Senate approves ‘public options’ for final health care reform law

The phrase ‘public option’ usually refers to a government-run medical insurance program that would be offered in competition with private insurers. That option and a Medicare buy-in option were scuttled by the Senate after Joseph Liberman threatened to vote with Republicans against closing debate for this morning’s final vote on the legislation.

Several other ‘public options’ – government expansion of coverage and insurance subsidies – are included in both bills, so they are likely to be central components that make it through the conference committee for submission to both chambers in late January.

Eligibility for Medicaid will be expanded from those earning less than the official poverty level to those earning up to 133% of that measure. The U.S. Census determines the poverty level, and that expansion won’t occur until long after the next Presidential election, but their current statistics suggest that the number of people who will qualify for Medicaid could easily double. That’s a huge and very expensive increase in direct government-funded payments for health care, even if it isn’t technically government-run medical insurance.

The Congressional Budget Office guesstimates that this Medicaid program expansion would add at least $500 billion in new federal medical expenditures over the first 10 years, but the CBO wouldn’t venture an estimate of the increased cost to states. The federal government pays less than 57% of total Medicaid costs, with states picking up the remainder. In a purported deal with Senator Ben Nelson to overcome Republican opposition, Nebraskans will get those increased benefits at no cost to their state, ever. Nelson says he didn't literally ask for the exemption, but thinks it’s fair. Governor David Heineman says “the federal government can keep that money.”

The new ‘public option’ in both bills is also government-run, but it’s a restricted federal market for private insurance company policies that comply with all the new government restrictions and regulations. Those offerings will be subsidized by the federal government for any family that earns less than $88,000 a year (based on current figures, but actually a sliding scale up to four times the official poverty level that’s set in 2014). The subsidies are an ‘option’ and they do come out of ‘public’ funds, but it isn’t the kind of ‘public option’ that many of the President’s supporters had expected him to demand.

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