The Not-Quite-Public Plan


Solid details on the Senate's sorta-kinda secret health care deal are still scarce—there's no official summary available yet, much less anything like legislative language—which leaves open a lot of questions. One of those questions is what the proposed new national plan(s) based on federal employee health benefits would look like. 

Here's how the NYT describes the basic shape of the proposal, which it labels a "not-quite-public plan": 

The goal would be to provide a menu of private, nationwide insurance plans, and for the Office of Personnel Management to oversee them, conducting the same type of negotiation over benefits and premium prices that it does for federal workers.

The federal employees health plan offers federal workers an array of different private insurance plans, including fee-for-service plans, with preferred provider networks and lower cost HMOs. Several of the plans are national in scope—the most popular is a national Blue Cross plan—and benefits are portable, from state to state, and usually can be carried into retirement.

…Although the plans are all private, the fact that the program is regulated by legislation, overseen by a federal agency, the Office of Personnel Management, and serves federal workers gives it the aura of public insurance even though it is not public insurance. And giving many Americans the same coverage as members of Congress is a politically potent—and appealing—concept for both lawmakers and the people they serve.

Even at this early stage, the idea has already been subject to a fair amount of criticism. Tyler Cowen says he thinks of the FEHBP as "a somewhat indirect voucher scheme, albeit with complications," but isn't sure what it would look like when scaled up. The Galen Institute worries that the plan, which would presumably work heavily with the private insurers that the FEHBP works with now, would bolster the market power ofa few large players and make the health insurance market even less competitive. And Cato's Michael Tanner points out that the FEHBP wouldn't make a great model because it's already riddled with problems: Costs are rising faster than average and, as a result, premiums are going up and plan choices are dwindling. 

Nor is it clear that OPM could handle the new administrative duties. As Tanner writes, "former OPM director Linda Springer doubts that the agency has the 'capacity, the staff, or the mission,' to be able to manage the new program. Taking on management of the new program could overburden OPM.  'Ultimately, it would break the system.'" Even liberal reform supporters like Jon Cohn are questioning whether OPM could handle a dramatic expansion given its small staff and relatively limited authority. 

In other words, one of the key elements of the supposed "deal" is something of a mess. Indeed, the more I read about this deal, the less I think that's the right way to describe it. With so many factors left uncertain, and the support of so many key players still up in the air, it's more like a hope for a deal, and a show of confidence that reform advocates think might create an air of inevitability. 

NEXT: Will History Channel and/or Matt Damon Get to the Bottom of 9/11?

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  1. Well, rest assured that in the end, the SHeeple (thats us) will get the short end of the stick!


  2. Wait a sec...so federal employees can carry plans from state to state?

    Here is a simple reform idea, use the power of the interstate commerce clause in the correct way and make sure this applies to all plans.

    Okay, nothing shocking there, but what the fuck is the need of congresscritters to do complex things when simple solutions exist?

    1. Agreed.

      If you want people to have nationwide portable plans, just let insurance companies offer their existing statewide plans nationwide.


  3. I'll give you credit on this one, Suderman. That last line is right on. I noticed the "deal is done" talking points showing up in bulk a couple of days ago.

  4. The Real Chicago Way A privatization scheme that's a loser for taxpayers

    When the entertainers of the right aren't declaring their disgust with President Obama for groveling before foreign potentates, they're pretending to fear him as a left-wing thug, an exemplar of what they call "the Chicago way." As imagined by the right, the men in the West Wing are like a demonic cross between the antiwar demonstrators who gathered in Grant Park in 1968 and the Chicago cops who cracked their hippie skulls. Tremble, men of commerce, before this infernal combination.

    Myths like this are fun to invent. The problem, as ever, is reality.

    Consider one of the actual news stories to emerge from Chicago of late: The city's decision to privatize its parking meters. Thanks to a deal finalized in 2008, Chicago's parking meters will be operated for the next 75 years by a group of investors put together by Morgan Stanley, including the sovereign wealth fund of Abu Dhabi.

    Chicago Mayor Richard Daley
    As it happens, Chicago is the nation's leader in municipal privatization efforts. That's right: The city that conservatives portray as the citadel of the power-grabbing, government-growing left has been selling itself off in pieces for years. It signed a 99-year lease for the Chicago Skyway, a toll road in the city's South Side, back in 2005. It did the same for its big downtown parking garages in 2006. Last year, it approved a deal to privatize Midway Airport; fortunately, the arrangements fell through.

    The city's longtime mayor, Richard M. Daley, is such a keen enthusiast of privatization that he has promoted it as the budget solution for every government in the land. "If they start leasing public assets?every city, every county, every state and the federal government?you would not have to raise any taxes whatsoever," Mr. Daley told the Chicago Sun-Times in January. "You would have more infrastructure money that way than any other way in the nation."

    Selling public property is the true Chicago way. Had Mr. Obama not been elected president, the nation's business journals would be falling over one another to praise his city for its daring, market-friendly innovations.

    And if they chose, they would also find just as much to criticize in Mayor Daley's real-life privatization spree as they do in the brutality that they imagine President Obama shows his opponents.

    The details of the parking meter deal, for example, were negotiated by the Daley administration with almost no public scrutiny. When it came time to approve the billion-dollar arrangement, the city council got exactly two days. It was a farce. According to a report issued by Chicago's inspector general, "No financial analysis was provided of the value of the parking-meter system to the City if it retained the system, since no such analysis had been done. . . . There was no public comment; no testimony from critics or experts; no presentation of recent studies" on privatization elsewhere.

    It was not until months later that Chicagoans discovered what a lousy deal it was. The inspector general's report estimates that the private investors paid a little more than half the amount that the system would have generated had the city held onto the meters itself.

    One alderman, described at length in the Chicago Reader last May, figures that the parking system might be worth four times what the investors paid. "The taxpayers had been hosed," the Reader concluded.


    1. the brutality that they imagine President Obama shows his opponents.

      Tell that to Ryan. You know, the election opponent whose sealed court files detailing his divorce was mysteriously circulated at just the right time to get Obama a Senate seat.

    2. Yeah, a "Farce." I'm glad someone finally came out and said it--- Chicago lost one billion dollars, and now the money's almost gone.

      Richard Daily

  5. I think the best way to describe the reformers on this is "pot-committed."
    They are so invested in getting health care reform that they can't turn back now. Gotta cobble together something.

    1. They're like Bush on Iraq.
      If we don't pass healthcare reform, the terrorists win.

  6. In other words, one of the key elements of the supposed "deal" is something of a mess.

    C'mon, Petey. The whole thing is steaming pile of clusterfuck that can't be fixed. Just admit it, and move on.

  7. The USA would have to declare bankruptcy if it were a private individual or corporation. As such, the health care "reform" effort looks to me like someone figuring out how they want to run up the last $100 on their last credit card with any room left on it. It's going to end badly, regardless of where the money is spent.

    1. Leasing public assests the way Daley is reminds me of a pyramid scheme-- lease away tomorrow's assets, to balance the budget today. Then, when there are no more City assets left--run.

      Dick Daily

  8. So what you're saying is, this "plan" is just a big muddled mishmash of what-ifs and wouldn't-it-be-nices?

    This surprises me.

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  10. regardless of the bill they pass we are going to have to deal with this typobounty.com/Funny/Health_Care_Reform3.htm just be prepared

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