NTKG, Reporting

On the Baucus Bill:

I think Senator Baucus had caused something quite interesting to happen. In his version of the health bill today, he has not included a public option. That, however, is not to say that a public option with a trigger won’t be part of the final package.

Instead, he’s introduced the Co-Op function as a mechanism by which to cover the uninsured. There’s one problem with this, however: insurance companies and large employers cannot participate as part of the Co-Op. Co-Ops will be required to essentially build their own plans, negotiate with provider networks, and negotiate drug prices, all without actually cooperating with current insurance providers to expand coverage. Additionally, the bill doesn’t allow for large companies to participate. The Co-Op will only be able to provide services for individuals without coverage. Thus, you’ll have individuals buying from Co-Ops which will then comprise a likely high risk pool of people with potentially low incomes and probably large federal subsidies in a program that is unable to harness the power of large pools to negotiate lower prices. Sounds confusing? It is. A government run public option, however, has the size and force of the federal government with an established relationship with care providers, networks and pharmaceutical companies via Medicaid/Medicare. And what provider is going to deny guaranteed business with the federal government, versus multiple unstable new Co-Ops?

What impact will this have? Some insurance companies, if given the choice only between co-op and a public option with a trigger, they are more likely to advocate for the public option with a trigger. Why? Because they have a window of opportunity to absorb millions of new customers while trying to prove that they can handle the influx, still remain solvent AND prove that there’s no need for a public option. With the Co-Op, it’s an immediate government program which prevents insurance companies (private business) from vastly expanding their customer base.

This could be a pretty smart move on the part of Baucus, and a catch-22 for Republicans.