As everyone here knows, the President and his staff have come out with some decidedly mixed messages about the public option element of the Affordable Health Choices Act.
After further review, I think the President is right, or at least, has the potential to be right. The key thing isn't the existence of a public option - it's the existence of affordable choices. In other words, if the Health Insurance Exchange system works (along with the mandates and penalties for non-participation), and provided there is a sufficient subsidy for individuals and businesses to participate , it doesn't matter whether there is or is not a "public option" (or even co-ops) among the menu of choices.
There are plenty of crazy myths out there - death panels, "trojan horses," etc. There is a myth of our own we must confront: a watered-down "public option" (as presently exists) may not be that great of a choice.
According to the CBO's July 2nd letter, the AHCA would:
require all legal residents to have insurance; establish insurance exchanges (called "gateways") through which individuals and families could purchase coverage; set certain minimum requirements regarding the availability, pricing, and actuarial value of policies; and provide federal subsidies to substantially reduce the cost of coverage for some enrollees.
There are a lot of cost estimates, and Republicans have latched on the incorrect initial estimate of $1 trillion. This has been whittled down to approximately $239 billion after revenues are considered. It's clear the CBO has taken a very conservative (from an accounting, not necessarily political) approach to scoring the various drafts of the AHCA. Former CBO Director Peter Orzag said that the CBO was exaggerating costs and underestimating savings.
Thus, I found it very interesting what the CBO had to say about the net cost impact of the "public option":
The new draft also includes provisions regarding a "public plan," but those provisions did not have a substantial effect on the cost or enrollment projections, largely because the public plan would pay providers of health care at rates comparable to privately negotiated rates -- and thus was not projected to have premiums lower than those charged by private insurance plans in the exchanges.
Thus - even if a "public option" were included, according to the CBO, its premiums would be the same as the other qualifying private plans in the exchange. The CBO views the "public option" as an irrelevancy.
The public option would indeed be just one more option on the menu, no more affordable than the private options. It would have the same defined benefits and operate under the same basic rules - no adverse selection for pre-existing conditions, for instance - as the eligible private plans in the exchange.
It would be like seeing a box labeled "Government Beer" in the supermarket aisles next to Budwesier and Miller Lite. Same bad beer, same price.
True, potentially, a "public option" could morph over time to be the "Trojan Horse" to single-payer or Medicare-for-All that the right fears. There are also different versions of the "public option" that set limits on provider reimbursements, and thus potentially reduce costs.
However, it's jsut as likely that the "public option" is the candy-coating to the middle class to swallow the bitter pill of an individual mandate. It's supposedly a guarantee that there will be at least one affordable, trustworthy choice in the marketplace. But this assumes that the public option will be cheaper to the individual than the private plans. If it's not cheaper, or qualitatively better, it's just a marketing gimmick to induce acceptance of a mandated insurance regime.
The key is the subsidy. With an adequate subsidy, the exchange would be popular (although more expensive). With an inadequate subsidy, the exchange will be unpopular (but cheaper). It doesn't matter whether there is a public option or not.
UPDATES
To be clear - I'm all for a robust public option. Hell, I'd be for single-payer. I'm not saying don't put pressure on your Reps or Senators or neighbors - go fight the good fight.
I just think it's funny that we're going to the mat on the watered-down "public option.
For a good analysis of why it's "watered down" and not worht trashing the whole effort over, see this report from the Physicians for National Health Plan (PHNP), one of the biggest pro-single-payer groups around:
Bait & Switch
UPDATE #2
Also - some make the very good point that subsidies cause prices to increase. That's true, generally speaking. But my understanding of the Health Insurance Exchanges is that qualifying health plans are subject to price constraints. They can't arbitrarily increase costs, and given competition, they wouldn't really want to unless all their competitors did the same.