Don't Fear the Option (Yet)
The passage of a sweeping healthcare reform bill sometime before the end of 2010 seems likely and, given the overwhelming Democratic majorities in both houses of Congress, whatever bill ends up on President Obama’s desk will probably include a government-backed plan -- a public option -- that has become a holy grail to many Democrats. By itself, the idea of a government-run health plan for people who aren’t poor, disabled, young, or old ought to raise eyebrows amongst anyone who believes that government ought to reserve public help for needy people willing to help themselves. But predictions from the Right that a public option will result in overnight healthcare socialism also appear overstated. Quite simply, the most politically plausible versions of the public option will seem small enough to start with that the real battles over a government takeover will take place sometime in the future.
To begin with, a government-run plan that negotiated rates on the same basis as private insurers rather than imposing them by government fiat — the only version that seems to have the votes to pass both houses this year — probably wouldn’t have large immediate consequences. In fact, a recent Congressional Budget Office report indicates that only about 6 million Americans (2 percent of the population) would sign up for this type of plan. Other options with some legitimate chance of passing Congress — government-subsidized health co-ops and a public plan that states have to join—would have similar short-term results.
And, although Medicare and Medicaid both quickly busted their budgets, examples from other insurance markets show growth isn’t inevitable. All states maintain “residual” auto insurance markets for people unable to get insurance elsewhere. For years, these plans grew out of control and, in a few places, they remain large. But, since about 1990 dozens of states have shrunk their residual auto insurance markets to sizes that, literally, can be counted on one hand. In many urbanized states — Illinois, Ohio, and New York — similar plans created to provide property insurance in the wake of 1960s riots and 1970s arson sprees have also shrunk themselves almost out of existence. (These plans, however, have continued to grow at a rapid rate in hurricane-prone areas.) In health terms, it’s true that these residual markets have much more in common with high risk health insurance pools than the public options before Congress. Nonetheless, the ability to downsize them in much of the country shows that government run-or mandated insurance isn’t always a political third rail and won’t always grow out of control.
In the short term, conservatives have plenty of reasons to dislike the idea of a public health care option. At the same time, however, the reasonably modest proposals currently before Congress won’t, by themselves, result in a government healthcare takeover. Even if liberals get a small-scale public option, many battles over government control of healthcare will still lie ahead.