Health Care Public Option is needed

Paul Krugman, nobel prize winning economist, further explains the need for a health care public option in his op-ed today:

When it comes to domestic policy, there are two Barack Obamas.

On one side there's Barack the Policy Wonk, whose command of the issues – and ability to explain those issues in plain English – is a joy to behold.

But on the other side there's Barack the Post-Partisan, who searches for common ground where none exists and whose negotiations with himself lead to policies that are far too weak.

Both Baracks were on display in the president's press conference last week. First, Obama offered a crystal-clear explanation of the case for health care reform, especially of the case for a public option competing with private insurers. "If private insurers say that the marketplace provides the best quality health care, if they tell us that they're offering a good deal," he asked, "then why is it that the government, which they say can't run anything, suddenly is going to drive them out of business? That's not logical."

But when asked whether the public option was non-negotiable, he waffled, declaring that there are no "lines in the sand."

It would be a crushing blow to progressive hopes if Obama doesn't succeed in getting some form of universal care through Congress. But reform isn't worth having if you can only get it on terms so compromised that it's doomed to fail.

The success of reform depends on successful cost control. We really, really don't want to get into a position a few years from now where premiums are rising rapidly, many Americans are priced out of the insurance market despite government subsidies, and the cost of health care subsidies is a growing strain on the budget.

And that's why the public plan is an important part of reform: It would help keep costs down through a combination of low overhead and bargaining power. That's not an abstract hypothesis, it's a conclusion based on solid experience. Currently, Medicare has much lower administrative costs than private insurance companies, while federal health care programs other than Medicare (which isn't allowed to bargain over drug prices) pay much less for prescription drugs than non-federal buyers. There's every reason to believe that a public option could achieve similar savings.

Indeed, the prospects for such savings are precisely what have the opponents of a public plan so terrified. Behind the boilerplate about big government, rationing and all that lies the real concern: fear that the public plan would succeed.

So Obama and Democrats in Congress have to hang tough – no more gratuitous giveaways in the attempt to sound reasonable. And reform advocates have to keep up the pressure to stay on track. Yes, the perfect is the enemy of the good; but so is the not-good-enough-to-work. Health reform has to be done right.

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