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The resurrection of the public plan?
Have I seen twenty MSM articles on this theme in the last five days? Yet the betting odds are only slightly above their minimum point. Right now the contract is running at about twenty rather than eighteen or so a few days ago.
I don't follow the ins and outs of the trenches (try Ezra Klein), but as an outsider I don't understand why in strategic terms the Democrats are resurrecting this idea. It's their most likely path to failure, namely that they can't pass a public plan and can't easily go back to a bill without a public plan either. Any bill that is passed will be revised repeatedly in any case, so there's plenty of time to try to get a public plan in the future anyway.
Posted by Tyler Cowen on October 26, 2009 at 01:00 PM in Medicine | Permalink
Comments
The InTrade market is conflated with the deadline of Dec 31, 2009. Perhaps most of the market is trading on this cutoff, based on Senator Snowe's comments about pushing the vote into 2010.
Posted by: Christian at Oct 26, 2009 1:23:10 PM
That you frame this as a "resurrection" suggests you've been watching the wrong news sources. The public option was declared dead by right-wingers in the press, but Congressional Democrats have been quite clear that they were fighting for a public option the Senate could pass the whole time. The opt-out compromise that looks to be the final deal is weeks old.
Talking heads notwithstanding, it was never dead.
Posted by: G C at Oct 26, 2009 1:25:18 PM
I was thinking the same thing about the contract deadline, but then I didn't understand why there wasn't more interest in the March and June 2010 contracts.
Posted by: ryan yin at Oct 26, 2009 1:25:45 PM
The InTrade market you link to is the chance of passage by Dec '09. It's not surprising the probability is going down as that date approaches without having a bill out of committee.
Posted by: MostlyAPragmatist at Oct 26, 2009 1:26:24 PM
This is now-or-not-anytime-soon shot for Democrats. Bundling it with health care reform that everyone supports, and while they have huge majorities in both houses, is much easier than passing it separately after 2010 with smaller majorities.
The 60 Senators limit is pure fiction. You need 50+VP to pass laws, what public option easily has.
Posted by: Tomasz Wegrzanowski at Oct 26, 2009 1:30:35 PM
Still, it seems like potentially a good pickup. The top Democrats are still talking about passing the bills by Thanksgiving.
Posted by: G C at Oct 26, 2009 1:30:52 PM
Christian is right. The intrade betting is mainly about whether it can be done before Dec. 31, 2009, which is not looking that likely.
See http://thehill.com/homenews/senate/64451-healthcare-for-christmas
As for your other question, the reason so many Democrats are in favor of of the public option is probably because they believe it will be better for the country and believe it's achievable now. There are actually a lot of people who think that way, in my experience.
Posted by: Erik Brynjolfsson at Oct 26, 2009 1:34:58 PM
Why do people see the public plan as important? With or without it, the proposal does a lot of things, good or bad, and I don't see the public option as making any real difference.
Posted by: Alan Gunn at Oct 26, 2009 1:40:21 PM
The Intrade contract terms state that a state opt-in or opt-out provision will count as no public option.
Likewise with a trigger: Trigger=no public option.
Posted by: Garett Jones at Oct 26, 2009 1:49:27 PM
"The public option was declared dead by right-wingers in the press..."
Right-wingers like NPR?
Posted by: Noah Yetter at Oct 26, 2009 1:58:30 PM
I also do not follow the ins and outs all that closely, but I will suggest that the public plan is being resurrected to anchor the Dems' bargaining position. With a public plan on the table, Dems can claim that giving up public plan (again) represents a concession. It also makes the version of the Baucus Bill that passed the committee look like a "middle" position. So even if a public option would be unlikely to pass, seriously discussing it can still provide Dems with benefits.
Posted by: TomB at Oct 26, 2009 1:59:13 PM
Noah, I'm not sure what story you're referring to on NPR, so I can't say. They do have right-leaning hosts and commentators, though.
Garrett: good catch.
Posted by: G C at Oct 26, 2009 2:01:41 PM
The intrade definition of public plan has been clarified to indicate the plan must be truly national in scope. So, even the most expansive comprimise that is on the table in the Senate (the national opt-out public option, which is a Schumer modification to Tom Carper's state-based opt-in version) would not cause the contract to expire at 100. Accordingly, a fair price for the contract is probably in the single digits. I think the observed price can be accounted for by noting that many traders on the long side probably have not read the rules (at least since they have been most recently updated) and that there is some risk on intrade issuing a further (contradictory?) clarification. I know that many traders were frustrated by the clarification (which was explicit) that the opt-out proposal would not qualify, and I'm sure some potential short traders fear the same kind of definition uncertainty risk.
In any case, the intrade contract should not be relied on as indicator of the probability of some form of the public option being passed into law, though it is probably true that the direction of any shifts in the contract price have a relationship to that probability.
Posted by: Gabriel Weil at Oct 26, 2009 2:10:11 PM
The intrade definition of public plan has been clarified to indicate the plan must be truly national in scope. So, even the most expansive comprimise that is on the table in the Senate (the national opt-out public option, which is a Schumer modification to Tom Carper's state-based opt-in version) would not cause the contract to expire at 100. Accordingly, a fair price for the contract is probably in the single digits. I think the observed price can be accounted for by noting that many traders on the long side probably have not read the rules (at least since they have been most recently updated) and that there is some risk on intrade issuing a further (contradictory?) clarification. I know that many traders were frustrated by the clarification (which was explicit) that the opt-out proposal would not qualify, and I'm sure some potential short traders fear the same kind of definition uncertainty risk.
In any case, the intrade contract should not be relied on as indicator of the probability of some form of the public option being passed into law, though it is probably true that the direction of any shifts in the contract price have a relationship to that probability.
