Hasty headlines to the contrary, it is very likely that a strong public option will be part of a final health insurance reform bill when it finally passes Congress this fall. There are three reasons:
1). A Public Option is the most elegant and politically viable solution to a major practical problem. Three basic models have been adopted by Western industrial nations to provide universal health care to their populations.
The government can directly employ doctors and hospitals to provide service. That is the system they have in Britain where they spend 40% less per person on health care than in the U.S. and get pretty good reviews from their citizens. It's the same system that we use to provide health care to veterans through the Veterans Administration.
The government can provide heath insurance for everyone as it does in Canada - or as we do in the U.S. with Medicare. Medical practices and hospitals are in private hands, but the health insurance fund is managed by the government. Again, that system seems to work quite well and also does a good job at controlling costs.
The third approach is to require individuals and businesses to purchase insurance and leave it to private insurance companies to provide that coverage. The problem with this approach is that requires some mechanism to control costs. That is particularly true in the United States where insurance companies are one of only two industries (Major League Baseball being the other) that are excepted from the anti-trust laws that are aimed at insuring competitive markets. In fact, most major health insurance markets are dominated by two or three companies so there is no real competition -particularly with respect to price.
Once everyone is required to buy insurance, the companies can have a field day raising prices and profits using the government to guarantee they are paid - either through subsidies or the imposition of fines. You can see why, from an insurance company perspective, this would be a great deal.
But from the point of view of the taxpayers - and the insurance ratepayers - it would be a disaster. It would be like giving the insurance companies a license to take your money - with no regulation - all enforced by government edict.
This, of course, is basically what happened with the prescription drug benefit - Medicare Part D. But there is a big political difference. A huge percentage of the money used to pay the insurance and drug companies in Medicare Part D comes from the taxpayers (or deficits). Most of the money that will go to pay for health insurance in a new system will come from ratepayers - individuals and companies who will feel the sting of rate increases directly.
What politician in his right mind would pass a law that requires individuals and businesses to buy products from companies who can then charge whatever the traffic will bear -- especially in an industry where premiums have increased three times faster than wages, and profits keep heading skyward even in the worst recession in 60 years? Once government requires you to purchase a product, it has to provide some means to assure that the price is fair.
There are only two real practical solutions to this problem. On the one hand, you could set up a public health insurance option that does not have the same incentives to increase profit or CEO salaries and would compete against the private insurance companies and keep them honest. That is what President Obama has proposed. Or you could regulate health insurance rates.
20Now rate regulation is not a crazy idea. It's been done for years in segments of the insurance market at the state level. But if you think the private health insurance industry is fighting tooth and nail to stop a Public option - wait to see what they would do to stop rate regulation.
A public option has none of the bureaucratic complexity of rate regulation and uses competitive forces to keep rates down. It is simple and elegant.
That's why the President and his top advisers support at public option.
2). The politics of Congress and the White House. There are a couple of political givens:
* Both the White House and Democratic Leadership understand that they must pass health insurance reform. Defeat is simply not an option. Both the Carter and Clinton administrations foundered because they proposed major policy initiatives and failed to achieve them. The effect was to depress overall support for the President and the Democratic Party. In 1994 it cost the Democratic Party the control of Congress when large numbers of Democratic Members (mostly moderates) lost their seats in the mid-term elections. These defeats crippled their ability go back to the political well for subsequent big initiatives.
So far this White House is batting 13 for 13 in major initiatives - but health care is by far the biggest of them all. The White House and Democratic Leadership will do whatever is necessary to win. Health care is their signature issue.
* Finance Committee Ranking Member Charles Grassley has made it increasingly clear that he will not support any "bi-partisan" measure that is not endorsed by a majority of Republicans. That means that the likelihood of a "bi-partisan" deal are about zero.
This leaves two other approaches to victory. First is a strategy that works to get all Democrats and a couple of Republicans to vote for cloture, but not necessarily for a final bill. Second is the budget process known as reconciliation under which the bill could pass with just 50 votes (plus the Vice-President). Either of these options will make possible passage of a public option in the Senate.
* There are at least 100 Democrats in the House who would have to be dragged kicking and screaming to vote for health insurance reform that does not include a public option. In fact, it is hard to see how a bill could pass the House without a public option.
3). Inclusion of a public option is necessary to assure a mobilizable base to counterbalance a highly-motivated right wing and make passage of any health insurance reform possible. The public option has become an iconic symbol for Progressives. Without it, many would lose the passion that sends them to town meetings, phone banks and demonstrations. Without a public option to fuel this passion, the forces for reform would likely be20overwhelmed by the shock troops of the right wing.
When you put all of these factors together, it is very likely that later this year President Obama will sign a health insurance reform bill into law that will indeed include a strong public option - not simply because the President clearly supports it, but also because of the practical policy and political considerations that make it critically necessary to success.