The "public option" and the wheelbarrow parable (Part 2)

The “public option” and the wheelbarrow parable: Part 2
By Kip Sullivan JD
It is way past time for “public option” advocates to take a stand either for or against an insurance industry bailout.
Do “option” advocates support the individual mandate in the Democrats’ legislation (a requirement that all uninsured Americans buy health insurance from the bloated insurance industry) and the subsidies that will allegedly make the mandate affordable, even if these provisions are enacted without an “option”? Or do they oppose the mandate and the subsidies if there is no “option” in the final legislation? Does the “robustness” of the “option” have any bearing on their decision, or will any provision with the title “public option” in it suffice to win their support for an insurance industry bailout?
For the last two years, the leaders of the “option” campaign have been extraordinarily vague about what sort of “option” they stand for and whether the “option” is more important to them than an insurance industry bailout. They have refused to adopt minimum criteria that would guarantee that the “option” would be large and they have refused to make the “option,” even the tiny “option” unveiled by congressional Democrats last June, a precondition for their support of the Democrats’ “reform” bills. On the other hand, they have urged their followers to support the Democrats’ bills and, in the case of the Senate bill, they have even urged their followers to support the bill after the “option” was stripped from it.
These tactics – creating a hullabaloo over a vaguely defined “option” but then supporting bailout legislation that contains no “option” – remind me of an old parable about an employee of a factory who, night after night for many years, left the factory pushing a wheelbarrow filled with straw. At the factory gate, the security guard carefully lifted the straw to see what if anything the employee might be stealing and, finding nothing, waved the guy on. On his last day of work, the employee approached the factory gates without his usual wheelbarrow filled with straw and said goodbye to the guard. “What were you stealing all those years?” the guard asked. “I’m sure you were stealing something but I never figured it out.”
“Wheelbarrows!” replied the employee.
Like the wheelbarrow thief who induced the guard to focus on the straw, leaders of the “option” campaign have been promoting a bailout of the health insurance industry – the centerpiece of a plan proposed by the insurance industry — right under the noses of progressives and the media. They have done so by focusing all their rhetoric on the “option.” The public has been inundated by a blizzard of news stories, blog comments and email appeals about the politics of the “option” and how it will work. Will this or that party or politician support it? Will it be open to large employers? Will the co-op version work as well as the more abstract version in the House bill? Will the “option” have the authority to use Medicare’s rates plus 5 percent? Will it attract more than its share of sick enrollees? Should it be in place prior to 2013? And so on.
On the other hand, the “option” campaign has been utterly silent on the most fundamental question one could ask about the bailout: Should Congress enact a requirement that most non-elderly Americans become compulsory customers of the insurance industry and should the taxpayer finance massive subsidies for the insurance industry, with or without an “option”?
Health Care for America Now (HCAN), the most prominent advocate of the “option,” and its allies both inside and outside Congress have been silent on virtually every issue raised by this question: Is it ethical to force Americans to purchase the product of a particular industry? Could the individual mandate backfire on Democrats, especially when the news media starts publishing stories about the IRS enforcing fines against middle-income Americans who don’t or can’t obey the mandate? Will the bailout strengthen the insurance industry and thereby postpone the day America enacts a Medicare-for-all system? Will federal courts decide that the individual mandate, the subsidies and the exchanges pre-empt state single-payer legislation and thereby snuff out the state-level single-payer movement? (See discussion of this issue in my opening statement for a recent live blog and the discussion that followed.) How, if at all, are the answers to any of these questions altered by the enactment of the tiny “option” contained in the House bill?
On these and other critical questions about the bailout – the mandate that Americans buy insurance plus the tax-financed subsidies for the insurance industry in the amount of a half-trillion dollars per decade – the “option” leadership has been silent. Their silence on these issues coupled with (a) their refusal to endorse criteria for the “option” that would guarantee the “option” would be large, (b) their hype about the “option” and (c) their support for the Democrats’ bills even if they contain only a tiny “option” or no “option” at all indicates their true priorities. Like the wheelbarrows in the parable, the “option” leadership’s true priority – the enactment of an insurance industry bailout – has been in plain sight for a long time.
In the remainder of this article I review the evidence indicating the “option” campaign failed to promote to the public or to members of Congress criteria that would have guaranteed the “option” would be large enough not only to survive but to take on the gigantic insurance companies that dominate every market in America today. In the last part of this three-part series, I review evidence indicating the “option” campaign never informed congressional Democrats that an “option” of any sort (large or small) was a precondition for their support of the Democrats’ “reform” legislation.
No minimum criteria for the “option”
The first sign that the “option” campaign would give higher priority to the bailout than the “option” was HCAN’s refusal to adopt any criteria at all for the “option” until long after the Democrats began writing their “reform” bills. Although the bill-writing process began no later than late 2008, HCAN waited until June 2009 to release four vague criteria, and then promptly ignored them.
