Public Option Genie Will Soon Be Out of the Bottle

Very soon, the Congressional Budget Office will release a score for the House Democrats' draft health care legislation. Their bill contains a relatively strong self-financing public option. My research has led me to conclude that including a strong public option will result in the bill being scored several hundred billion dollars cheaper.

The House bill is very similar to the draft legislation from the Senate HELP (Health, Education, Labor and Pensions) committee. Both fix the size of credits, which would be given to help individuals buy health insurance, to the "reference premium". In both, the "reference premium" is the average of the three cheapest available plans. I explained previously how offering a much cheaper public option would reduce the cost of the "reference premium" and dramatically lower the amount in subsidies the federal government will need to pay out.

While the two bills differ slightly in who is eligible for subsidies, (House is people between 133%-400% of the federal poverty level, Senate HELP is 150%-500% of federal poverty level) the general effect of including a strong public option should be the same. The strong public option could easily reduce a bill's score by $100-$300 billion.

Once the savings of a strong public option is scored, it should dramatically change the nature of the debate. Already an overwhelming number of Americans support the public option. Once it is clear it will also save the country hundreds of billions, it will be hard to argue against it on vague ideological grounds. Members of the Democratic leadership, who once thought they would be able to use the public option as a bargaining chip, will quickly find out that including a public plan is the only way to receive significant grassroots support.

Soon the public plan genie will be out of the bottle, and it is going to be very difficult to put it back in.