Last week, there was an argument in comments that the public option would be the gradual glide slope to single payer.
I don’t think it would be. My objection is purely mechanical. For the public option to be a glide slope enabler for single payer, it would have to be the overwhelmingly best deal on the Exchanges. In some states that would be true. In most states, it would not be.
Most public option plans were based on either a broad Medicare network at a reimbursement rate of Medicare plus 5% or Medicare plus 15% or a negoatiated network where there was a possiblity of narrower networks with reimbursement somewhere between Medicare and Medicare plus a billion%. If the public option was passed and it bargained prices to Medicare plus five, or Medicare plus ten with a broad network, its pricing would be good in West Virginia or southwestern Georgia where there is minimal competition. A Medicare plus ten plan with a broad network including expensive providers would be a middle of the pack Silver plan priced above the 2nd Silver subsidy points in areas with fairly robust and competetive insurance markets. In my region, all the Exchange players have plans that are cost efficient narrow networks that are priced somewhere between Medicare plus 3% and Medicare plus 7%. A public option here would be just another plan clustered with everyone else.
The next chance for progressive activists to get a public option experiment is January 1, 2017. That is the date when states can activate innovation waivers for PPACA. Innovation waivers are powerful tools as they remove the training wheels of the Exchange structure for states that think they can meet PPACA’s goals through different and locally more palatable means:
known as 2017 waivers or Wyden waivers, 1332s offer wide latitude to states for transforming their health insurance and health care delivery systems. According to the statute, states can request that the federal government waive basically every major coverage component of the ACA, including exchanges, benefit packages, and the individual and employer mandates. But the cornerstone of 1332 waivers is the financing. To fund their reforms, states can receive the aggregate amount of subsidies—including premium tax credits, cost-sharing reductions, and small business tax credits—that would have otherwise gone to the state’s residents. Depending on the size of the state, the annual payment from the federal government for alternate coverage reform could reach into the hundreds of millions or even billions of dollars.
A better name for this program might be Waivers for State Responsibility, because they don’t exempt states from accomplishing the aims of the ACA, but give them the ability (and responsibility) to fulfill the aims in a different manner while staying between certain guardrails. State reforms must ensure “affordability,” cover a “comparable” number of people as statutory ACA implementation would have, and not increase the federal deficit.
If progressive activists think that the public option will help to cover more people, and cover them cheaper, the innovation waivers are a prime point of process and political pressure. States could create local public options based on either the Medicaid network, or state Medicare providers.
The big problem is that the states where this is likely to succeed are the states that would benefit from the public option the least. It would be implemented in states which have embraced the ACA where there is already active regulation of the insurance market, where there is already significant competition at the 2nd Silver clustering point, it would be in states where the marginal gain would be real but not massive. But since the stakes are smaller and simpler, these states would be a good spot for a proof of concept test of the public option where three or five years of data could be built up for Healthcare Reform Act of 2021.