Is the Public Option for Health Care Overrated?

In the last week, the biggest health care furor to take place outside the sweaty, screamy town halls was the Obama administration's tacit, and possibly unintentional, admission that it was backtracking on a government-run insurance program -- a "public option." The debate over the public option is often a battle of two caricatures: Republicans call public insurance "socialism" while Democrats call it a necessary litmus test of their party's cajones.

So it's both surprising and and refreshing to read Steven Pearlstein, the business columnist for the Washington Post who's received a lot of link-love from liberal bloggers, begin today's column: "Enough already with the public option!"

I suspect that this part will sting liberals particularly sharply:

The public option has become for the left what "death panels" have become for the right -- an easily understood metaphor that can be used to wage an ideological war over the issue of Big Government, and mostly a sideshow.

That's a little hyperbolic perhaps -- the public option appears in the House bills; the "death panels" are a figure of Sarah Palin's excitable imagination -- but it raises an important point that the public option is, perhaps, expendable. Defenders of the provision argue that a strong public option is necessary to both deliver quality care for the uninsured and to use the government's size and bargaining power (it doesn't have to turn a profit) to drive down prices and push for quality care over expensive over-treatment. Some opponents say it sets a ball rolling down the hill that ends in the valley of socialism.

Still other detractors point out something much less hyperbolic: There isn't great evidence that the House version of the public plan would do much to control costs outside the 10-year window in which Obama has promised to account for the trillion dollars he spends on health care. The CBO, stocked as it is with health care quants, actually said the House bill bends the cost curve in the wrong direction.

My takeaway is this: We don't know if any of the health care bills in consideration will achieve significant savings in the long-term, the public plan included. Even Slate's Tim Noah, a stalwart defender of the provision, says it wouldn't smother health care inflation, it would just nudge it down at best. The reason cost-savings are nearly impossible in our system is that what policy experts call "expendable fat," insurance companies and doctors call "income." The real myth in the health care debate today isn't really "public option," it's "long-term savings." The only sure recourse to exploding deficits is more taxes. In the end only one thing is certain: We'll all have to pay.