Public Option Debate: Red Herring?
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Richard H. Thaler, professor of economics and behavioral science at the Booth School of Business at the University of Chicago, wrote a piece in the Sunday Times about health care’s “public option” and how this is a red herring, distracting from the issue of real reform.
While everyone is arguing about whether or not the public option will stimulate real competition and whether or not the public option is a socialist trojan horse, no one is bothering to debate the real issue, namely, the lack of any details associated with the public option, and with the latest proposal, in general. Without such details, there is no way to ever enact anything that will bring real reform to our health care system.
PULLQUOTE:
if we stop the current debate, and instead focus on debating the details, we will inevitably eliminate the bad ideas from the plan by virtue of actually debating their practical detail
An example of one such detail going unscrutinized while everyone debates the “big picture talking points” is the fact that Obama has “promised” (hold the laughter) that the public option would be required to break even financially. Has Obama or Congress addressed how that will even happen? No. Has anyone taken them to task on that detail? Not really.
Another detail not being hashed out is whether or not the public option will be allowed to secure special deals suppliers, essentially crowding out competitors. This is a huge decision that no one in Congress seems to be addressing head on in terms of laying down the ground rules and the details for this.
In short, if we stop the current debate, which will most likely get us nowhere (other than “agree-to-disagree”), and instead focus on debating the details, we will inevitably eliminate the bad ideas from the plan by virtue of actually debating their practical details.
Thaler has some advice for everybody:
Here’s some free advice to members of Congress: While you are enjoying your August recess and town hall meetings, instead of arguing about whether to have a public option, argue about the ground rules.
To the Republicans, I say this: If you can get real assurances that the public option has to break even, and that it will get no special deals from suppliers, let the Democrats have it but ask for concessions on tort reform in return. (That could actually save some money.) The resulting public plan will be too small to notice.
To the Democrats, I say this: If you want competition in health care, you won’t get it if the public option can make deals its competitors can’t. So either give the Republicans hard assurances that the public option would have to break even and not get special treatment, or, better yet, just give it up to ensure that some useful health care reform is passed. A public option is neither necessary nor sufficient for achieving the real goals of reform, and those goals are too important to risk losing the war.
Now, it seems that Obama did just that: gave up the public option to ensure that some useful health care reform is passed. A Wall Street Journal editorial today discusses how Obama has over the weekend indicated that he has more or less given up pressing for a public option.
The interesting (and convincing) perspective presented in that piece is that Obama jettisoned this part of the proposal in hopes that ObamaCare critics will be so thrilled by this retreat, that they’ll forget about the rest of the issues. This is a reasonably clever strategy by Obama, considering how all the hype so far has been on the public option, as I discusssed already.
So, now we have to see if the public will be smart enough to still scrutinize the details of his plan, despite Obama’s tossing the public option overboard (a la Jonah) in an attempt calm the storm.
The WSJ writes:
The most dangerous outcome of this weekend’s ostensible concession would be if ObamaCare acquires a “moderate” gloss and the public comes to think the rest is innocuous. Cashiering the public option doesn’t eliminate the plan’s many other problems: The federal fisc is already a shambles because of our current health entitlements, and a new $1 trillion liability is unsustainable given the deficits and tax burden required to finance them. Democrats plan to subsidize insurance up to 300% of the poverty level, which for a family of four is about $66,000. That commitment will only grow, as do all government health programs. ObamaCare would still impose costly new mandates on individuals and businesses and dismantle even the parts of the health-care system that are working well now.
The real goal this year is to create enough of the architecture for government-run health care; eliminating the public option merely slows the march. Still, that Mr. Obama has been forced to publicly repudiate one of his main ideas shows how much he over-interpreted his 2008 mandate…
The best health-care option now is to attempt a truly bipartisan reform, likely one built on individual tax credits for private health insurance. Or drop the scheme entirely and focus on improving the economy. The Democratic walk-back on the public option is just a few steps. This fight is a long way from over.
So, ultimately, we all have to keep things in perspective: this fight is far from over, and if we can get those involved in the debate to focus on the details, there’s a good chance we can actually do some good by putting together a few smaller-scale, higher-impact reforms, rather than a mammoth government-run program that will inefficiently lose money but unfortunately manage to stay solvent through tax subsidization.

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