Reid's Roll Of The Dice

With Sen. Harry Reid's decision to ask the Congressional Budget Office to score a public option that states can choose to use, he's betting against the prospect of any Democratic senator filibustering the end product of health care reforms. Reid decided not to submit a public option with a trigger mechanism -- the approach favored by Sen. Olympia Snowe (R-ME), calculating instead that he would be able to enforce party solidarity on what will certainly be an epochal vote.  In order to induce at least one of those Democrats, Sen. Kent Conrad (D-ND), Reid said that the final Senate bill would include non-profit co-op experiments, but he did not provide details. Liberals will interpret Reid's decision as evidence that their pressure worked. Indeed, Reid seemed to acknowledge that the power of moderates was not nearly as acute as it had been -- or that he thought it had been. He noted that, almost any way the data is sliced, Americans support a "public option" and understand what it would do.

It's important to realize that Reid has also given himself a bargaining chip here. By going to the floor with a public option, he has something to trade away in order to get to 60 votes, if, for some reason, Democrats refuse to give him 60 votes on cloture.

Reid's political situation is tough. In Nevada, voters seem tired of him; they don't see him as a leader. Liberal activists have been apoplectic at what they believe are his inner need to be loved by everyone and his refusal to make tough decisions. Now he's decided to put the onus on non-liberals like Mary Landrieu or Blanche Lincoln, and dare them to join Republicans in openly filibustering health reform. Landrieu says she opposes a government-run plan on principle.

Satan is in the specifics. Different states with different health care needs will make different decisions. Potential presidential candidate Tim Pawlenty has already announced that he'd want Minnesota to opt out of the program, though he won't be around as governor to make sure this happens. Who'll opt in? There are three ground conditions to consider. One is that states want to figure out how to pay as little as possible. Two: politicians who decide to opt out are going to have to come up with an explanation as to why. Three: the poorer, Southern states will benefit by opting in more than other states, but their political leaders tend to be opposed to the public option on principle.

States that pay more, on average, for health care -- states where private providers are reimbursed well over Medicare's rate -- will face pressure from hospitals and doctors to opt out, assuming that the public option rates aren't much better than Medicare. If the rates are negotiable, then the ability of states to reduce costs will probably decline. Finally, consider the case of a large metropolitan area spanning two states -- one that opts in, and the other that opts out. If you're thinking of building a hospital in the area, you probably aren't going to put it in the state that'll constrain your profit margins. In that case, poorer folks in the "opt in" state would be at a double disadvantage...and quality care would flee toward the opt in state.

Paul Ginsberg, the president of the Center for Study Health System Change, believes a public plan with negotiated rates wouldn't have much of any impact on costs because the plan "would lack the advantages of incumbency of leading private plans in an area and would be subject to pressure from Congress about including all providers," even those with higher rates.