Friday, July 23, 2010


Just when we thought it was dead and buried, our old friend the public option has been resurrected by a trio of Democratic congressmen, headed by Representative Pete Stark.

HR 5808, introduced in the House this week with support from some 120 congressmen, would establish a national public health insurance plan to be offered though the new insurance exchanges. This public option would pay providers at rates tied to Medicare, but with physician payments detached from the SGR formula. Providers would not be required to participate in the public plan in order to participate in Medicare.

The CBO estimates that the public option’s premiums would be 5 to 7 percent lower than private plans offered through the exchanges, and that by 2019, some 13 million individuals would be enrolled through exchanges—if the public option were available. The CBO also estimates that while some providers would decline to participate, many would in the expectation that a plan administered by HHS would attract a considerable population of enrollees (and—not mentioned by the CBO—would probably be administered more loosely than a commercial plan). The CBO’s bottom line is a projection of a reduction in federal deficits through 2019 of about $53 billion, due to lower exchange subsidies and increased tax revenues.

So, is there really any life in the public option? Although the positive CBO scoring will give it some appeal, it seems very unlikely that many in Congress—even supporters of reform—will want to revisit the reform battlefield, especially in an election year. (Actually, some Republicans might be delighted to extend the reform debate to include such a socialistic concept.) So, Representative Stark and his fellow liberals will gain a little political traction, but—whatever its merits or otherwise—the public option is likely to quickly find itself returned to the tomb.

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