Last night, it occurred to me that the public option idea is a disingenuous approach to health care reform. Here’s the argument.

Talking to other progressives, I’ve noticed that they all freely say that single payer will work better than a public option, and that it is the best alternative they know. And then they also go on to say that they are supporting a public option, rather than single payer, because it’s more politically acceptable and will result in a single payer system anyway after a number of years, since everyone will switch to the public option. The question is: would these progressives support a public option, if they thought it would not result in a single payer system? I don’t think so, even though their counterparts in the US Congress are currently fixing to do just that as a recent post by Kip Sullivan (thanks to ralphbon for the reference) shows.

So, basically, I think progressives are trying to fool opponents of the public option, when they say that it keeps the private system intact but gives it some competition “to keep it honest.” It’s true that it may do that, but the kind of competition progressives who prefer single payer intend it to provide is the kind of competition that will drive the private companies out of business.

On the other hand, supporters of a public option who don’t prefer single payer, are looking for a public option that will leave intact the capability of the insurance companies to safeguard their profits and raise their prices. So, their approach is also disingenuous, since they want to use the term "public option" to prevent any real change.

These two types of supporters of public option plans are both taking a disingenuous approach. They are really partisans of either single payer health care, or of the profit system in the private insurance industry donning sheep’s clothing. The question is: who’s going to fool whom? The way it looks right now, it’s a pretty good bet that it’s the progressives who are getting fooled and not the partisans of the insurance industry.

What about a third alternative? Isn’t it possible that some who say they support a public option are not looking for one that will drive private insurers out of business, or that will be too weak to influence prices and profits? This third alternative, the “honest broker” approach to a public option, is conceptually possible. But the question is, is it practical? Will it work to both bring down costs, and allow room for the insurance companies to continue to enjoy high profits?

I doubt it. The reason is that markets are not self-regulating, and no market can ensure that the public option will not dominate the others, or that the private insurers won’t dominate, even if a fairly strong pubic plan is instituted to begin with (which doesn’t look likely right now). At the beginning, everything would be poised on a knife edge. To maintain the market equilibrium and prevent its tipping one way or another will require very heavy Government regulation. In my view, this sort of arrangement is just not worth it. It provides a guarantee of continual headaches in making sure that it stays poised on the knife edge, and does not tip over to the private or the public side of the equation. Moreover, the arrangement will be very vulnerable to short-term political trends. When the Republicans are in office, there will be pressure and perhaps even additional legislation to weaken the public option. We have seen recent Republican Administrations simply break the effectiveness of public agencies one after the other, in part by appointing opponents of those agencies to head them, and then gut them. On the other hand, when Democrats are in office, the regulatory system will be used to make the public option more competitive, but depending on who Democrats appoint as regulators, the degree of competition allowed may be less than intense.

For these reasons the third, honest broker, orientation to the public option will, I think, be much more unstable and unsustainable than either of the other two disingenuous approaches. So, it will fail. And, if history is any guide, the health insurance lobby will probably overwhelm it, and it will tend, over time, to produce the ineffective public option that progressives fear, even if that is not the result of the original bill.

For progressives then, the only good outcome of the present effort at reform is to get legislation with a public option that will evolve into single payer. But Republicans and Blue Dogs know this very well, and they seek a public option that won’t constrain the private insurance companies substantially. So both sides are trying to bring about what they want by internal political maneuvering in Congress. Since the term “public option” is now vague and ambiguous, there is plenty of opportunity to construct numerous alternatives, all carrying the label “public option” that Congress can consider. All kinds of shadings and maneuver are possible in this process. Furthermore, it is easy to introduce complex alternatives that require close analysis to understand, and that have pitfalls that, in practice, might prevent the success of a public option. Whatever the result of this maneuvering in reality, it will carry the term “public option,” and the winners of the legislative struggle will be able to claim that they have fought, and voted, for President Obama’s “public option.”

In the end, what have progressives gained and what have they lost by allowing single payer to be taken off the table? Well, they’re still getting the charges of “socialized medicine” along with heavy advertising directed at the public option. They’re also still getting a lot of static about cost, since public option plans are probably more expensive than single payer. Next, they haven’t gained any support from Blue Dogs or Republicans because they’ve offered a public option. The Republicans are all voting “no,” and the Blue Dogs are trying, and probably succeeding, in creating a public option that won’t work, and that will provide increased payments for providers relative to Medicare. Of course, there appears to be greater openness of interest groups to the “public option” than there was to single payer. However, that openness is restricted to a public option that won’t cut into profits, rather than one that will.

On the loss side of things, by taking the disingenuous approach, progressives have fooled no one, but they have sacrificed the advantage of simplicity, and they have given all sorts of opportunities for amendments to Republicans and Blue Dogs. Instead of an expanded Medicare bill that everyone already understands to defend, the progressives will have a very weak public option bill to explain and then defend. If they end up favoring it, they’ll have to explain to the public why this complex bill will work. If they end up opposing it, they’ll have to explain to people why it’s not a “real public option” and why it won’t work. If it’s not going into effect until 2013, progressives will have to explain to their supporters why it can’t be implemented until then (and then they will have to explain why they are so ineffectual that they’ve supported a bill that won’t be implemented until 2013).

In addition, progressives have lost the advantage of a simple political situation in which they might have had better leverage on the Blue Dogs. With only a single payer bill representing the progressives, the Blue Dogs would not easily be able to create amendments to water it down, since what single payer means is very clear and everyone understands what it is. The Blue Dogs could not both introduce amendments to destroy single payer, and also claim that they were supporting single payer, as they can with the “public option.”

Finally, since the idea of a “public option” is new, progressives can’t point to experiences where it has worked. It doesn’t exist in any of the States and has not been implemented in any other nation. So, by proposing a public option, they’ve sacrificed the advantage of pointing to the experience of other nations in implementing single payer. Some progressives think that Americans are so blinded by pride in our own way of doing things, or so persuaded of the truth of "American exceptionalism," or so steeped in attitudes created by long-standing myths about health care works in the UK and Canada that presenting to them the experience of other nations with single or Government run insurance systems wouldn’t work and would make them hostile to the idea of reform. I think this view is an assumption that has not been tested appropriately empirically, and is just an article of faith among those who consider themselves more sophisticated about politics than others. I’m well aware of the cliché that no one has ever lost anything by underestimating the intelligence of the American people. But the nomination of Barack Obama himself refutes that cliché, since it shows that Hillary Clinton often underestimated the intelligence of Democratic voters, which is why Barack Obama was able to even get close to her in the early days of their competition.

Americans know that our system has failed us, and that it is projected to fail us even worse in the coming years. They know we need a new system. They can be told, and they will accept, the idea that it may be valuable to look at the experience and results of other nations whose citizens live longer than we do, whose infants survive more frequently than ours, whose citizens never die because of lack of health care coverage, and also never find themselves going into bankruptcy because their bills for medical care have ruined their economic lives and often their family lives as well.

We do not have to do everything those countries do, if aspects of their systems do not, for one reason or another, appeal to us. But we must, at least, attend to what they have done, to see if we can learn anything from them about how to be as or more successful than they are. To not look at their experience and consider it, is nothing more than to stick our heads in the sand, and to refuse to attend to the reality around us. If we insist on acting like that we will never solve any of our problems including the problem of reforming our health care system. I just don’t think that Americans, long said to be the most pragmatic people in the world, are that closed-minded.