Compromise On Public Option Brewing For Health Overhaul

While President Obama took center stage on health overhaul this weekend with a rare Capitol Hill visit to rally Democrats, the real action was going on far behind the scenes.

A group of 10 senators—five moderates and five liberals— is reportedly making progress on a new flavor of public option, or government sponsored insurance plan, that would be offered as an alternative in new marketplaces for individuals, families and small businesses.

The idea, still sketchy, would be for the federal Office of Personnel Management to contract with private insurers for a national health plan that would take the place of a directly run government plan. OPM runs the Federal Employees Health Benefits Program, or FEHBP, for government workers that some have held up as a coverage model for all Americans.

 

The ultimate goal is to devise a plan that would draw support from enough moderates, including avowed opponents of the existing public option, to get to the magic number of 60.

Political reaction so far is upbeat, with administration overhaul czar, Nancy Ann DeParle saying, "I think it has potential," according to the Washington Post. Key Republican Sen. Olympia Snowe of Maine called the potential compromise "a positive development."

Yale economist Jacob Hacker, father of the public option, isn't so hot on the idea, though. Writing about on the New Republic's Treatment blog, he called it "another, even stranger idea" than the co-operatives previously proposed as an insurance alternative.

How come? "Since the FEHBP is itself a form of exchange, this amounts to offering a new set of private plans within a new set of private plans," he writes. "How is that going to provide real pressure on private insurers in a consolidated insurance market in which nonprofit plans already have a large presence (and often act little differently from for-profit plans)?"