Another Stab At the Public Option

On the main site, I have a story from the Netroots Nation conference in Las Vegas about liberals’ post-ObamaCare strategy to work toward their ultimate goal of a fully government-run, or single-payer health care system. One strategy all along was the creation of a new government-run plan within the new insurance exchanges, which liberals dubbed the “public option” because “public” polls better than “government” and “option” suggests choice.

While I was at the conference, the Congressional Budget Office released a new estimate finding that the idea would reduce the deficit by $68 billion through 2020. And it’s not hard to see where liberals are going with this.

Here‘s single-payer advocate Rep. Jan Schakowsky: “As one of 18 members of the President’s National Commission on Fiscal Responsibility and Reform, I am charged with looking for ways to reduce the federal deficits. A public option would trim federal spending by $68 billion from 2014 to 2020, according to the nonpartisan Congressional Budget Office.”

As I’ve also been writing, liberals are worried that Obama’s deficit commission will call for Social Security cuts. So one of their rallying cries is likely to be: Don’t cut Social Security, pass a public option.

However, in the near-term, the public option is unlikely to become a reality. CBO’s model anticipates that the proposed public option would be able to offer lower premiums than the privately-administered plans, and thus a third of those who will be purchasing insurance through the exchanges — or 13 million people — would enroll in the cheaper government option. Thus, the federal government won’t have to spend as much on the subsidies for people to purchase insurance.

The problem is, that to achieve lower premiums, government would be using its bargaining power to drive down payments to providers, and hospitals would end up being paid Medicare rates. As it is, Democrats were unable to get any form of a public option through the Senate, and that’s even though the proposal that was on the table did not set rates at Medicare levels. At the time, Democratic Budget Committee chairman Sen. Kent Conrad argued that doing so would destroy hospitals in North Dakota.

So, a public option with Medicare rates couldn’t get 60 votes in the Senate last year, before Scott Brown was elected, and without any Republican gains this November. Next year, it’s even less likely to have a shot.

That said, it’s still something conservatives should worry about in the longer term. Because once premiums continue to rise and ObamaCare doesn’t meet its deficit reduction claims, liberals will be arguing that they have just the right answer in the public option.