The Federalist Public Option And Political Bargaining

By Big Tent Democrat, Section Other Politics
Posted on Thu Oct 08, 2009 at 08:00:51 AM EST
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The debate in progressive circles over the Federalist Public Option (see here and here) mistakes, in my view, the basic state of play in the political bargaining on health care reform.

In the House, the debate is between the Progressive Block view that the public option needs to be robust (Medicare +5) or level playing field (negotiated rates.) the good news is that the house seems headed to passing a national public option. there is no doubt which of these is superior - the robust public option.

In the Senate, where the Federalist Public Option is being debated, the option of a robust public option is not even in the conversation. the best you will get out of the Senate would be a meek level playing field public option, which is not a sure bet at all. Triggers, co-ops, the Carper opt-in (which is not really an opt in but rather providing for state run public options) and nothing at all are still in the mix. For political bargaining purposes, it would be a major step forward if the Federalist Public Option became the Senate position on the issue. More . .

How we got here can and will be debated. But this is where we are. Where do we go from here? That is the question. The absolute best we can possibly do in the Senate right now is the Federalist Public Option.

In my mind, it is a no brainer. After the Senate adopts it, then we can talk. But right now, the battle is in the Senate. Which is why I am a strong proponent of the Federalist Public Option right now.

Speaking for me only

< Thursday Morning Open Thread | 217: Progressive Block Close To The Magic Number For A Robust Public Option >

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The Federalist Public Option And Political Bargaining | 29 comments (29 topical)

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A different Kos diary not linked by you... (5.00 / 1) (#1)
by magster on Thu Oct 08, 2009 at 08:32:23 AM EST

...raised an argument that Blue States might opt out due to budget constraints, then citing California's cuts to Medical even at the expense of receiving federal dollars.

I don't know if any other state is as screwy as California, but California is so huge (in terms of denying people in need and losing bargaining power) that losing CA to the opt out might be too high a price.

I agree that opt-out might end up being the best that can be hoped for in the Senate, and ultimately out of conference, but I wish that reconciliation was talked about more. I was pro opt-out yesterday, now...

Misunderstands or buys into (5.00 / 2) (#4)
by Big Tent Democrat on Thu Oct 08, 2009 at 08:49:43 AM EST

GOP talking points.

That's not how the public option works at all.

States would pay nothing for it.

It is not like Medicaid.


Any public option will be funded by premiums. (none / 0) (#3)
by Ramo on Thu Oct 08, 2009 at 08:46:19 AM EST

I don't know why current budget deficits would be germane.


If its Federalist (none / 0) (#5)
by magster on Thu Oct 08, 2009 at 08:50:06 AM EST

I would think there would have to be some state by state administration. Otherwise, how would the state legislatures or GOP governors have any say at all.

I don't know if the PO would be forced to be modeled after Medicaid (federally funded state health ins) or not, but I think that was the fear of the Kos diarist I linked.


No (5.00 / 1) (#6)
by Big Tent Democrat on Thu Oct 08, 2009 at 08:53:04 AM EST

My play on words does not describe the idea at all.

there will be a national plan run by the feds.

states can opt out of allowing it to function in their state.

Eugene does not understand it.


Well then, good (none / 0) (#8)
by magster on Thu Oct 08, 2009 at 09:05:21 AM EST

although I'd like to see the draft. It could be watered down just like anything else that has been tainted by the US Senate.


: Of course (none / 0) (#13)
by Big Tent Democrat on Thu Oct 08, 2009 at 09:46:54 AM EST

But it is important to understand what the idea is.
Eugene does not.

A question (5.00 / 1) (#2)
by ruffian on Thu Oct 08, 2009 at 08:37:55 AM EST

If the Federalist opt-out option is passed in the Senate, can it be taken out in conference, in favor of the House public option, after the House and Senate both pass their bills?

: Of course (none / 0) (#7)
by Big Tent Democrat on Thu Oct 08, 2009 at 08:53:37 AM EST

Since, as written, there still would (5.00 / 1) (#21)
by Anne on Thu Oct 08, 2009 at 10:45:11 AM EST

be limitations on who is eligible for any public option, I think there's a risk that as long as the plan would allow states to opt out, the size of the pool would be further reduced, which ultimately weakens the plan; there ought to be serious consideration given to making the public option truly public, and allowing anyone, regardless of whether insurance is offered by his or her employer, to enroll. There's just no compelling reason - in my opinion - to continue to handcuff people to their jobs because of health insurance.

