Healthcare public option tests political priorities
Joshua Divine, Staff Writer
photo: Courtesy www.hacer.org
Healthcare legislation stands closer than ever to passage in the U.S. Congress. Only a few procedural processes stand between lawmakers and the first serious floor vote on comprehensive healthcare legislation since the creation of Medicare and Medicaid in 1965. Congress and the Obama Administration face one more major hurdle: the battle over the “Public Option.”
The public option provision has captured the attention of politicians, media and the public alike.
It has come to symbolize the ultimate vision of progressives and the ultimate fear of conservatives. And yet for all the liberal praise and conservative furor directed toward the public option, its significance as policy remains modest.
An understanding of the public option’s significance requires a basic understanding of the reform effort.
Healthcare consumers fall under four basic types: seniors, the poor, workers ensured by their employers and workers who buy their insurance individually, typically workers who are self employed or employed by smaller businesses.
Under the current system, seniors receive basic insurance through Medicare and the poor are provided basic insurance through Medicaid.
Workers for large employers, like universities, typically get a relatively good deal on healthcare. Rates are held down because the massive purchasing power of large institutions ensures a robust competition between insurance providers for the business of major employers.
Two segments of the population, then, are disadvantaged most by the current healthcare system: the lower middle class and small business employees. Lower middle class families often fall into a troubling loop-hole in the current system.
These families earn too much to qualify for Medicaid, but not enough to pay for quality health insurance.
Small business employees face a separate problem. Many small businesses cannot afford to offer health benefits to their employees. Rates remain high because competition over the small employee base of small businesses is almost non-existent and often dominated by state-wide monopolies.
Protected by an anti-trust exemption, insurance companies have little incentive to lower rates to attract individual customers.
The reform focuses on these groups most disadvantaged by the inequities of the current system. Each major reform plan in Congress works to redress the most egregious injustices in the current system through fundamentally similar approaches.
All consumers, including those employed by larger employers, will be given added protections: insurance companies will no longer be able to drop coverage due to pre-existing conditions, cap annual payouts or cap lifetime payouts.
Households who do not qualify for Medicare but earn less than 300 percent above the poverty line, about $32,000 for individuals and $66,000 for a family of 4, will receive subsidies toward the cost of insurance. These reforms are broadly accepted but leave out a vital segment of the population: middle class people who are uninsured by their employers.
The central remaining challenge, then, concerns helping middle-class workers who are self-employed or employed by small businesses.
One basic consensus has been reached. State level healthcare exchanges, open only to individuals uninsured by their employers and to small businesses, will be created to promote competition and provide easily-accessible price comparisons for smaller purchasers.
The current political battle in Washington centers on one complicated policy question: are the exchanges enough to hold prices down for small purchasers? Most Democrats in Congress believe a public option will be needed within the new exchange to protect small purchasers from price gouging.
Republicans, along with a collection of conservative Democrats, believe a public plan constitutes undue government interference in the healthcare market. But the most ardent supporters and strident opponents of the public option often miss a key point: the public option being debated would only be available to the roughly 10 percent of Americans eligible for healthcare exchanges.
Only consumers who are ineligible for Medicare or Medicaid and who are not offered healthcare plans by their employers could potentially purchase a public plan.
While the public option could play a significant role for this 10 percent, it is neither the savior of the healthcare system portrayed by many on the left nor the menacing socialist master plot portrayed by the right. The public option as it is currently conceived remains significant, but is not truly central to the core policy approaches of the healthcare reform effort.
This option matters chiefly not as a policy approach, but as a broader test of our political system’s ability to generate sound policy. The basic conservative argument against the public option is that we cannot allow the government to offer a healthcare plan because the government is grossly inefficient. If we allow it to offer a plan, it will be too efficient and will out-compete private insurers.
The logic of conservative opposition defeats itself. The public option will not be subsidized by taxpayers.
It will save money through administrative streamlining and reduced marketing costs. If it fails to provide quality healthcare, no one will purchase it. If it succeeds, millions of Americans will be offered quality care at a reduced cost.
Conservative opposition to the public option does not center on a serious policy critique, but rather on an anti-government fundamentalism which pervades American conservatism.
Republicans in Congress could be making their own substantive contributions to the reform plan, but by attempting to legislate according to ideological absolutes over genuine policy concerns, they undermine not only their own relevance, but the efficacy of the legislative process.
The battle over the public option will provide a fundamental test for our legislative process and our political culture.
It will test the ability of our democracy to value pragmatic policy over ideological purity, to value sound analysis over political posturing, and to govern effectively even amidst political polarization.
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