Going public

Somewhere in the half-century fight for health-care reform, the public option became a liberal litmus test.

It seemed to wither amid the shouting of the August town hall meetings, and now it's back.

Sort of.

That is, congressional Democrats are trying to come up with a maybe option -- a government-run health that would kick in under certain conditions. If a certain trigger threshold is met. If states have the right to opt out. If there is a full moon on the night it passes.

All, of course, to provide a bit of cover to those who think a public option will cost too much, drive insurance companies out of business or just be difficult to defend back home.

Now Harry Reid says he'll send the opt-out version to the Senate floor. So the public option lives! (At least until it gets to a House-Senate conference committee, where good ideas go to die.)

But what if it's more political talking point than ground-breaking reform? Even leaving aside the opt-out provision -- which could lead to a patchwork system -- has this thing been oversold?

On Monday's WashPost op-ed page, two columnists argued yes. One was Robert Samuelson:

"The public plan's low costs would be artificial. Its main advantage would be the congressionally mandated requirement that hospitals and doctors be reimbursed at rates at or near Medicare's. These are as much as 30 percent lower than rates paid by private insurers, says the health-care consulting firm Lewin Group. With such savings, the public plan could charge much lower premiums and attract lots of customers. But health costs wouldn't subside; hospitals and doctors would offset the public plan's artificially low reimbursements by raising fees to private insurers, as already occurs with Medicare. Premiums would increase because private insurers must cover costs to survive. . . .

"Medicare has low marketing costs because it's a monopoly. But a non-monopoly public plan would have to sell itself and would incur higher marketing costs."

The other was Fred Hiatt, who says a government-run plan "allows Democrats to make their base happy, to bash the unlovable insurance companies -- and to claim to be taking care of cost control, too, by ensuring competition in the marketplace.

"The claim merits skepticism. If, as advocates sometimes argue, a public plan operates without favoritism, it will be simply one more entrant in the marketplace. Like other companies, it will have marketing and administrative costs. In some markets served by few private plans, it could offer a useful alternative. But it won't radically reduce costs.