Mark Dunlea is the Co-chair of Single Payer New York. He writes:

Their [public option advocates] solution was to create an “800 pound gorilla” in the form of a public health insurance system that would provide quality and affordable health care coverage to more than one hundred million Americans. It would be large enough to operate efficiently and achieve cost savings. They argued that by setting up a fair fight between a public option and the private for-profit health insurance companies, over time the advantages of the public option – no profit margins, reduced paperwork and administrative costs, less marketing costs – would become clear. The public option would grow stronger, and under the best case scenario, either we would move to a single payer system or private for-profit health insurance would become a boutique industry serving the rich.

Before either House of Congress has adopted a specific plan, the public option 800 pound gorilla has turned into a five pound Chihuahua. And with four months or more of intense negotiations to take place among the nation’s power players before a final deal is reached, the public option will only get weaker.

In days of yore when Jacob Hacker’s original version of the PO was the only version to talk about, PO advocates weren’t saying how the bill would be created but their failure to do so was less pressing than it is now. That’s because Hacker’s original PO was seeded with tens of millions of Medicaid and SCHIP enrollees and uninsured people before it even began selling health insurance to non-enrollees. That feature, coupled with the requirement that only PO enrollees get subsidies to help them obey the mandate to buy insurance, probably would have guaranteed a live birth of the PO in all or most parts of the country. For example, a PO with those features here in MN would have opened for business with roughly 20 percent of the MN population. That’s large enough to visualize what the director of the MN PO could do and would have to do to organize coverage for all those people and to start selling health insurance to people outside the PO.

(The subsidies for the PO enrollees would be required in addition to the pre-population requirement because if the subsidies go to both PO enrollees and people who enroll with insurance companies, there’s nothing to keep the Medicaid/SCHIP/uninsured people in the PO. The statement that Medicaid people etc. would be “pre-enrolled” in the PO would mean little if they had no economic incentive to stay enrolled in the PO — if they could use their subsidy to buy a policy from an insurance company. There’s no way we could pass a law dictating that people who started in the PO had to say there the rest of their lives.)

But now that the debate is about the tiny PO in the Democrats’ legislation, an explanation of how the PO will be created is absolutely essential. Now that the Democrats have endorsed a PO that will not be pre-populated and will not have a subsidy advantage, it is not at all obvious how the PO will be created. The question seems to shriek out for an answer. Yet PO advocates have nothing to say about it. I would think it would be in the interest of PO advocates and Democrats to answer this question prior to passing a law, not after the law is passed.

Kip

The other question is: what will people do until 2013? Can we really afford to pass a reform bill that still allows 31,000 annual fatalities for 3 plus years after enactment? Is this the right thing to do?

My sense is that an awful lot of people expect to be able to choose public insurance when the health reform bill goes through. I expect that there will be some backlash when voters realize that they may never have a public option themselves. How much may be a shock to Congress. So will Contress hold fast in the face of public anger and an upcoming election? Or will it loosen up the restictions on the exchange?

But your scenarios skip over the birth of the PO. How is the PO created and who will do it? I can’t find anyone, pro or against the PO, who can answer that question.

I posted my own scenario plus some question on one of Jason Rosenbaum’s diaries a week ago and asked him if he thought it was accurate. He answered, “Not interested.” I’m posting it again here. I’d appreciate hearing your assessment of my scenario.
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Could you walk us through the process by which the Department of Health and Human Services will set up an “option” plan in any given market, say Boston, under the Senate health bill, HR 3200, or HCAN’s blueprint? Here’s the scenario I believe will occur under both the Senate HELP bill and HR 3200.

* Beginning in 2013, the Secretary of HHS contracts with a “contracting administrator,” that is, a corporation such as Blue Cross Blue Shield, to set up an “option” plan in Boston. The Secretary also loans Blue Cross several hundred million dollars to carry out all the tasks necessary to set up an “option” plan.

* Blue Cross then hires 80-100 people to create an insurance company to serve Boston. These people do the things you’d expect people to do to create a new insurance company, including making cold calls on clinics and hospitals to see if they’d be interested in accepting “option”-insured patients at Medicare rates plus 5% (or about 15% below the insurance industry average).

Question: Do you anticipate that Blue Cross will at some point ask clinics and hospitals to sign contracts with Blue Cross indicating their commitment to be part of the Boston “option” network? Or will contracts be unnecessary?

* After six months of making numerous cold calls, Blue Cross succeeds somehow in inducing a sufficient number of clinics and hospitals to agree to accept “option” enrollees. Now Blue Cross incorporates the Boston Public Option Plan (BPOP) and hires 80 people to staff BPOP.

Question: Does Blue Cross exit the scene now, or do you anticipate Blue Cross will continue to serve as an advisor to BPOP? Obviously, Blue Cross, if it does retire from the project, has to leave in place a contract with BPOP that at minimum ensures BPOP will repay the loan that Blue Cross got from the Secretary of HHS.

* BPOP/Blue Cross now begins advertising heavily and making cold calls on employers seeking to induce tens of thousands of Boston residents to pay their premiums to BPOP in the event that these people are eligible to shop in the MA exchange.

Question: How many people will have to enroll in BPOP in order for BPOP to have sufficient leverage over local providers to get them to accept reimbursement rates even with or below the rates paid by Aetna et al. in the Boston area? I’m not looking for precision, just some evidence that you or someone you know in the “option” movement has thought about this.

* Let’s assume BPOP solves the chicken-and-egg problem of trying to assemble a critical mass of providers and enrollees roughly simultaneously. BPOP formally opens for business. BPOP makes enough money within the next 8 to 9 years that it can repay to Blue Cross the loan it got from the Sec or HHS. Blue Cross in turn repays HHS.

Is this the process you envision?
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Thanks.

Kip Sullivan