On the day Sen. Max Baucus begins health care hearings, the Washington Post runs what amounts to a shot across the bow from key Democratic client groups: don't punt on a public plan. What's the story behind the story? Read on.
Without dismantling the system, there are two ways to extend health insurance coverage in the near-term. One way is to create a government-sponsored plan that would be able to compete with those offered by private insurers. The government would give the plan away for free to those who can't afford any insurance, and would heavily subsidize it for those who can afford to pay something. Administratively, the government could simply expand and add money to Medicaid. The second way would be to require that insurance companies offer affordable plans and then provide direct subsidies for people to buy the private plans. There'd be a public alternative, but it wouldn't be large enough to set the market price, as it were. As President Obama regularly emphasized, Congress is likely to keep the employer-based health care system alive for a while, but, if reformers like Jacob Hacker and the Lewin Group have their way, add to it well-funded government components and alternatives that, over time, will drive down costs and provide a source of pressure and competition. A market for insurance policies would be the end-result. (Jonathan Cohn explains the different between a real public plan and a quasi public plan here.) Politically, Obama wants all stakeholders to agree on a solution. So he's been very coy about what he thinks Congress should do first -- the private insurance subsidy part or of the public plan.
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