An Opt-Out Public Option is a Really, Really Bad Idea!!!

[iceman66]

I posted this in another thread, but feel that it deserves its own because not a lot of people seem to be making this point:

Unless this is a national plan, it will encourage businesses to move jobs to red states where they wouldn't have to pay any additional taxes to support a public option. The low tax/anti-union climate has already caused a lot of businesses to set up shop in the South and this will only exacerbate that.

I really don't see how 'opt in' vs. 'opt out' would be in practice any different than union vs. 'right to work'.

Given the current economic climate, I can see even blue states feeling pressured to 'opt out' to attract/retain business investment.

Unless the public option is completely self-funding and does not require ANY tax increases, it's just not going to fly in the majority of states. You can argue that a public plan would eventually lower costs, but corporate America is notorious for considering only the short-term bottom line and I don't see that changing.

[paulk]

1. the point of a public option is to provide competition for

for profit health insurance companies, thereby driving down the cost of health insurance.

If that's the case, wouldn't companies relocate to "opt in" states to pay less for health inurance?

I think you have it backwards

[iceman66]

4. It really depends on how it is funded.

If the states that 'opt in' have to fund it themselves, that revenue has to come from somewhere. Any decrease in health insurance costs would be offset by increased taxes. The last thing state governments need is another unfunded mandate.

A national system would be much more effective in spreading out the costs, as well as the risks.

[Ms. Toad]

32. It is funded by the premiums paid into it by participants in the plan. n/t

[roguevalley]

36. most of the south would opt out probably. balkanizing the country

is a bad thing. people will cross state lines for health care.

[anonymous171]

2. The only business that might be hurt by a PO is the Insurance Industry. nt

[BlooInBloo]

3. Krugman, Dean, Nate Silver....

Nobel prize-winning economist Krugman:

http://krugman.blogs.nytimes.com/2009/10/08/opt-out-public-option/
"At first blush, that sounds good. It’s true that the states most likely to opt out will probably be small states that really need the competition. But many states, with probably a majority of the population, would opt in. And if the public option works well, there will soon be pressure on politicians in the others to do the same.

I guess there’s a possible issue of principle: if states can opt out of one component of reform, why not all? But I haven’t noticed principles playing much role in this process! And the idea of putting red-state governors on the spot, having to decide whether to deny their voters cheaper policies, definitely has some appeal."


Medical Doctor Howard Dean:

http://www.huffingtonpost.com/2009/10/08/dean-if-i-were-a-senator_n_314118.html
""If I were a member of the U.S Senate I wouldn't vote for the bill but I would vote for this," Dean said, "not because it is necessarily the right thing to do but because it gets us to a better conversation about what we need to do."

In a brief telephone interview, Dean stressed repeatedly that his preference remained, far and away, a national public option that was available to anyone -- regardless of state -- from the day of its conception. But in a wholly political context, he acknowledged, adding the opt-out option to the bill might be the best and only way to get something through the Senate.

"I would like to see that come out of the Senate because it is a real public plan," he said of the opt-out compromise. "Then they can negotiate it in conference committee... And if this passes I won't say it is not reform because it is reform."

"If this is what it takes to get 60 votes I say go for it," said Dean"


Statistician Extraordinaire Nate Silver:

"1) If the public option is indeed popular -- and the preponderance of public polling suggests that it is -- we should expect the solid majority of states to elect to retain it. Perhaps some Republican governors or legislatures would seek to override the popular will in their states -- but they would do so at their own peril (and at Democrats' gain).

2) Behavioral economics further suggests that default preferences are extremely powerful. Making the public option the default would probably lead to much greater adaptation than requiring states to "opt in".

3) If the public option indeed reduces the costs of insurance -- and most of the evidence suggests that it will -- than the states that opt out of it will have a pretty compelling reason to opt back in.

4) Even in states that do opt out of the public option, the fact that voters could presumably elect later to restore it creates an extremely credible threat to the private insurance industry that will itself help to create price competition.

5) The ability to negotiate at Medicare or Medicare-plus-X-percent rates really is what makes the public option so powerful... As a general rule, then, compromises that allow the government to take advantage of its size and negotiate at Medicare-type rates should be preferred strongly to those that would neuter it.

