Details are still sketchy on the latest compromise, which is not a public option at all but as Ezra calls it, "a private option with a public filter." It would set up another exchange of national non-profit plans offered through OPM, and what it won't do, as Jon Walker explains, is control costs.
What exchanges don’t do is systematically control cost. The 8 million-person federal employee health benefit (FEHB) exchange has premiums and premium growth rates basically identical to any large employer. As a serious cost control mechanism, they are basically a failure. In fact, the proven cost control failure of the FEHB run by OPM was one of Jacob Hacker’s best arguments for the need for a public option.
The Senate bill already creates exchanges which are meant to give be the same benefit as being part of the FEHB. In fact, it creates potentially over 100 exchanges. There will be an individual market exchange and small business market (SHOP) exchange in each state. It also allows for smaller regional exchanges within states, and the creation of multi-state exchanges.
The potential benefits of creating another exchange in addition to these exchanges (or inside these exchanges) seems dubious. The new OPM exchange sounds like it might be better regulated (like all the exchanges should have been from the get go), and the OPM does at least have experience running this type of program. With people able to buy insurance completely outside any exchange, in the state-based exchange, possibly the regional exchanges, and now the OPM exchange, I don’t see how you get enough people to choose the OPM-run program to give it the customer base it needs to demand concessions from the private insurance companies.
It's just another mechanism to provide private plans, rather than a public option, and for all the "deficit hawks" who oppose the public option, won't actually work to bring down costs. This is perhaps an intriguing idea for a substitute for the exchange, but not for the public option.