The bill-writing process began formally in January 2009 in the Senate Finance and Senate Health, Education, Labor, and Pensions (HELP) committees when the new Congress convened, and informally as early as 2008 when Senator Ted Kennedy (chairman of the HELP Committee) convened secret meetings of the “workhorse group.“ (According to the Wall Street Journal, this group began meeting in early 2008. According to the New York Times, it began meeting in the fall of 2008.) The process began in the House in March 2009 when the chairmen of the three committees with jurisdiction over health care reform agreed to write a single House “tri-committee” bill. The bill-writing process was completed by the Senate HELP committee on June 9, 2009 and by the House “tri-committee” on June 19, 2009. On those dates those committees published draft versions of their bills. Nearly identical versions of these bills were formally introduced a few weeks later.
HCAN was well connected in Congress and must have known long before the public did that the HELP Committee and the tri-committee would recommend tiny, ineffective versions of the “option.” (The AFL-CIO, an HCAN steering committee member, was a member of the “workhorse group.”) Nevertheless, HCAN waited until June 12, 2009 to post four vague “option” criteria. Of these, only two related to size, and both of these (“national and available everywhere” and “bargaining clout”) were merely expressions of a desired goal, not descriptions of criteria that had to be met to achieve the goal. Merely expressing the wish that the “option” be “available everywhere,” for example, does nothing to ensure that the “option” is big everywhere.
HCAN could have endorsed Hacker’s original criteria
If HCAN had been serious about promoting a large “option,” it would have endorsed the five criteria proposed by Jacob Hacker, the godfather of the modern “option,” and it would have done so early in the bill-writing process, not after the bills were written.
In papers published in 2001 and 2007 Hacker set forth five criteria that would have guaranteed massive size in the “option:
(1) The program had to be pre-populated (he proposed that states “shift” current Medicaid and SCHIP enrollees and the uninsured into the program prior to the start of operations);
(2) People who enrolled in the public program would get tax-financed subsidies to pay the the public program’s premiums while people who signed up with insurance companies would not;
(3) All non-elderly Americans would be eligible to enroll in the public program;
(4) The public program would have the authority to use Medicare’s reimbursement rates; and
(5) The insurance industry would have to offer the same coverage required of the public program.
According to Hacker as well as the Lewin Group (which published analyses of Hacker’s proposal in 2003 and 2008), a public health insurance company that met these five criteria would be able to insure half the nonelderly population – in 2007, 129 million people – and charge premiums far below those of the insurance industry.
But because the HELP committee and the three House committee chairmen who wrote the House “tri-committee” bill were far more interested in being able to say the “option” would “compete with the insurance companies on a level playing field” than they were in creating a huge “option,” they incorporated only the fifth criterion (insurance companies had to offer comparable coverage) and abandoned the other four. The abandonment of the other four, especially the criteria calling for pre-population and subsidies only for the “option,” resulted in a much weaker and smaller “option” program than the one envisioned by Hacker. The Congressional Budget Office estimated the HELP committee “option” would insure no one and that the House bill would insure only 6 million people. (I have written elsewhere about why even this dismal estimate of the House “option’s” size by the CBO was excessively rosy.)
“Option” proponents cave
June 2009, then, would have been an obvious time for HCAN, Hacker and other “option” proponents to rise up on their hind legs and demand that if Democrats wanted their support for an insurance industry bailout the Democrats would have to take their sick little “option” back to the drawing board and draft an “option” based on Hacker’s original criteria. That didn’t happen. As I have reported earlier, in June 2009 the “option” campaign entered the “switch” phase of what was turning out to be a “bait and switch” campaign. Even though they had to have known by June 2009 that the “option” in the HELP and tri-committee bills were travesties of Hacker’s original proposal, the “option” campaign pretended otherwise. They called the Democrats’ microscopic “options” “robust” and “strong,” and lavished praise on the bills – bills which contained the bailout provisions so coveted by the insurance industry.
Neither HCAN, Hacker nor any other leading individual or group within the “option” campaign made an effort to restore the pre-population and subsidy criteria, and apparently none made any effort to restore the criterion calling for the “option” to be universally available. When Richard Kirsch, HCAN’s campaign director, testified in favor of the House “reform” bill before a subcommittee of the House Energy and Commerce Committee on June 23, 2009, Kirsch knew or should have known that the “option” in that bill did not meet Hacker’s pre-population, subsidy, or universally available criterion. Kirsch, however, made no effort to call his listeners’ attention to that fact. To the contrary, he concealed the small size of the “option” by telling the committee it would be available to everyone.
The only criterion of the four abandoned by Democrats that “option” leaders went to bat for was the one authorizing the “option” to use Medicare’s rates to reimburse clinics and hospitals, and even here they could not bring themselves to fight for Hacker’s original criterion. They pushed not for Medicare’s rates (which are about 20 percent below the rates insurance companies pay), but Medicare’s rates plus 5 percent.
