Nix the Public Option, Find a Better Horse
Let’s acknowledge the obvious: We can’t pass the public option prior to the midterms.
And since we can’t pass it, let’s reconsider the horse we picked.
The public option is a piecemeal solution that further complicates a piecemeal health system. It won’t do much for most Americans and any gains are so marginal that the Biden administration should prioritize a dozen other policy issues before putting their weight behind it. Rather than invest effort and political capital in a mediocre plan that won’t pass, Biden should scrap the public option and try again.
Public debate often simplifies Democrats’ decision to a choice between a public option and Medicare for All – but that’s far too limiting. Other countries provide a plethora of alternatives to either proposal, from Germany to the Netherlands to Switzerland. I believe there are four hurdles any proposal must clear before we stake the house on it.
- The solution needs to make economic sense. The public option fails this straightaway – in short, unless a public option covers only the minimum EHBs, private insurers can undercut it on price by reducing coverage. If they undercut it, low-risk patients will stick with commercial coverage. The public option will lack the leverage to negotiate prices down, won’t realize sufficient efficiency gains, and will be stuck with the expensive, high-risk patients. We’d ultimately see an adverse selection death spiral. There are opportunities to mitigate those issues, from setting prices to mandating physician participation to covering only minimum EHBs, but each comes with its own economic, moral, and political issues. A winning proposal must be grounded in sound economics (and get a good CBO score).
- Voters need to understand what’s in it for them. We probably need an election landslide to pass meaningful reform. For that, we need votes – and the best way to get votes is to convince voters that our proposal will help them and their families. So, we need a clearly defined proposal. We need party members to understand it and be able to explain it, quickly and under pressure. We need a communication strategy for each voter bloc. We need different appeals to the uninsured, the underinsured, and those with generous employer coverage. We need an appeal to the working class and one for the wealthy. That’s certainly possible – looking at you, Germany – but we can’t neglect the importance of messaging.
- One third of the healthcare trifecta needs to like it, too. Healthcare companies are uniquely good at lobbying. PhRMA, the American Hospital Association, Blue Cross / Blue Shield, and the American Medical Association were the 4th, 5th, 6th, and 7th biggest spenders on lobbying in 2019, totaling more than $110M. In politics, money (unfortunately) speaks. We need at least one and ideally two of the doctors, insurers, and pharmaceutical giants behind reform to win – which Barack Obama recognized and acted on to pass the ACA. Different solutions will appeal to different stakeholders. A sickness fund model may appeal to payers if the structure is right and most doctors can probably come around to a Swiss-like system, for example. Let’s pressure test proposals with business leaders and find common ground.
- The proposal must satisfy both progressives and moderates. Any proposal must equal or better Mediare for All’s promise of affordable, high quality coverage and care for disadvantaged populations to get the Left’s support. Simultaneously, a proposal must appeal to moderates holding the keys to House and Senate control. Their constituents value choice and access and security – and many think today’s systems works just fine for them. Any plan needs to recognize those competing interests. We consistently run into the trap of putting proposals on an impossible-to-navigate political spectrum – so a savvy politician should seek support from both party wings early or enlist a colleague better positioned to do so.
It’s a lot easier to create tests than design proposals that pass them. We have less than two years to assess alternatives, amass allies, and draft strong legislation to run on in 2022. Let’s get moving!