14 June 2009

More like capitulation than compromise

Jacob Hacker writes at TNR's health policy blog The Treatment about Senator Kent Conrad's compromise plan which replaces the public plan option with a national series of insurance co-ops.  Ezra Klein had some of the details the other day, in which the "co-op" plan was ballyhooed as a brilliant solomonic compromise and also the necessary solution to the political problem that the "public plan" just doesn't have the votes to pass.

I just skimmed the interview and the details of the "compromise" because in my opinion Kent Conrad has only slightly more credibility as a loyal democrat and genuine reformer than does Ben Nelson.  Which is to say very little indeed.  I remember thinking it was an interesting notion, creative and maybe with some potential, but that it just wouldn't work, though I couldn't say why off the top of my head.  Fortunately, The Treatment is there to provide a more rigorous explanation of my gut impression.

In short, the co-ops would not fulfill the critical element of the public plan: to provide a cheaper alternative to the commercial insurance market, which would in turn force private insurers to become more cost-competitive and thereby provide some containment to the exponential growth in health care costs.  The problem with the proposal is that a national medicare-like public insurance option would be large enough to negotiate significant discounts from providers*, whereas a series of much smaller co-ops would lack the market position to do so and would in fact have to pay premium rates to contract with providers.  As a result, the co-ops would probably not be cost-competitive with private insurers and would certainly not achieve any national cost savings.   And as a "back-up," an insurer of last resort, the co-ops would not really be effective if they were more expensive than private insurers, which would be the case if they did not have the market position to negotiate discounts.

Hacker also writes that the public plan is necessary to act as driver of care quality, to set benchmarks and standards against which private insurers can be compared.  I'm not sure this is actually a necessary component of the public plan -- Medicare is already doing much of the early work in this area and will always be the big dog in setting standards, like it or don't. 

Hacker's summary line, I think, is quite accurate -- this is not a compromise, it's outright capitulation.  And it's not like we're going to get a chance to come back and re-do this in a year or two.  As Robert Reich wrote: This is it, folks. The concrete is being mixed and about to be poured. And after it's poured and hardens, universal health care will be with us for years to come in whatever form it now takes.  So it's extra-important to get it right -- or as right as possible -- this time.

So, coming back to the political question of whether a reasonably strong public plan option has the votes to pass, or whether real, painful compromises are going to be necessary in order to get health insurance reform passed, Conrad's assertion that there aren't sixty votes is pretty questionable.   He cites "three" democrats that are on the fence or opposed to the public option. Forgive me if I assume that he's one of them!   The real question is whether these three democrats would vote to sustain a filibuster of the final bill.  For sure, we can dilute it down right now and more or less ensure that we can get it by all sixty dems.  (Assuming Senator Franken is ever seated.)  But how far are they willing to play the brinksmanship game?  Will, say, Ben Nelson or Mary Landrieu actually vote to filibuster a democratic health care bill?  It's logical that they would try to exert all their leverage as swing votes while the bill is being crafted -- but when push comes to shove, I suspect that none of them would actually vote to oppose cloture.  Any or all of them might cast a symbolic protest vote against final passage (which only takes 50), but I am dubious that they would actually join a republican filibuster.  And even if they did, evidence is that the votes of Snowe, Collins or even Grassley (!) are gettable, given the right confluence of events. 

What this means, I think, is that we are very close to being able to pass a pretty good bill.  If there was a big reach necessary to overcome cloture, it would justify a big compromise to get it done.  But being so close, a weak public plan (as opposed to a more robust option, which ironically I think to be worse policy) might be a sufficient compromise to bring the bill to its final up or down vote.

*Standard disclaimer: a well-designed public plan will do this through market-based, not compulsory means.

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