Earlier today, Holly wrote about the mixed messages
emanating from the White House on the public option. They've been dancing around
the question of whether a public plan is an absolutely essential component of
health-care reform for months now, frustrating the left and providing
ammunition for the right. But I'm not so surprised at the ambiguity about the public
plan. The dirty little secret is that the health-insurance exchange─a online
marketplace where eligible individuals could shop for and purchase insurance─is actually the critical component of Obama's plan, not a public option.
The president has said consistently that his primary
motivations for reform are twofold: expanding coverage to the uninsured and lowering costs. Yes, a public
plan would be an effective way to achieve those goals. But it's not the only
way. A robust health-insurance exchange, with strict rules governing
eligibility for coverage and pricing, would similarly impact the health-insurance market. The government could mandate that private plans participating
in the exchange be both comprehensive and affordable, even setting price
ceilings as a condition of their inclusion. Insurers would still participate
because it expands their market and increases their revenue stream. A well-constructed insurance exchange─where the uninsured can purchase insurance with
the help of government subsidies, if necessary─would be a significant step in
providing coverage for all Americans. If the plans included in the exchange are
subject to appropriate price regulations, then the cost impact on the broader
insurance market would be akin to having a public plan. The insurance exchange
achieves the goals Obama set out without a public option. Judging by his public
statements, the president is very aware of this.
So why has the White House put so little effort into talking
up the exchange? Probably because it is a more complex idea than having a
government-sponsored health plan. It's hard to get people excited about it. But
it's more likely that it's part of a negotiating strategy. Obama has kept the
notion of a public option alive long after it appeared politically viable in
the Senate because it's a bargaining chip. When the time comes for him to drop
it, which is increasingly likely to happen soon, it looks like he has given up something. He'll
have more credibility in asking Republicans to compromise because he has the appearance
of having made a sacrifice himself. And if Republicans don't compromise, he can
make the case to the public that he acted in good faith, attempted
bipartisanship, and got nothing in return. He can do all this knowing that the
two things he really wanted all along─extending coverage and exerting price
pressure on insurers─have been achieved through the exchange.
