Don't underestimate the importance of Chuck Schumer's proposed compromise on the public plan. The Senior Senator from New York is not freelancing on this. Max Baucus asked him to work out the details of the public insurance option. And so he did. The public plan he has proposed will not be subsidized by the government or partnered with Medicare. It will not be supported by tax revenue or guaranteed access to hospitals and doctors. It will compete on a "level playing field" with the private insurance industry.
Which has put the private insurance industry in a tricky space. They had based the whole of their argument against the public plan on the idea that it would not compete on a "level playing field." Like brass knuckles in a boxing match, it would not be fair. But what if it is fair? What if you check its gloves? In that case, you have Karen Ignani, the head of the insurance industry, countering with two arguments. The first is that there is no need for a public plan “if you have much more aggressive regulation of insurance.” The needs of the American people, of course, are somewhat above the pay grade of the health insurance industry. The second is that “it’s almost impossible to accomplish [a level playing field],” which also doesn't make much sense.
And that's exactly the point. Schumer and the Democrats are splitting two critiques of the public insurance option apart from each other. The first, and most dangerous, argued that a public plan would make your health care coverage worse. It would be outfitted with expensive, unsustainable government subsidies. It would set its prices through legislative fiat rather than open market bargaining and thus shift costs onto private insurers. And eventually, it would reduce your choices on the open market, and not because you chose to abandon Aetna, but because the government had rejiggered the rules and made it impossible for Aetna to compete.
The second, and much less persuasive, is that the insurance industry doesn't want a public plan. They don't want to compete against it. They don't want to match its prices. They don't want to give up their profits. This is essentially what Ignani is saying when she protests that "more aggressive regulation of insurance" is sufficient. This argument is not about the danger the public plan poses to consumers. It's about the danger it poses to insurance industry profits. And insurance industry profits are not, in theory, the concern of the United States Congress. And nor, incidentally, are they particularly sacred in the minds of the American people.
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