The fight over the public option has taken on a symbolic importance well beyond its actual impact. For some of us, it has become a litmus test of whether a congressman is a "true" progressive, or some kind of sellout.
The public option is vital part of the bill. Without it, there is little incentive for the private insurance firms to reduce costs. They won't have the heavy regularly apparatus countries like Switzerland or the Netherlands have. And no private firm has the purchasing clout to force prices down the way Medicare or the public option does.
But there are other reforms in the bill too. There remains the possibility that, if the final bill doesn't contain a public option, liberal votes could sink it. This would be a terrible, terrible mistake.
Let's consider some other provisions of the bill. (Source: KFF's side-by-side comparison)
Medicaid expansion. Neither liberals nor conservatives have spent much time talking about this, but I'd argue it's actually more important than the public option.
Medicaid today is a very restricted program used mostly by the elderly (its range of covered services is larger than Medicare's). This is because its eligibility requirements are so strict. It's not enough to have a low income. It's not enough to be poor, you have to be deserving poor. The requirements vary from state to state and are opaque, but generally you have to have old age, children, pregnancy, disability, or whatever the state says is "severe" medical need. Sometimes only children actually get Medicaid; their parents don't.
The Senate HELP committee bill expands Medicaid to 150% of the poverty line, for everyone. That's about $16K for a single adult and $30K for a family of four. No conditions. No requirements. You need, you get. The House bill provides only 133% of the poverty line, but even that is above what's currently available in most states.
The Senate Finance Committee might gut that further (133% for children and 100% for adults has been floated), but even that is the biggest expansion of Medicaid in its four-decade history. Normally progressives would consider that a huge victory (and conservatives a huge defeat) but neither side is talking much about it.
And an important fight is being neglected. Whether Medicaid goes to 100%, or 133%, or 150% of the poverty line matters. There are millions of people in each of these brackets. Without a determined effort by progressives, the lowest common denominator proposal (the Senate Finance Committee, as usual) will prevail.
And to be frank, the public option offers meager relief for families earning less than $30K. Even its premiums are likely to be much higher than anything they will be able to afford. They need Medicaid, and it's our job to make sure they get it.
Individual mandate. Just how strong is this mandate? Only as strong as its penalty. The House bill's penalty is 2.5% of income, that is $1500 for someone earning $60K. Such a figure is well below what even the public option's premiums are likely to be. The HELP committee's penalty is just $750 per year.
These bills don't have a real individual mandate. They have an individual nudge. It's still cheaper to not buy insurance than to buy it, penalty or no, public option or no. A true individual mandate would automatically enroll people in the public option, but no version of the bill does this.
The nightmare scenario - people mandated into buying expensive, poor-quality private coverage - is not going to happen under these bills, even if the public option is defeated. People can just refuse to enroll and pay the penalty - they'll still be better off financially. At least until they actually have a catastrophic illness or injury, in which case private insurance would be better than nothing.
If we do get a public option, what happens to it without automatic enrollment? Who has an incentive to actually enroll in it? Only those with chronic medical conditions. The public option will be saddled with huge costs with little revenue to pay for it. Politically and financially, it will struggle to survive. A future Republican administration or Congress would find it an easy target, gutting coverage or making it behave as evilly as private companies do now - for the same reasons.
Employer mandate. Only the House bill has a robust employer mandate; the penalty is 8% of payroll. The HELP committee has an anemic flat penalty of $750; the Finance Committee has not committed to an employer mandate at all. All three exempt small businesses. The level of the employer mandate also varies from 50% of premiums (Finance) to 72.5% for singles (House).
This too matters. If your employer plan's premium is $10,000 a year, the Finance bill would cost you $2,250 more than the House bill. The public option can't help you because, under all versions of the bill, people with employer-provided coverage cannot enroll in it!
Medical claims ratio. The House Education & Labor committee version of the bill contains a truly awesome provision. Insurance companies must have a medical loss ratio of at least 85%.
Wha heck; what does that mean? "Medical loss" is industry jargon for claims paid. Basically, the EL committee is putting a ceiling on premiums; they cannot be more than 15% higher than claims. The insurance companies must squeeze their administrative costs, profits, executive bonuses, etc, etc. all into that 15%. The HELP committee requires only that they disclose what the loss ratio is; the Finance committee does nothing.
If this could go into the final bill it would be like a hammer blow on the private insurance companies. They would basically be prohibited from gouging us. It would hurt them as much as the public option would, using regulation instead of competition. Furthermore, it also applies to employer-provided insurance (which, remember, is immune to competition from the public option). So in that sense it's actually better than the public option.
But it's on very thin ice. The other two House committee bills don't have this provision. Without an aggressive grassroots effort, it won't even make it out of the House, let alone the Senate.
Ban on denying coverage for pre-existing conditions. Insurance companies turn down people for coverage. They rescind policies of people who already have coverage. They refuse to cover treatments of people who have been faithfully paying premiums. The fragility, the insecurity, the bankruptcies, and the deaths our current system causes are in no small part due to the lack of treatment for pre-existing conditions.
A single-payer system would eliminate these problems by getting rid of insurance companies. We don't have the votes for that. We do, however, have the votes to simply ban these practices. And if we couple this with the medical claims ratio provision, insurance companies can't hit back simply by raising their premiums, at least not beyond the actual cost of treatments.
Of course, the companies don't have the leverage to negotiate prices downward, as Medicare does. On the other hand, neither does the public option. In the HELP bill, rates are negotiated separately per state. The House bill only has Medicare+5% rates for the first three years, after which a (possibly Republican) HHS Secretary takes over.
It is a measure of how far we've already come that a bill containing these measures can make it so far and actually have a good chance of success. It would be better still if we had a public option to negotiate rates downward, and cut profits and paperwork out of the mix. And it may be that the only way to get the public option is to play hardball.
But the danger is brinksmanship is that the enemy may call your bluff and leave you with no deal. We don't know when, or even if, we can get a bill like this again. To let it go would be to deny Medicaid to millions, to leave insurance out of the reach of millions for lack of money or lack of health. It would be a monumental tragedy.