator Olympia Snowe (R - Maine) announced that she would support the passage of the Baucus bill coming out of the Senate:

"When history calls, history calls. I happen to think the consequences of inaction dictate the urgency of Congress."

She also added:

"My vote today, is my vote today. It doesn't forecast what it will be tomorrow."

Which may mean she would vote against the final bill if it includes the public option, but her support means the Dems are almost certain to avoid a filibuster. Now the Dems technically already have 60 votes (58 Dems, 2 Ind). However, Snowe's support provides coverage for the more conservative/Blue Dog senators (Lincoln, Nelson, Conrad) to support it, at least to get it to a final vote.

As for what the final bill will look like, well, surprisingly, a lot like the Baucus bill looks now, and I don't think I would have guessed that 2 weeks ago. However, it is likely it will include some sort of Public Option. The first option is that there will be a triggerpoint of premium increases that would set in motion a Public Option. That threat alone is probably sufficient to keep rates lower, which is one of the primary goals of the public option (eliminating pre-existing condition exclusion would be the other). The second option I just caught wind of yesterday which is to have a Public Option as the default in all states, but that states can choose to not offer them. There is a wonderfully perverse justice wrapped into this one. Conservatives that don't want the Public Option can work toward making sure their state doesn't have one and really shouldn't care what happens in other states. However, once states without a public option see benefits occurring in neighboring states with the Public Option, they will clamor for it. This also utilizes the Behavioral Econmics concept of the Status Quo Bias, whereby people are less likely to change something that is already in place.