Getting Specific on the Public Plan

Sen. Olympia Snowe is among the handful of Republicans who agree that private insurers haven't done a good enough job to be trusted with the provision of health insurance. But she doesn't think we should go straight to a public insurer. Rather, she's a fan of the "or else" strategy, as in, "Shape up ... or else." She supports a "trigger" option wherein if the private industry doesn't fulfill certain benchmarks (lowering costs, say), then and only then will a public option be introduced. In a recent interview with the Associated Press, she explained her thinking:

“If you establish a public option at the forefront that goes head-to-head and competes with the private health insurance market … the public option will have significant price advantages,” she said.

That language is, I think, a bit needlessly opaque. When Olympia Snowe says that they public option will have "price advantages," she's saying that it will be able to negotiate lower prices with health-care providers and thus offer consumers lower premium costs. This will make it hard for private insurers to compete because no one will want to pay more for worse service.

I imagine that Snowe's concern extends a bit further than that: If private insurers can't compete, they'll go out of business. If they go out of business, the government will control the market. If the government controls the market, various bad things will happen.

But it would be nice if the debate over the public plan got a bit more specific. It tends to focus on pretty weird questions of "fairness" and "advantages." But markets aren't fair. And public policy is about producing beneficial outcomes, not setting up some sort of arena battle between various forms of insurance companies. It would be useful to know what Snowe fears would happen in a market dominated by the public plan. How much money does Snowe think they would save (as that, of course, is why they're voluntarily choosing the public plan and its "price advantages")? Would this harm innovation? By how much? Would this decrease access? By how much? Why does she think that? Why should consumers prefer her world over Bernie Sanders's world?

Liberals, incidentally, should answer the same questions. The impact of the public plan is a serious policy question. It shouldn't just be gestured toward.