The Senate Bill and the Public Option
I've always had trouble understanding the opt-out version of the public option. Or more specifically, I've had trouble understanding why any state would actually opt out of something that some might find ideologically objectionable, but that doesn't actually cost them anything, gives their citizens a choice, and might actually bring in some government money down the line.
In that sense, the opt-out reminds me of all those Governors who made a lot of noise about rejecting the stimulus money, but then took it. As Doug Holtz-Eakin, a Republican and a former director of the Congressional Budget Office who is now a fellow at the Manhattan Institute, puts it: "If the default is, you're in, the legislative momentum has to be found to get you out. ... You have to make the case that eliminating a choice is a good thing."
That's why I'm a little puzzled at this passage in CBO's preliminary analysis of the health bill that will go to the Senate floor in the next few days:
CBO's analysis took into account the probability that some states would opt not to allow the public plan to be offered to their residents. Rather than trying to judge which states might opt out, CBO applied a probability recognizing that public opinion is divided regarding the desirability of a public plan and that some states might have difficulty enacting legislation to opt out. Overall, CBO's assessment was that about two-thirds of the population would be expected to have a public plan available in their state.
Translation (I think): We're plugging in a random number here, but we have no clue why anyone would opt out either.
Otherwise, their estimates are in line with earlier ones, which suggest that a relatively small number of people would actually choose the public plan, and that it would have somewhat higher premiums than the private ones participating in the exchanges. I think they do a little better job here explaining their rationale for that assumption:
Roughly one out of eight people purchasing coverage through the exchanges would enroll in the public plan, CBO estimates, meaning that total enrollment in that plan would be 3 million to 4 million. That estimate reflects two main components:
= CBO's assessment is that a public plan paying negotiated rates would attract a broad network of providers but would typically have premiums that were
somewhat higher than the average premiums for the private plans in the exchanges. The rates the public plan pays to providers would, on average,
probably be comparable to the rates paid by private insurers participating in the exchanges. The public plan would have lower administrative costs than those private plans but would probably engage in less management of utilization for its enrollees and attract a less healthy pool of enrollees. (The effects of that “adverse selection” on the public plan's premiums would be only partially offset by the risk adjustment procedures applicable to all plans operating in the exchanges.)
This, by the way, is also along the lines of reasoning that we heard in a recent analysis of the House bill by the actuaries at the Centers for Medicare and Medicaid Services:
The proposed legislation specifies that a Federally operated “public health insurance option” would also be available through the Exchange. This plan would meet the same benefit, cost-sharing, network, and other requirements applicable to private Exchange plans and would negotiate payment rates with providers (rather than paying based on Medicare rates, as under H.R. 3200). We estimate that the public plan would have costs that were 5 percent below the average level for private plans but that the public plan premiums would be roughly 4 percent higher than private as a result of antiselection by enrollees.
Translation: A public option that had to negotiate with health care providers (as opposed to having its reimbursement rates tied to Medicare's) would be somewhat more efficient than private insurers, but also somewhat more expensive, because it would attract a sicker population of people who would be looking for more generous benefits and less hassle than they get from private insurers.
-
1
It's not random. Two thirds of the population will have access to the public option, the rest are the 33% of people who seemed to believe, no matter what evidence to the contrary, that George W. Bush wasn't a horrible president.
-
1.1
The CBO could also track the per capita sales of "Going Rouge" and arrive at a similar number...
-
-
2
Interesting. Though I have to wonder if the number of people who have been consistently scr*wed by the health care companies might not opt for the public option just on principal.
-
2.1
FourGoodlegs:
.
I see the converse a lot in my red section of Michigan. I call it the "spare tire" mindset. That is: if you've never had a flat tire, you're thinking, "Why am I schlepping around a $100 tire that I don't need? Can't I get rid of it?"
.
But, if you've had a flat, you're thinking, "Thank goodness I had a spare. It saved me all sorts of grief."
.
HCR101 in my book...the Public Option is our spare tire.
-
-
3
KT:
.
That should readA public option that had to negotiate with health care providers (as opposed to having its reimbursement rates tied to Medicare's) would be somewhat more efficient than private insurers, but also somewhat more expensive, because it would attract a sicker population of people who would be looking for more generous benefits and less hassle than they get from private insurers, unless they already have insurance through their employer, in which case they're now not allowed to opt out of their employer's crappy group plan, and take a better package available in the exchange if that were affordable to them --also making it more expensive, by shrinking the pool.
-
4
The opt-out is just ideological eye candy to placate moderates like Ben Nelson and Blanche Lincoln, etc. Not working, but that's why it's in there.
-
-
4.2
I believe the correct expression is "fig leaf".
-
4.3
States' Rights, Nullification, Heritage, not Hatred!
-
-
5
At the rate we are moving, there will not be a single aspect of your life the Imperialistic Federal Government will not be involved in. Welcome, Big Brother, we humbly place ourselves at your feet to tell us what kind of life we should live. Don't forget, a government powerful enough to give you something is also powerful enough to deny said thing to you. The death knell for freedom and personal responsibility in the USA is tolling.
