The Public Plan Lives! Until the States Kill It

James Madison once envisioned states as the laboratories of democracy. Now Democrats envision them as laboratories of the public option. Ezra Klein points me to this Sam Stein reporting:

Senate Democrats have begun discussions on a compromise approach to health care reform that would establish a robust, national public option for insurance coverage but give individual states the right to opt out of the program. ...

I think I like this idea.

One thing that concerns me about the health care bills is that it seems to me that requiring every American to purchase health care represents a windfall opportunity for insurance companies if you don't also include some strong mechanism to keep prices down. At the same time, the problem with the public option, from a cost-saving perspective, was that the original versions in the House were too small to exert much downward pressure on prices. A compromise that would create a national public option that allows states to opt out might highlight the cost savings of states with the plan, but the converse could happen too. A neutered public plan that's also rejected by many states could end up having no impact on prices -- or states with the PP might see their prices rise faster -- and that might discredit the idea entirely.