But without Hacker’s first three criteria – the pre-population, subsidy, and available-to-all criteria, which were essential to guaranteeing the “option” would start out large and stay large – the demand that the “option” be given the authority to use Medicare’s rates plus 5 percent was meaningless. Giving a microscopic “option” the authority to use low rates is like giving first-graders the authority to bench press 400 pounds. They can’t do it, and giving them permission to do it doesn’t change that fact. Similarly, an “option” program that represents zero to 6 million people cannot expect clinics and hospitals to agree to be paid below-industry rates (see my discussion of “the chicken and egg” problem here). No dispensation or blessing from Congress is going to change that. What the “option” needed from its supporters was an uncompromising insistence upon large size on the day it opened for business. But the “option” campaign made no effort to fight for the criteria that would guarantee large size. (As “option” proponent Jon Walker recently explained, “option” proponents did, however, adopt the ludicrous label “robust” to distinguish a tiny “option” with the authority to use Medicare rates plus 5 percent from a tiny “option” that does not have that authority. The label was extremely misleading.)
“Option” proponents in Congress equally incompetent
Members of Congress who supported the “option” adopted tactics virtually identical to those of the “option” campaign, and thereby revealed that they too cared more about the bailout than the “option.” They refused to adopt criteria that would guarantee large size in the “option,” they refused to alert the public that the Democrats’ “option” was a mere shadow of Hacker’s original version, and they insisted on calling the Democrats’ scrawny “option” “robust” if it included the Medicare-rates-plus-5-percent provision.
In one of their first letters to the Democratic leadership in the House expressing support for the “option,” the Democratic Congressional Progressive Caucus (CPC) failed to say a word about Hacker’s original criteria. In fact, they made things worse. Two criteria the CPC did endorse in that letter – that subsidies should go to the insurance industry as well as the “option,” and that the “option” pay providers “competitive rates” – nullified two of Hacker’s original criteria (the subsidy and Medicare-rates criteria). The nullification of these criteria would have greatly reduced the power of the “option” vis a vis Hacker’s original version.
Like HCAN, the CPC waited till long after the bill-writing process had begun to develop a list of criteria for the “option.” On June 8, 2009 (four days before HCAN released its four vague “option” criteria), the CPC released the contents of a June 5 letter to Speaker Nancy Pelosi which contained a one-page mish-mash of “principles” they said the “option” had to meet. The mish-mash included, for example, a call for dental coverage and “transparency” in the “option.” On the other hand, it mentioned only one of Hacker’s original principles (the one requiring that all non-elderly Americans be allowed to join the “option”). To make matters worse, the mish-mash included the same two criteria the CPC had adopted earlier which nullified Hacker’s subsidy and Medicare-rate criteria. Unlike HCAN, which never summoned the courage to say it would oppose legislation that did not meet its criteria, the CPC did say in this letter to Pelosi that it would “oppose” the final House bill if it did not include an “option” that met its “principles.” As we shall see in Part 3, this threat turned out to be a bluff.
“Option” proponents in the Senate were even less assertive about spelling out criteria for the “option” and demanding that they be met than the CPC was. A May 29, 2009 letter from 16 Senators to Senators Baucus and Kennedy (chairs, respectively, of the Finance and HELP committees) urging them to include an “option” in their committees’ bills mentioned no criteria. Over the next nine months, nothing changed. On February 16, 2010, Senator Michael Bennet (D-Utah) and three of his colleagues sent a letter to Senator Harry Reid (D-NV) urging him to restore “a strong public option” to the Senate bill. (This letter was subsequently endorsed by two dozen other Senators.) Although this one-page letter used the phrase “public option” 15 times, and although half the time the word “strong” preceded the phrase, the letter made no attempt to define what “strong” meant.
Senator Ron Wyden made an effort late in the 2009 session to make the “option” available to all non-elderly. He received very little support from “option” proponents and his effort failed.
These isolated and, in the case of the CPC, confused efforts by members of Congress to reinvigorate the moribund “option” are further evidence that HCAN and other advocates of the “option” were doing nothing to create pressure on Congress to adopt minimum criteria that would guarantee that the “option” would start out large and stay large.
Compromising on the large “option” had consequences
The small size of the “option” endorsed by Democrats, and the disinterest among “option” proponents both inside and outside Congress in strengthening the “option,” meant the Democrats’ “option” would pose virtually no threat to the insurance industry. It meant the “option” would not be available to the vast majority of Americans (according to the Congressional Budget Office it would be available to about 10 percent of us), and would have very little impact on health care costs in the US.
The small size of the “option” meant, furthermore, that the “option” campaign’s slogans, which arguably had some integrity prior to the introduction of the Democrats’ mouse version of the “option” in June 2009, became false advertising thereafter. No longer could the campaign say they were promoting “quality affordable health care for all.” They were only promoting coverage for some. No longer could they say, “If you like your health insurance you can keep it.” The reality was that the individual mandate plus the tiny “option” meant, “If you don’t like your health insurance, you must keep it (because unless you’re among the 10 percent of Americans with access to the exchange, you won’t have access to the ‘option’”). No longer could the “option” campaign claim the “option” would cut the cost of health care in the US.
As health policy, the “public option” was worthless. But as a political tool it was priceless. As the straw distracted attention from the wheelbarrow, so the “option” distracted attention from the fact that the health care “reform” promoted by the “option” campaign will criminalize the uninsured and transfer hundreds of billions of dollars of public funds to private insurance companies.
Kip Sullivan is a member of the steering committee of the Minnesota chapter of Physicians for a National Health Program.