-
5.1
I am truly bewildered. Several regular posters seem to believe, most sincerely, that the function of government is to deprive us of rights and regiment our lives. Since this sort of thing tends to be the province of communistic and other totalitarian governments, the net result is their labeling Obama and his supporters as socialists, Communists, Nazis, and Fascists -- and they mean it.
.
And yet, the US is almost pathologically deferential to the rights of individuals. The first two Amendments to the Constitution (notably Second) offer good examples(as do the Fourth and Fifth and Fourteenth and others). Almost nowhere in the world is speech as free as it is here, and to my knowledge no other first-world country is so permissive about the ownership of firearms as a personal right. Similarly, even if the House health plan were to pass, the government would stlil have less control over health care than governments in single-payer countries.
.
That's not to say that our government has never gone overboard, but when it does it rarely does so to the frustration of the majority. Even Prohibition got passed by 2/3 of each house of Congress and 3/4 of the states. Far stronger things were said against Social Security and Medicare than are being said against the current proposals for health care. Those of you who don't want to see Social Security and Medicare repealed are free to leave the room. Let's see who's left.
.
Okay, those few still here -- Is the government trying to do something TO you or FOR you? Before you answer, think about Karen's brother. Think about the poor kid in DC who died of a dental infection because his mother couldn't get him any care (a physician could have quickly diagnosed and resolved the matter; she didn't need a dentist). Think about my adult son who is between jobs and can't get health insurance because he broke his leg a few months ago. I'll bet they and those others like them who haven't yet died for lack of insurance would be happy to sign up for the public option.
.
Ideology may keep you warm at night, but it won't cure an infection or set a broken bone. -
5.2
"the US is almost pathologically deferential to the rights of individuals".
.
Yes, and we want to keep it that way. I refuse to apologize for being staunchly in favor of individual rights.
.
I believe in the people more than the government. How about you? -
5.3
"I believe in the people more than the government. How about you?"
.
False dichotomy. It's like asking whether I believe in medication or surgery with no explanation of what the problem is -- and when the answer could well be "neither." When it comes to defending the country against an invader, I prefer the government to "the people." Or can you and your buddies afford to purchase an aircraft carrier, train its crew, and send it into battle?
.
This shouldn't be an argument over some sort of political faith. The issue is who is best equipped to perform a given task -- and the answer may be neither "the people" nor the government. In the case of health care the issue is how best to go about wiping out disease while doing the best possible job of detecting and treating individual cases of any given disease until we do wipe it out (if ever). That issue pits not "the people" but the health-care establishment against the government -- and, I would argue, the health-care establishment against the people as well. But only the government, acting on behalf of the people, can take on the health-care establishment and accomplish anything significant.
.
Here's the question to ask: What works? Many impartial studies have established that we pay around twice as much per capita as most other first-world countries for medical outcomes that in the aggregate are no better -- and frequently worse -- than what those other countries get. We also have less government involvement in health insurance and care than those other countries. Coincidence? I think not.
.
I have nothing against "the people." But when you ask what I believe in, allow me my own choice. I choose reality and results. On that basis, resistance to government health care is absurd. -
5.4
"...can you and your buddies afford to purchase an aircraft carrier, train its crew, and send it into battle?
.
Bingo! Well said, Bobell.
.
Of course, the reply is going to be "Wolverines!" -
5.5
bobell--great response with the false dichotomy comment. I think this has become a default position on many issues, so much so that people parrot this sort of reasoning without considering the content. Actually it's not even reasoning--it's a bludgeon that's meant to obliterate complications and nuance and reduce every argument to black-hat / white-hat simplicity
.
"What do you want: the land of the free and the home of the brave, or a Big Brother nanny state?"
.
Why do we have to choose only between these two options? I'd prefer a better version of choice A.
-
-
6
If medicare has administration costs that are below 5%, closer to 3% IIRC, and most national health care services in other nations also have similarly low administration and overhead costs, and private insurers are considered efficient if they get 85% of the premium dollar going to actual care, leaving a 15% admin cost (and most seem to have a 20 to 25% admin cost) then how can the CBO estimate that the public plan would have costs that were only 5 percent below the average level for private plans?
That number would seem to want to be somewhere in the 10% to 20% range, not 5%. If that were true, and accepting the 4% higher premium figure based on the 5% savings in administration, thereby getting (by simple subtraction) a 9% benefit cost increase, wouldn't the public plans premiums actually be LOWER than private insurance by 1% to 10%? I.e. a 9% cost increase from less management of utilization for its enrollees and attracting a less healthy pool of enrollees offset by 10% to 20% administrative savings?
-
6.1
Because the public plan would have to negotiate reimbursement rates with providers, unlike Medicare, which can essentially dictate them. In that sense, it looks more like an insurance company than a single-payer kind of system.
-
6.2
Karen, thanks for responding, but we're not talking about reimbursement rates, we're talking about administrative costs. Medicare costs may be substantially lower than private insurance because of a combination of lower administrative cost and lower reimbursement rates but that was not the crux of my analysis nor mentioned in the CBO's statement.
