The newest “alternative” to the public health insurance option is neither public, health insurance, nor an alternative option to private insurance companies. From what I’ve been able to determine about this worthless proposal, all it does is give the director of the Office of Personnel Management (OPM) some vague power to try to negotiate with private non-profit insurance companies for a slightly better bargain.

There appeared to be serious consideration of a new proposal on the table: a national health plan similar to the Federal Employee Health Benefits Plan, which provides insurance to members of Congress and federal workers. It would be administered by the Office of Personnel Management, which oversees the federal plan, and all of the insurance options would be not-for-profit.

This is not a public insurance entity competing with the existing private insurance companies. This will do nothing to inject competition into concentrated markets. This will not ensure the government provides people with at least one decent insurance plan structured to promote the public good. In the long run, this will not change how the insurance market operates or help rein in our out-of-control health care costs. (The FEHBP has been a failure on the cost controlling front.)

From what little reporting there is about this proposal (here and here), it seems the idea is basically to create another national exchange as an alternative to the state-based exchanges, or another slightly better exchange run by OPM within the basically useless state-based exchanges. I don’t know what is more sickening; the fact that Democrats will try to slap the word “public option” on existing private insurance coverage and hope everyone is too stupid to notice, or the fact that the current state-based exchanges are such terrible pro-insurance, anti-consumer marketplaces that some senators think an acceptable “alternative” is another exchange designed slightly better.

This “alternative” does not even vaguely resemble a public option. It is simply a marketplace where the OPM will negotiate with private non-profit insurance companies to try to get slightly better deals for people using the program. You will still be forced to buy expensive insurance from the same private insurance companies that have failed us so far. It will not inject any competition into concentrated insurance markets. This is only an exchange. This is similar to how the national exchange is designed in the House bill. This is how the exchanges would have been designed in the Senate bill — until Max Baucus and Olympia Snowe removed every consumer value protection.

The Democrats better start acting like they at least care about regular Americans more than the health insurance corporations. Dropping the incredibly popular public option, which would bring down the cost for the government and for regular Americans, because the private insurance companies, Republicans, and Joe Lieberman demanded it is not going to rally the base. Making the “alternative” needed to win over Snowe merely fixing a few of the problems with the exchange that she herself caused does not sound like victory. If elected Democrats insist on putting a Republican in charge, don’t be shocked when the Democratic base has zero reason to turn out in 2010. After all, a vote for a Republican is a vote for Republican leadership, and a vote for a Democrat is also a vote for Republican leadership.

Update – Jacob Hacker has more and came to basically the same conclusion about this non-compromise.

Employees Health Benefit Plan (FEHBP) within the exchange. Since the FEHBP is itself a form of exchange, this amounts to offer a new set of private plans within a new set of private plans. How is that going to provide real pressure on private insurers in a consolidated insurance market in which nonprofit plans already have a large presence (and often act little differently from for-profit plans)?

In short, the new compromise proposals are anything but. They represent calls for advocates of the public plan to eat their crumbs and be happy. But a majority of Senators support the public plan. At least two–Senator Bernie Sanders, an independent from Vermont and Senator Burris of Illinois–have said having a real public plan in the legislation is a precondition for their support. Those who believe in the public plan—and, more important, who believe in the principle it embodies: that no American who lacks access to good insurance should be forced to buy coverage from the private plans that got us into our present mess–should stand firm in the face of these non-compromises.