In a thoughtful post, Ezra argues that even a weak public option can be useful because it could pioneer some system delivery innovations, such as pricing based on comparative effectiveness research.
But I think that even a weak public option’s value is even greater than that procedurally — which is why the insurers and other providers have campaigned so hard against it. The answer, like so much else, turns on the reconciliation process.
Recall that both the Byrd Rule and the Budget Act of 1974 require that that anything added to a budget bill concern, well, the budget. That’s sensible enough. The problem is that just about anything relates to the budget. How about repealing DOMA? Well, that would expand Social Security survivor benefits to gay couples, which is a budget outlay, and thus that would qualify.
But of course it wouldn’t qualify, because the Rule and the Act say that any outlays from a provision cannot be “merely incidental” to the provision, and with DOMA repeal, that surely is the case.
Back to the weak public option. Suppose that it doesn’t do much, or becomes a dumping ground for bad risks, and that the insurers game the system because of lousy “risk adjustment” rules that allow insurers to dump bad risks on the public option. So then the Senate HELP Committee strengthens the risk adjustment rules, or tries harder to regulate Pharma. Is that “merely incidental” to the budget?
Not if there is a public option, it isn’t. It’s a much stronger argument — not a slam dunk, but much stronger — to say, “if we don’t change the risk adjustment rules, or clamp down on big Pharma, then that will put the public option’s finances in peril.” Because there is a government plan, a lot of private health care regulation normally outside the budget process (and not coincidentally, outside Senate Finance jurisdiction) now comes into the budget process. That means reconciliation is possible. That means you don’t need 60 votes to pass it.
What comes in and what goes out of a budget bill, in the final analysis, is a political judgment made by the members of the Senate. but they have seemingly agreed — against the clear text of the law — to hand the intial determination to the Senate parliamentarian. He or she will find it much more reasonable to include all health regulation in a budget bill if there is a public option.
And that’s one reason why the insurers and Pharma are so intent on killing it.