6) If the policy wonks are wrong about the public option reducing health care costs -- I don't think they will be, but they could be -- this creates a relatively pain-free way to remove it.

...

Now, if you could have a Jay Rockefeller-style, Medicare-for-Anyone type public option with no strings attached, would that be a superior alternative? Of course. But that amendment was rejected 8-15 by the Finance Committee and has very little chance of becoming law. Some sort of compromise is almost certainly going to be necessary. This is almost certainly the best compromise that has been floated so far. I don't really see what the problem is."

[iceman66]

8. They are only looking at part of the picture.

In order for a public option to significantly lower costs, it would have to be widely available to both businesses and consumers alike, and that is not exactly what is being proposed.

Also, none of the authorities you cited make any reference to how it is to be funded - if lower insurance costs are directly offset by higher taxes it will be, at best, a zero sum game.

I do think we need a public option. The point it that it could be much, much more effectively and efficiently implemented on a national level. As we are so close to getting that, I do not see any benefit in muddying the waters with this substantially more risky 'compromise' approach.

[BlooInBloo]

13. Of course. What fools.

[iceman66]

17. Brilliant rebuttal.

You must have been captain of the debate team.

[Hosnon]

30. I probably trust Nate Silver to a fault...

But, in my opinion, he has earned the benefit of the doubt.

[KharmaTrain]

5. Au Contrare...Businesses Will Want To Move To Blue States

Public option is all about lowering costs through competition. This also means employer-based insurance. If a state opts in then there will be the choice of the lowest cost policy...be it government or private. In states that don't opt...all you have is what the insurance comapanies offer and with little if any regulation. Remember, employers contributions will drop in a state with a public option.

Right to work is a lot different than public option as it is limited only to those employed at the factories...public option covers all.

The big advantage of a public opt in plan is the solid chance that the a majority of the largest states...New York, California, Illinois...and I wouldn't be surprised to see Florida even join in. The pool of people in the plan is sure to be a very potent force in negotiating down health care costs. If people in Utah or Nebraska or Georgia want to opt out...so be it.

In short...this is the best road begining reforming healthcare...a process that will require a lot of fine tuning and revisions in the year ahead.

[ddeclue]

9. Not at all right - if you were right, they'd already be moving to Massachutsetts

and other high tax north eastern states which is exactly the opposite of what they actually do.

[iceman66]

12. My point exactly!

[KharmaTrain]

14. Depends On The Business...

A single state pool can't have the effect of several...just like a single state lottery doesn't have the big jackpots a multi-state lottery does. A reduction of health care expenses...or even eliminating employer subsidized plans would mean big savings cause if its cheaper for a person to self insure, they will and more savings to the employer. A preventative system also will reduce costs as people will be healthier and more productive. Of course labor intensive companies will still either outsource or stay in right to work states, but corporations that want/need a huge and educated pool will have to operate in the blue states.

With lower health care costs and more people working, tax bases expand as well and not that I expect any state to lower taxes. Inversely, states where rates remain high will be less attractive as these states and those companies may have to take up the slack for the profits lost in the opt in/blue states.

[iceman66]

19. Your first sentence said it all

'A single state pool can't have the effect of several"

Why are we even considering an obviously inferior plan when we are so very close to doing this right?

[anonymous171]

21. "Opt-in" means that BY DEFAULT every state is in on this plan

[KharmaTrain]

24. Playing Poker...

The short game is to get 60 votes to prevent a filibuster that would kill any reform...the opt in would do the trick. Then the bill goes into reconciliation where a stronger public option can be written in and need only 51 to pass. Right now no bill as it stands has the ability to get 60 votes...and that's the key. Get it to reconciliation it's a new ballgame with Democrats and predominately public option proponents in charge.

Inferior at this point beats nothing. And if this plan covers the more populace states it will put pressure on the others to join as well. From a political standpoint, it puts rushpublicans and conservadems on the record...they will have to face their voters and say, "yes, I voted against the public plan California and 27 other states have".

Get us past the possibility of a filibuster and you minimize those who could hurt a public option the most...Baucus, Nelson, Lincoln...then we will be very close to getting a far stronger, more equitable and "right" bill.

