Op-outs, Co ops, and Triggers. Oh, my!

The conservative think tank, The Heritage Foundation, in today’s Morning Bell reacted to Senate Majority Leader Harry Reid’s (D-NV) announcement that the health care legislation he is drafting will include a government-run health insurance plan by saying that it doesn’t matter what vehicle he chose. Op-outs, co ops, and triggers all lead to the same place – everyone in a government-run health plan.

Take the op-out. The piece notes that Reid has not provided a lot of details about how the plan would work. But, what we do know is that the plan would take effect in 2013 and states would have until 2014 to pass legislation declining participation in the program.

Here is what has the Heritage Foundation so worried.

“In 17 states Democrats control both houses of the legislature and the state house. In another 24, Democrats control at least one legislative chamber or the governor’s mansion. That, they say, leaves a total of only 9 states where Republicans run the entire show — Texas, Utah, South Carolina, South Dakota, North Dakota, Missouri, Idaho, Florida, and Georgia. That, according to the Heritage Foundation, means Americans in 41 states are all but guaranteed to have no choice but to endure the government run health plan.”

Turning to the idea of the co-ops that Sens. Chuck Schumer (D-NY) and Kent Conrad (D-ND) have both been pushing, the Heritage Foundation reminds us of the collapse of the mortgage market in warning us that this is a model guaranteed to fail.

“Simply calling some form of a government-sponsored enterprise (GSE) a “cooperative,” for instance, would be only another type of public plan in disguise. … One need look no further than Fannie Mae and Freddie Mac to see how GSEs can distort the market and leave taxpayers with huge liabilities. Decades of market distortions generated by their implicit government backing, compounded by the effects of repeated political meddling by Congress, put those GSEs at the very epicenter of the mortgage market collapse that triggered the current financial crisis and recession.”

Lastly, there is what the Heritage Foundation calls the “Trigger Trap”, an approach favored by Senator Olympia Snowe, (R-ME). A trigger is a legislative tool that would put in place automatic benchmarks that if not met, would immediately unleash the government-run system into the market. For example, if 95% of Americans as defined by the bill don’t have adequate health coverage by a certain date, the public option would be “triggered.”

The Heritage Foundation:

“What a trigger does is hold off the tough decision until future, uncertain circumstances. The public option would essentially become law today, but not go into effect until an undetermined time when economic conditions could be even worse. Had Congress enacted a trigger to save Clintoncare, the trigger would have forced states to implement HMOs at exactly the time everyone was moving away from that overly rigid version of managed care.”

Is it any wonder that the public option has become the most contentious aspect of the healthcare reform debate? It is shaping up to be the overarching factor that will determine how healthcare is financed and delivered going forward. Regardless of your point of view, this is where the action will be going forward.

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