I'm strongly in favor of a public option, as a crappy substitute for a single-payer system, but we've already lost single-payer as a serious option this year. So we are focusing on public option,.. but even that has been triangulated down, and triangulated down again. It looks as if Rahmbo has decided that doing things exactly the opposite of how the Clintons did it is the tactic, but the strategy is exactly the same as the DLC's: Triangulate on something that is in between the favored position of each party. And in today's polarized world, that puts you right in the 30-foot ditch between the zoo's lion exhibit and the public.
Since Obama and his bungling General Rahmbo has already surrendered most of the territory to the enemy, what's left is to create a strategic beachhead where something can be achieved other than Rahmbo's current plan, accepting defeat (such as a Republican plan, what Nelson, Baucus and company are pushing) and calling it victory. That has no credibility. Better to come up with a purely Democratic compromise that gives the insurance companies something for now, while still getting a public option started right away.
So here's a tactical plan to minimize the damage. It's not what I like, but it is better than what is brewing in the bought-and-paid-for Congress today. Let's recognize everyone's vested interests first and see if they can be met:
- Republicans have played the "Waterloo" card and will accept nothing, so they have forfeited their right to contribute directly.
- The Blue Dogs want to preserve private insurance company profits at all costs. So the number of people on private insurance can't decline, and the profit margins can't be capped too tightly. However, the specific rules for insurance companies are in play, so long as they don't hurt profits. Same for drug company and other provider profits.
- Some representatives, mostly Blue Dogs, are upset with low Medicare reimbursement rates in their districts. And Medicare rates are almost always below commercially negotiated ones. "Medicare for all" at today's rates thus hurts the providers too.
and on the other side
- The insurance business is a cartel, very concentrated in some markets.
- Coverage is often lousy, due to pre-existing condition clauses and basic "death by spreadsheet" policies, not to mention recission.
- Small business can't get decent negotiated deals, though large businesses often do better.
- People covered by large-business group policies tend to be happier with their current policies.
A realistic negotiating goal, not starting point, might look like this, then:
- A public option is created in a manner that makes its total subscribership roughly equal to the current number of uninsured people, so the insurance companies retain their current numbers. This does not mean that today's uninsured people are the only ones to go on the PO, since reform could open private insurance to many, but let's aim for 40M public subscribers once it's implemented (say, end of 2011). This should keep the insurance companies from fighting too hard.
- The public option initially makes use of the Medicare mechanism, because it exists and has very low overhead.
- Medicare reimbursement rates are generally subject to review, with below-65 rates not necessarily the same as 65+ rates. Rates in general and disparities between markets should be studied by an independent commission. (This should please the rural reps.)
- A commission is formed to review malpractice rules, not to ban "pain and suffering" awards or kill the lawyers, but to establish reasonable guidance for what is and isn't malpractice, and to set guidelines (not hard limits) for awards. This is to limit the costs of "defensive medicine" while still leaving plenty of weapons to go after the bad apples out there.
- Low-income people get subsidies that are portable to either the public or private plans.
Open to question: National reinsurance, a single risk pool, so that private insurance companies are not responsible for the "medical losses" (what an awful term) of high-cost subscribers. This is standard practice in European private systems. This would accompany stricter regulation of the private policies.
Who would be eligible for the public option in order to meet that 40 million goal? The give-back would be to preserve the employer-based system and keep it private where that does the least harm. It should not be a nationwide trigger, but some guidance for who could sign up:
- Companies that now offer insurance to employees would not be allowed to drop it in order to force employees onto individual public-option plans. (This would have to sunset at some point though or the workarounds would become fatal in more ways than one.)
- Markets (narrowly defined geographically) are first characterized for how competitive they are, for today's insurance plans. The initial tool will be the HHI, the Herfindahl-Hirschman Index, which is the main tool for reviewing mergers for antitrust concerns. The HHI is measured by taking the percent market share of each player, squaring it, and adding the squares. One player with 100% is thus the maximum 10,000, the pure monopoly HHI. Two with 50% apiece is 2*(50^2)=5000. One with 20%, one with 70%, and one with 10% is (400+4900+100=) 5400. The antitrust review bogey is typically 2500. So if the HHI for insurance in a market is below 2500, call it "competitive", otherwise it is an "uncompetitive" market.
- In a competitive market, the public option is closed to groups of 20 or more, so only small businesses and individuals can use it.
- In an uncompetitive market, the public option is closed to groups of 200 or more, so medium-sized businesses can use it, but larger companies still have to use their clout in the private market. If a market somehow becomes "competitive", existing participants can keep PO even if they are no longer eligible to join.
- A company that grows too large for PO would have a transition period to switch to private.
- If an ineligible (large) company is not offered a private plan within 10% of the average rate for similarly-sized companies in their market, they can request to join the public option, subject to triennial review.
This is, of course, a form of rationing. It is rationing of the public option, to benefit the insurance companies. But it may be the best deal possible to get 50 senators on board, and it's much better than no public option at all.