Don’t kill reform over the public option

Five moderate Senate Democrats struck a tentative compromise this week with five liberal colleagues over the contentious public option, or government-run health plan for uninsured individuals and small businesses. Rather than creating a federal plan, the proposal would encourage nonprofit insurers (whose ranks include several state Blue Cross organizations) to offer coverage nationally through a federal agency. If none did, then the federal government would develop its own public option. In addition, uninsured people between the ages of 55 and 64 would be allowed to buy into Medicare.

Members of the “gang of 10” said the agreement hinges on getting a favorable review from the Congressional Budget Office. Meanwhile, advocates of a strong public option are complaining that the new version wouldn’t be effective in holding down insurance costs, which is one of the main rationales for having a public option. Judging by the initial reaction from insurance industry lobbyists -- “We win!” one crowed to Politico’s Ben Smith -- the advocates are probably right. The public option they coveted would be eviscerated under the proposed compromise.

We’d like to see Congress approve a public option because it could be a powerful force in improving the way healthcare is delivered and financed, but we don’t think the overall package should be held up over it. And opponents of a strong public option -- including every Senate Republican and half a dozen Democrats -- have shown that they’re willing to kill the bill over that issue alone. So it makes sense for supporters of healthcare reform to focus on other ways to slow the growth in costs, improve the quality of care and increase insurance coverage.

The proposal to have nonprofit insurers offer national plans is replete with practical problems, but the plans could still become effective laboratories for new payment and delivery systems. Opening Medicare to millions of uninsured 55- to 64-year-olds has risks too, particularly if reimbursements to doctors and hospitals remain artificially low. But if done right, it could save money in the long run by improving the health of those heading into retirement. Finally, Congress can revisit the public option after it sees how well the other reforms work. It would be a tough sell, but it would be better to try again in a future Congress than to have no reform at all.