Posted by: Gabriel Weil at Oct 26, 2009 2:10:33 PM
For that matter, can we ask why the Democrats are so hell bent on passing into law something observers from most every vantage point think is terrible?
Hell, even the supporters of health care seem to spin its terribleness into some sort of Trojan Horse positive, "If we pass this terrible bill, we'll create such a disastrous CF that we'll have to do completely re-work everything in a few years.
So, basically, you're asking why people who set on doing something that makes no sense... are set on doing it in a way that makes no sense?
Posted by: MikeDC at Oct 26, 2009 2:19:18 PM
"* Fraud makes up 22 percent of healthcare waste, or up to $200 billion a year in fraudulent Medicare claims, kickbacks for referrals for unnecessary services and other scams."
http://news.yahoo.com/s/nm/20091026/ts_nm/us_usa_healthcare_waste
So, just scamming medicare is almost one quarter of the waste in medical spending. Sounds like a winner to me.
Posted by: Andrew at Oct 26, 2009 2:26:05 PM
I continue to be amazed that we have these discussions in the most abstract way. I would have thought the logical place to start would have been to define what is [and is not] covered by any plan - public or otherwise. I could support a basic - major medical type of public plan - that had coverage for the most needed services - and eliminated coverage for thing like marriage counseling and dental and eye care.
A limited scope public plan would provide the kind of insurance most needed and could override the hundreds of mandated coverages that have been added to various state plans [and medicare]. Insurance companies could continue to exist - and employers could continue to offer more extensive plans - but the consumer would be assured of a basic safety net. The alternative of not limiting the coverage - or even defining it of the "public option" leads us to the place Tyler's NYT op-ed piece suggest - spiraling out of control.
Posted by: Lonely Libertarian at Oct 26, 2009 2:29:39 PM
Tyler,
The strategy is simple. It takes 41 Senators to protect the public option, 60 to add it. So long as you don't think it knocks you below 60 votes for final passage, you can get something in that you probably can't add back later. Further revisions won't be useful - Democrats will probably lose a vote or two in the next elections, and thus probably won't be able to add a public option.
Also, I think you misread the post of Ezra's that you linked to. He's not saying its their most likely way to kill healthcare reform - its an interesting quandry, but unlikely to happen. Liberals won't join with Republicans to filibuster the whole bill once it becomes clear there are not enough votes to pass the public option. It'd be a death wish. (If you have another opinion, we'd love to hear it).
Posted by: Joe at Oct 26, 2009 2:49:35 PM
I see that there is a "plan" to allow states to opt their citizens out of the public option. Where is the "plan" that describes how these states opt-out of paying for the subsidized cost of the plan they opt out of?
Posted by: Bono at Oct 26, 2009 3:29:39 PM
Garrett Jones is correct and shame on me for not reading the details of the market.
The fact that InTrade considers the passage of an absolute, "no trigger", "no opt in/out", national public option a 15% probability means that a compromise version of the public options is much more likely than that.
Posted by: MostlyAPragmatist at Oct 26, 2009 3:32:18 PM
"I don't understand why in strategic terms the Democrats are resurrecting this idea. It's their most likely path to failure, namely that they can't pass a public plan and can't easily go back to a bill without a public plan either."
Answer: politics is not about policy.
Posted by: DWAnderson at Oct 26, 2009 4:03:20 PM
Please people. Everyone knows the Democrats have no interest in passing any sort of health care reform. No public option, no compromise, no nothing but the status quo.
Democrats have been selling socialized medicine as "what you have now, only better and for free". But everyone knows that public systems control costs using rationing. Medical systems in Europe don't do better because the average person gets better treatment, the medical systems in Europe do better because the people at the bottom get more equitable treatment. When Americans face Canadian style doctor shortages and waiting lists, and when they learn that socialized systems often deny people treatment, they are going to go ballistic, because all the health care statistics in the world don't mean shit when they can't get the treatment they want when they want it.
Democrats know that if they pass the public option, they replace insurance companies and Republicans as the scapegoat for all the system's faults. There will be no-one else to blame any longer. They will be the ones to take the blame when grandma can't get the hip surgery she needs.
If the Democrats support a watered down compromise with Republicans, the Democrats might be able to avoid the responsibility problem... but they won't be able to continue attacking the Republicans on the issue.
The only way the Democrats can continue to attack the Republicans on health care, and at the same not take the blame if the public option turns out to be a failure, is to make sure there isn't any sort of healthcare reform whatsoever. They can vote down any health care reform and blame the Republicans, and most voters will be too stupid to realize that the Dems have more than enough votes to pass whatever the hell they want.
There is 0% chance of any substantive reform happening, whatsoever. Anyone who isn't a brainwashed partisan true-believer (either a Democrat healthcare zealot, or Republican healthcare alarmist) can see that health care reform is dead.
Posted by: Vehical Driver at Oct 26, 2009 4:28:47 PM
Vehical: please, give us more of your insightful analysis. I never realized it could be so simple!
Posted by: a goddamn communist at Oct 26, 2009 6:39:16 PM
Tyler,
Vehical driver has already hit on it, but the public plan is back because it is the poisoned pill that kills reform in the most efficient way and politically acceptable way to Democrats. In the end, the plan will not be able to garner the votes for cloture in the Senate, and the Democrats will wisely, and with great theatrics, back down from any effort to do this through reconciliation. This way they retain the issue to run on indefinitely, they don't have to risk the implemented plan being unpopular with the electorate, and centrist Democrats can have their fiscal conservative bonafides polished and ready for 2010.
Posted by: Timothy Geithner at Oct 26, 2009 7:19:51 PM
By including the public option it is possible that the health care bill is scored as eligible for reconciliation rules, which eliminates the cloture problem.
Posted by: Matthew Ernest at Oct 26, 2009 7:41:13 PM
