To your list of key “shackles” on the PO I would add the requirement that the corporations that get loans from HHS to set up little PO programs around the country will have to repay those loans within ten years. Debt repayment was a significant factor in Kaiser Permanente’s failure to expand into North Carolina during the late 1980s and most of the 1990s (to cite one of the few examples of an insurance company’s effort to build their way into another market as opposed to buy their way in). According to an article in the Milbank Quarterly by Alain Enthoven and others about KP’s doomed North Carolina expansion, the decision by KP headquarters in Oakland to make the KP North Carolina branch repay all loans from the mother corporation added significantly to North Carolina KP’s premiums — and ultimately contributed to the demise of that branch of KP.

The media should long ago have begun reporting on what it’s like for anyone — be they public employees or insurance company employees — to set up a new insurance company. The media has not done that. However, if the current version of the PO passes, I would bet small sums of money (don’t want to go too far out on a limb here) that the mainstream media will finally get around to investigating the question I address here and that you address in your comment, namely, Is it possible for a tiny PO to break into some of the insurance markets in this country and, if so, what will that market-entry process look like?

You would think:

* this question would have been studied carefully by PO advocates before proposing or acquiescing to a dinky PO, and

* if the PO advocates failed to study it, the authors of the Democrats’ “reform” legislation would have studied it before proposing a tiny PO in their bills, and

* if both the PO advocates and the Democratic authors failed to study it, the Congressional Budget Office would have studied it before reporting back to the authors of the bills, and

* if all of the above-mentioned actors failed to study it, the media would have noticed the failure to study the question and would have raised holy hell about it.

You would of course be wrong.

The reason I bet small sums of money the media will finally get around to investigating this issue after the PO becomes law (if it does become law) is (a) there will be at least a three-year delay before the PO begins to be implemented, and maybe a much longer delay if the implementation problems you and I forecast come to pass, and (b) Republicans and other opponents of the PO will work hard to educate the public on its defects. The pattern I’m suggesting the media will follow on this issue — say little about a problem while it is brewing and provide useful reporting after the stuff hits the fan — is not a new one. As you may recall, the media offered only superficial coverage of the superficial debate preceding the Medicare Part D program during the summer and fall of 2003, but began to provide more useful coverage as the January 2006 implementation date approached.

We will see.

Kip

“In effect, the theoretically lower administrative costs will be more than offset by all these other obstacles that will almost certainly doom this public option to failure. And if it fails? It is shit out of luck:

(3) NO BAILOUTS.—In no case shall the public health insurance option receive any Federal funds for purposes of insolvency in any manner similar to the manner in which entities receive Federal funding under the Troubled Assets Relief Program of the Secretary of the Treasury.”

Another interesting clause:

“(B) no provider shall be subject to a penalty for not participating
in the public health insurance option.”

The plan establishes an interim “high-risk pool” for people who have no insurance and are at high risk of incurring medical bills, but:

“(2) INSUFFICIENT FUNDS.—If the Secretary estimates for any fiscal year that the aggregate amounts available for payment of expenses of the high-risk pool will be less than the amount of the expenses, the Secretary shall make such adjustments as are necessary to eliminate such deficit, including reducing benefits, increasing premiums, or establishing waiting lists.”

In short, the lobbyists have shackled the plan so it will fail and the federal government will watch passively as the billions invested go up in smoke leaving the “public option” at the whim of the private insurance industry. This is pathetic.