Upon further thought it appears that the whole opt-out scheme and limiting the number of people eligible for the public option is solely designed to prevent it from gaining the necessary clout to negotiate forcefully in setting rates and hamstring its ability to lower costs.
Still, my question above holds.
-
6.3
Not to confuse the issue further, but are "administrative costs" a function of the necessity to "negotiate reimbursement rates with providers" like private plans?
.
If so, that might explain a higher administrative overhead than Medicare... -
6.4
Stuart, I don't think so.
I assume that they refer to all the cost of administering the plan, making payments, collecting premiums, overhead and salaries, including executive compensation, and profits. In this mix is the large contingent of private insurance bureaucrats who live to deny coverage, largely lacking in publicly administered plans.
-
-
7
This "opt-out" nonsense is one of the biggest PR schemes I've seen yet. The phrase would seem to imply that the states can decline paying for HC reform in exchange for their residents not benefiting from said reform. This is not true. States (and the people, respectively) will have to pay for HC reform no matter what. The only thing that states can "opt-out" of is whether they receive the benefits from HC reform.
.
What a scam. I'll go with no on "opting out".-
7.1
The public options in both bills as written are self-funded off of enrollment from what has been reported.
In states that opt out, no one will be paying into the PO, therefore the state will lose no money by opting out, they are simply giving their citizens one fewer insurance option on the exchange.
You should pay a little more attention.
-
-
8
“Or more specifically, I've had trouble understanding why any state would actually opt out of something that some might find ideologically objectionable, but that doesn't actually cost them anything, gives their citizens a choice, and might actually bring in some government money down the line.”
How true!
Well, the only good thing is that there seems to be more and more traction on Healthcare reform.
Lets see what Reid and the others can do. All I can do is wait and hope that the reform continues to "chug" along and eventually results in the passage of a bill reflecting REAL change.
Nice piece!
LM
-
9
Isn't Douglas Holtz-Eakin the economist who did so much dishonest shilling for John McCain that no one would hire him after the election?
http://www.washingtonpost.com/wp-dyn/content/article/2009/11/01/AR2009110102121.html
Nice to see him getting picked up at the Manhattan Institute. Hey aren't they the firm that currently hires disgraced journalist Judith Miller? Sounds like a good fit.
You are the one claiming that our traditional media outlets are not corrupt. If you want to keep arguing that point, you should stop quoting people who work for an obviously tainted outfit like the Manhattan Institute. -
10
Does the Senate Bill keep Obama's pledge of no increase of tax on people making less than $250K?
-
10.1
No, nor the pledge of keeping your own doctor, or not having reduced services. And what will become evident shortly if this is passed is that regardless if something moves or not, it will be taxed.
Such will be the life of a conscripted health care system
-
10.2
KT, what of Obama's pledge? Is it blown?
-
-
11
This is interesting, CBO revises House bill and it cuts deficit more than the Senate bill.
http://www.rollcall.com/news/40801-1.html?ET=rollcall:e5970:80076713a:&st=email
-
12
Certain States may opt out, but I wonder what happens when this thing goes into full swing and those States Medicare, Chips Etc. bills are sky high; what then?
.
I presume that they will still have to provide these services to the uninsured.
.
Anyone know otherwise?
- ktumulty New Blog Entry, "For That Very Special Someone on Valentine's Day" - http://tinyurl.com/yg5qd4o - 2 hours ago
- ktumulty New Blog Entry, "Welcome to Swampland, Adam Sorensen!" - http://tinyurl.com/yadyarr - 11 hours ago
- ktumulty New Blog Entry, "Re: Politics of Process..." - http://tinyurl.com/y9uoo98 - 22 hours ago
Most Popular »
- Undercover Boss Is Phony and Manipulative. But Don't Hold That Against It.
- NH Poll: Dems Face A Thumpin'
- NBC: There Was Never a Conan O'Brien
- Paul Ryan Won't Run For Prez In 2012
- Today's Health Care Checkup - GOP Plans Under the Spotlight
- CO Gov Poll: Hickenlooper +4
- Love At First Byte: Your Nerdy Valentine's Day Guide
- Do You Spend Less than $2,000 Annually on Internet, TV, Cell Phone Service, and Video Games?
- In The Spotlight, Paul Ryan Faces A Purity Test
- Barack Obama: Then vs. Now
- Asian Carp Battle: Foreign Fish Threaten Great Lakes
- Is the Bible Fact or Fiction? Archaeology's Discoveries
- Spain's Troubled Economy: Fears Over Euro Zone Outlook
- Kennewick Man, Archaeology Find: Who Discovered America?
- Al-Qaeda, Yemen, Wedding: Unlucky Name, Celebration
- Tea-Party Convention: Lessons on Palin and the Movement
- Venezuela: Chavez Protests at Ball Game Over Electricity
- Jim Frederick, Black Hearts in Iraq's Triangle of Death
- Why China Needs The U.S. -- And Vice Versa
- Marja: Operation Moshtarak Tests Obama's Afghan War Plan
Quotes of the Day »
RSS