Week of June 29th, 2009

The U.S. Congress has adjourned for the Independence Day recess. Well, except for the hard-working Chair of Senate Finance, Max Baucus of Montana. He’s staying here in DC so he can have a package ready for roll out next week. His original attempt came in at $1.6T, so they went back to the drawing board in order to achieve a CBO score less than $1T. We’ll keep you posted if his staff leaks anything this week.

The Senate’s Health, Education, Labor and Pensions [HELP] Committee couldn’t finish their mark up last week - slowed down by too many Senators seeking amendments, and by the sheer size of their bill. As well, their process was impeded by all the GOP Senators complaining about sticker shock, and the unconscionable national debt bequeathed to future generations.

The House couldn’t finish their mark up either, for similar reasons. Their effort seems to be closer to what the President wants, since their version of the public option makes no mention of Sen. Conrad’s co-op idea. Conrad [Chair of Senate Budget] thinks co-ops would be more likely to get bipartisan support. Hopefully he provides more details soon, so that a more robust debate can ensue.

For now, our understanding is that these co-ops would be organized at the state level, and would comprise citizen owners who would not only be insured by the co-ops, but would make the key decisions about how they run and split profits at the end of the year. The main drawback is that they cannot achieve the economies of scale that national programs can, and would therefore be less likely to drive down cost. Consequently, competing on price would be difficult, and the private plans would simply outgun them in any state where there are only one or two dominant players in the market.

The public option, on the other hand, would be a national scheme, introduced as one option among many in a national ‘marketplace’, or health insurance exchange.

It would be paid for by the premiums of those who sign up, and could compete on price with the private plans because the public option would have much lower operating costs and more bargaining power, simply on account of its national scope.

More next week.