The Cat's Out Of The Bag

Ezra has the details on yesterday's public option "compromise":

The specifics are beginning to leak. The deal looks pretty much like it's looked for the past few days: The Office of Personnel Management will shepherd national, non-profit plans into existence. Medicare will open to folks between 55 and 64 who are eligible for the exchange. If the national non-profit plans don't materialize, then there appears to be a trigger that will call a public plan into the market, but that seems pretty unlikely. All of this, of course, is contingent on CBO giving it a good score.

The details will be important here. What are the conditions for the non-profit plans? How many plans do there need to be? What does the regulation look like? When does the Medicare buy-in start? But assuming those pieces don't come in much worse than expected, the combination of national non-profits and a Medicare buy-in seems like a pretty good deal. Better by far than what Democrats looked likely to get a week ago. And more likely, by far, to seed health-care reform with scalable experiments.

A public option partnered with Medicare might have been better than these policies, but national non-profits and direct competition between Medicare and insurers is more promising than the compromised public plans that succeeded the initial policy idea. In fact, it's like we split the strong public option into two parts.

The national non-profits are not exactly like, but not that far from, the compromised public plan in the House version of the bill. They won't be publicly run, but with the OPM regulating them tightly and carefully choosing which offerings are accepted into the market, the impact might not be that different in practice. They have the advantages of offering a single product nationally and being freed from the profit motive, both of which were key to the theory of the weaker public option. Indeed, they're like publicly-regulated utilities more than private plans. These look a lot like the semi-private insurers that function well in Germany, Sweden and the Netherlands, among others.

Meanwhile, the Medicare buy-in lets people in the broader insurance market see what national bargaining power can do for individual premiums. Right now, Medicare's rates are largely hidden, as no one pays the full premiums, and so no one can really compare it to private offerings. But if the premiums become visible, and Medicare's superior bargaining power is capable of offering rates 20 to 30 percent lower than its private competitors can muster, we'll see how long it is before representatives begin getting calls from 50-year-olds who'd like the opportunity to exchange money in return for insurance as good as what 55-year-olds can get.

So it includes both the OPM-run public option, and the Medicare buy-in option.  On the surface, it actually seems like a good idea.  I've long said that profit motive in the health insurance industry is the problem and why our current system simply cannot work.

On the other hand the devil is in the details.  If the plans don't kick in until 2014 and there are too many hoops to jump through to get to the OPM non profit plans, the Dems are going to suffer greatly in 2010 and 2012, not to mention another 20 million Americans could lose their health insurance over the next four years while the Republicans could certainly make enough gains to repeal the program before it ever takes effect.

We'll see what those details are.  Potentially this is a decent deal, and better than I thought the Dems were going to get just a week ago.  But those details could be the killer.