Public option revival not a sign of strength 

There is great excitement on the Left because the public option has been revived in the Democrats' health care plan.

But while it may be cause to raise a glass of carbon-neutral pinot noir in Berkeley and on the Upper West Side, the renewed talk of a government-run insurance program is a sign of weakness, not strength, for President Obama's health plan.

The president and his team have put the insurance industry at the top of their ever-lengthening list of enemies and are now threatening to cut them out of the great health care takeover.

But the plan until recently was to turn the health insurance industry into a public utility: Americans would have no choice but to buy their products, but the feds would set rates and coverage rules.

This was appealing to moderate Democrats in Congress who have rejected the idea of a government-run insurance program on the grounds that it would compete unfairly and wipe out private, employer-based insurance.

Rather than risking the poor quality of care and debilitating expense of a single-payer system, the public option would be scrapped in favor of a deal with the devil of big insurance.

The plan that plopped out of the Senate Finance Committee was intended to be that kind of a grand bargain. And for some special interests, like drug makers, the deal was still pretty sweet.

As the legislation was being brewed up, though, lawmakers flinched at imposing coercive fines for failing to buy insurance.

Trouble is, as long as it's substantially cheaper to pay the fine than buy insurance, millions will still choose to roll the dice on their good health. Plus, if insurance companies will be forced to accept people with pre-existing conditions, why not wait until you get sick to start paying?

A weak mandate means higher premiums for responsible customers and takes coverage out of reach of millions more middle-class families.

One way around the problems caused by low fines is to put additional billions into subsidies. Rather than offering free coverage for a family of three that earns $40,000 a year, make the threshold $60,000.

It's just that doing so would drive costs into the stratosphere.

With the government's credit already at subprime levels and the economy still stagnant, a health bill that increases the deficit or raises taxes is poison to moderate Democrats.

That's why Senate Majority Leader Harry Reid wanted to deal with preventing $247 billion in scheduled cuts in Medicare payments to doctors over the next decade in a separate bill.

Reid was trying a bit of Enron accounting: Dump an additional quarter-trillion dollars into general spending and then declare the overall health legislation deficit neutral.

More than half the cost of the $900 billion health plan proposed by the president would be paid for in unspecified future Medicare cuts. Underscoring the implausibility of those future cuts, Reid suggested that Medicare reductions set in motion in 1997 should be wiped out in another round of deficit spending.

But all Republicans, most moderates and some liberal budget hawks would not go along, leaving Reid 13 votes short on his sketchy accounting techniques. That put him and the president back where they started: a plan that will raise insurance rates for most Americans, increase taxes and leave millions without coverage.

Liberals have argued all along that the solution to high insurance rates is a government-controlled plan. The argument runs that if the government operated, for example, a nonprofit, subsidized airline, American and United would be forced to lower their fares to attract passengers.

A new government-run health care plan has consistently been more popular with voters than the overall Democratic proposal, and with Obama and Reid unable to solve the cost/coverage conundrum through fines or subsidies, liberals have found new interest in their plea for the public option.

Let states opt out if they do not wish to enjoy the workers' paradise of government insurance, they cry.

Obama and Reid, like Dr. Bunsen Honeydew and his assistant Beaker, are now in their lab trying different formulas in hopes of finding something that won't blow up in their faces.

As they run out of options, the president and majority leader are trying old ingredients in different proportions.

But the votes are not there in the Senate, and maybe not even the House, for a public option strong enough to really stick it to the insurance industry.

The next concoction is going to blow up on the doctor and his assistant, too.

Chris Stirewalt is the political editor of The Washington Examiner. He can be reached at cstirewalt@washingtonexaminer.com.

About The Author

Chris Stirewalt

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Washington Examiner Political Editor Chris Stirewalt, who coordinates political coverage for the newspaper and ExaminerPolitics.com in addition to writing a twice-weekly column and
regular blog posts.

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