Something about this (none / 0) (#9)
by lilburro on Thu Oct 08, 2009 at 09:17:02 AM EST

seems just a little too clever. I also don't like the way it is presented as "blue states will have the PO, red states won't." I think it is more advantageous to do what the source in the HuffPo article did, and suggest that 47 states will have it, and 3 won't. I mean, there are a lot of red states people.

This may be a good political move but it certainly reflects the abandonment of the healthcare moral argument by the Democrats.

I don't think the Dems lose the high ground (5.00 / 1) (#11)
by magster on Thu Oct 08, 2009 at 09:44:52 AM EST

if it's available to all 50 states. It puts the onus on the states to take the moral low ground. I guess maybe we have a moral duty to protect Republicans from themselves, but the way the GOP governors took stimulus money I think demonstrates that the opt out won't be invoked by GOP governors (excepting Stanford and Perry).


I disagree (none / 0) (#15)
by lilburro on Thu Oct 08, 2009 at 10:02:57 AM EST

OBAMA: Well, I think it should be a right for every American. In a country as wealthy as ours, for us to have people who are going bankrupt because they can't pay their medical bills -- for my mother to die of cancer at the age of 53 and have to spend the last months of her life in the hospital room arguing with insurance companies because they're saying that this may be a pre-existing condition and they don't have to pay her treatment, there's something fundamentally wrong about that.[emphasis supplied]

HuffPo

I mean it's not the worst idea in the world, it could be very good actually, but it's certainly a reflection of how weak the arguments for universal healthcare have been since the campaign, and how the moral aspect was pretty much ignored.

The whole frickin point of mandates is that everyone should have healthcare, because that's what is good for them. Even if you don't think it's good for you, you have to have it because guess what, it is. I think this compromise punts on the essence of what universal healthcare is all about and the unique opportunity provided to the federal government during this election cycle.

It's nothing new that Southerners are unable to vote their self-interest. They will no doubt find themselves impeccable moral examples to the world for paying out the nose for private insurance and letting the poor and particularly non-white poor rot because "they don't work hard enough."

Blargh, I don't know. Sure, the states are going to be the real immoral b@stards, but this is also a punt on the federal level. Though I am conflicted, if they can get Medicare+5 rates with it...


: I think (none / 0) (#16)
by TeresaInSnow2 on Thu Oct 08, 2009 at 10:19:01 AM EST

that we have to wait and see what the public option entails before we decide that it's the Southerners who are voting against their best interests.
Mandates and a weak public option? I hope our state opts out.

All states would have exchanges (5.00 / 1) (#14)
by MO Blue on Thu Oct 08, 2009 at 09:48:40 AM EST

where people who were eligible could get subsidized insurance or pay premiums. They would be able to choses from various private insurance policies or if included a public option. If under the BTD plan there is an opt out provision, the only difference in what is provided is the choice to be in the public plan. The Dems would still be providing health insurance benefits such as subsidies and expanded Medicaid to the opt out states.

If structured correctly, the public option could result in lower premiums for the public option and drive down the premiums for private insurance as well.


I agree (none / 0) (#10)
by Big Tent Democrat on Thu Oct 08, 2009 at 09:40:18 AM EST

I am not doing the political framing on this.

I am writing my opinion.

Our readership is not stupid.


: True (none / 0) (#12)
by lilburro on Thu Oct 08, 2009 at 09:45:54 AM EST

and it is encouraging that the person pushing the line about 47 states is a Democratic legislator working on the reform.

Booman makes a good argument for this (none / 0) (#17)
by lilburro on Thu Oct 08, 2009 at 10:30:38 AM EST

here:

When Stein says "everyone" would have access to a public plan, he means that each state would be part of the program, not that each citizen would be eligible to take part in it. While details matter greatly, in broad outlines this proposal would be the equivalent of offering each state large subsidies to pay for their uninsured, but also handing them a big bill in increased Medicaid spending. If the states participate, they'll not only get subsidies, but they'll get increased income tax revenue from the shifting of a portion of their workforce from tax-exempt health care compensation to taxable wages and salary.
What would happen if, for ideological reasons, some state like South Carolina decided they simply didn't want to participate in the public option? They'd still get hammered by the increase in Medicaid eligibility, but they wouldn't get any subsidies, they wouldn't see any drop in the uninsured, and they wouldn't see any increase in taxable income.