[iceman66]

26. Hopefully, that's all this is.

[KharmaTrain]

28. The Legislative Is Byzantine

It's frustrating as all hell...why they equate writing laws with making sausage.

A lot of folks here aren't familiar with how the legislative works...or doesn't...and for good reason. For the past 8 years we had a unitary executive that saw the legislative with disdain. President Obama, being from that legislative has tried to reinsert them in their traditional role of the executive suggesting and proposing legislation, but the actual hard work is done in the various committees. In many ways Congress is also trying to reacquaint itself with how its supposed to work.

The upshot is the Senate is 100 egos...all feeling they have to get their say or their due. The Baucus committee was President Obama's attempt to not only be bipartisan but flush out the rushpublicans and the conservadems. See what their price is and this could come into play in the next part of this kabuki theater.

I expect a lot of horsetrading ahead...but the goal right now is to get past cloture and to Reconciliation (with a big R) where only 51 votes are needed to pass and where the public option can happen through the small r reconciliation between the House & Senate. The opt in is the way to get the 60 that gets this next process rolling.

Cheers...

[Hosnon]

31. Mass. does not have a public option. nt.

[alfredo]

27. Imagine a governor who opts out with his state near the bottom of the list

of healthcare. He will be voted out next time around.

[Cali_Democrat]

6. On the flip side....isn't it possible that states with the PO will attract more business?

Healthcare costs are skyrocketing for employers. Car manufacturers have moved plants from the US to Candada citing astronomical healthcare costs in the US.

Isn't it possible that states with the public option will have lower healthcare costs and will be more friendly for businesses?

[iceman66]

10. Only if the lower health care costs are not offset by correspondingly higher taxes.

That is why it is critical in assessing the merit of this proposal to consider how it is funded, and we really don't have any details on that yet.

[Ms. Toad]

34. Read the bills.

The public option, in every bill, is required to be self-sustaining on the premiums charged to the participants who choose it.

[iceman66]

15. Consider this as well

A car manufacturer in Canada has NO health care obligation beyond paying into the national heath care system via tax revenue.

A manufacturer in an 'opt in' state could potentially be required to pay an employee health care premium IN ADDITION to an added tax to support a public option that, under the plan being proposed, would only be available to those without employer-provided insurance.

[laughingliberal]

7. Just because you can't see how opt out is different from opt in...

does not mean it is not different. I don't think the proposal is fully defined at this point but with opt out the default is the public plan is in place and action will be needed to deny it to citizens of a particular state. With opt in the state would have to take some action to put it in place.

[iceman66]

11. Yes, but

the insurance lobby will be much more effective at the state-by-state level.

[anonymous171]

16. Possibly, but you forget that Democracy is also more effective at the state level

[iceman66]

20. Then why are so many state legislatures dominated by Republicans?

Better yet, why haven't any states besides Massachusetts tried this on their own?

[anonymous171]

22. Because those people voted republican? The more local you go, the less party politics matter.

[laughingliberal]

23. The "better yet" question here is apples to oranges

Just because no other states have taken the initiative to start a plan does not mean they will vote out one already in place. This is a key difference between the opt-in and the opt-out.

[paulk]

35. Mass has a public option?

???????????

[laughingliberal]

18. That would be more true with an opt in program than with opt out

Just how will they convince the electorate to vote out something they already have? I favor making the mechanism for opting out a referendum. Kind of hard to tell the voters what evil will befall them if they allow the choice of a public plan to be one of the options in their insurance exchange.

[iceman66]

25. You're forgetting that the PO wouldn't go into effect until 2013!

PLENTY of time for states to 'opt out' before people even realize what they 'have'!

[TexasObserver]

29. Opt out plan won't make it.

Why would any Democrat in any state that might opt out favor using federal tax dollars to fund a program that doesn't help them? I'm in Texas, and any plan that doesn't deliver the goods to Texas is not one I want Texas congress reps to support.

[Ms. Toad]

33. The public option is required to be completely self-funded.

Read Sections 221-225 of HR 3200.

Subsidies for people who can't afford the premiums are at the federal tax level, and can be used to purchase any plan in the exchange (most of which are private insurance plans).