This is wrong (none / 0) (#18)
by Big Tent Democrat on Thu Oct 08, 2009 at 10:32:23 AM EST

There is no "big bill" handed to a state with a national public insurance plan.

I am surprised by your comment.

this makes it 2 or 3 times now that you have misstated what the proposal is.


From the same post (none / 0) (#19)
by lilburro on Thu Oct 08, 2009 at 10:36:54 AM EST

Beginning in 2014, states would receive higher federal reimbursement for CHIP beneficiaries, increasing from an average of 70 percent to 93 percent. CBO estimates that state spending on Medicaid would increase by about $33 billion over the 2010-2019 period as a result of the specifications affecting coverage.

I think he's arguing that all things considered, the public option allows states to create revenue to cover this separate new spending issue. I realize Medicaid and the PO are separate issues but they are related no?


Only related in that (none / 0) (#23)
by Big Tent Democrat on Thu Oct 08, 2009 at 11:03:32 AM EST

they are both in the bill.

Not related in any other way.


: I realize that (none / 0) (#24)
by lilburro on Thu Oct 08, 2009 at 11:12:37 AM EST

I guess you could generally argue that the public option is good for the state budget, period.
However state budget planning is such a chaotic and irrational process that I'm not sure that alone is going to push any state into accepting a national public option in their state.

I have not seen any Dem politician (none / 0) (#20)
by MO Blue on Thu Oct 08, 2009 at 10:40:57 AM EST

who has indicated that the subsidies were tied to whether or not a state chose to have a public option.

Booman IMO does not know what he is talking about on this subject.


Ok (none / 0) (#22)
by lilburro on Thu Oct 08, 2009 at 11:01:05 AM EST

I'd say he has a point about increased tax revenue from individuals though.


Don't think so (none / 0) (#25)
by MO Blue on Thu Oct 08, 2009 at 11:25:57 AM EST

It is my understanding that increased tax revenue from individuals would be the same if they chose any non employer based product regardless if it was private insurance or a public plan.


Thanks. (none / 0) (#26)
by lilburro on Thu Oct 08, 2009 at 11:40:11 AM EST

You're right. I am completely striking out on this.

Booman seems to have premised his piece on the idea that subsidies to buy insurance come ONLY with the public option, which is not the case. Nor did I think it was but I just completely overlooked that. o_o Oops.


: A little more about how the CBO made its (5.00 / 1) (#27)
by MO Blue on Thu Oct 08, 2009 at 12:05:23 PM EST

assumption that employees moving away from employer based insurance would increase tax revenues.

The exclusion from tax of employer contributions toward their employees' health insurance creates a price subsidy for health insurance. An employee who earns income in the form of health insurance avoids the income and payroll taxes that would be due if the compensation were paid in the form of cash. The additional compensation also escapes the employer's share of payroll taxes. As a result, the price of employment-based health insurance is reduced substantially by the tax savings--by an average of 26 percent in 1994. CBO
The CBO is making the assumption that if employers did not pay for all or a part of their employees health insurance premiums that they would have to pay their employees more in real taxable wages. Personally, in this job market, economy and the nature of some employers, I'm not convinced that their assumption is totally sound and they may have well overestimated the effect. Employers nonetheless would have to pay additional taxes.

Booman claims (none / 0) (#28)
by lilburro on Thu Oct 08, 2009 at 04:31:43 PM EST

there would be a difference:

The public option is both cheaper in itself, and makes other options cheaper through competition. If it is tied to Medicare reimbursement rates, it saves $85 billion in federal subsidies over the next decade. That downward pressure on cost allows millions more people to enroll, including people who currently have employer-provided health care. Of course, the employer has to drop that coverage and pay a fine in order for you to be eligible, but many will do so. That's where the increased revenue comes from in state income taxes.

I don't know if all of those assertions are correct, but there you go.


: Downward pressure on insurance premiums (none / 0) (#29)
by MO Blue on Thu Oct 08, 2009 at 06:18:47 PM EST

could just as easily exert downward pressure on employer based insurance premiums. Employers and employees also receive a tax benefits for employer based health insurance coverage. The bills also provide tax credits for some small businesses to provide coverage for their employees and IIRC the House and Senate HELP bills have stronger mandates that require employers to do so.
Bottom everyone, including the CBO, is just guessing since we have no idea of what all will be contained in the final legislation. Hell there is a very good chance that if a public option is even in the final bill that it will be based on negotiated rates and not Medicare + 5 rates.