CBO: Progressives' Public Option Saves $85 Billion Compared to Blue Dogs' Preferred Approach

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by Jed Lewison

Congress Daily reports new CBO estimates show a strong public option would save an additional $85 billion compared to a weak one:

In a bid to wrangle concessions from the Blue Dog Coalition on healthcare reform, House leaders Thursday released CBO estimates for liberals' preferred version of the public option that show $85 billion more in savings than for the version the Blue Dogs prefer.

Rep. Stephanie Herseth Sandlin, D-S.D., a Blue Dog co-chair, said any possible new momentum toward a public option tethered to Medicare rates is, in part, "because of the cost issue" and the updated CBO score.

The original House bill required the public plan to pay providers 5 percent more than Medicare reimbursement rates. But as part of a package of concessions to Blue Dogs, the House Energy and Commerce Committee accepted an amendment that requires the HHS Secretary to negotiate rates with providers. That version of the plan will save only $25 billion.

In total, a public plan based on Medicare rates would save $110 billion over 10 years. That is $20 billion more than earlier estimates, a spokesman for House Speaker Pelosi said.

As Ezra Klein writes, the CBO scoring only reflects the savings to government -- there would be additional savings to consumers.

Moreover, the CBO is estimating savings to the government. That is to say, the $85 billion reflects reduced federal spending on subsidies because premiums in the public plan will be lower. Savings to individuals and businesses paying lower premiums will be much larger than $85 billion, and politically, much more important.

Those who oppose the public option -- Republicans and a diminishing group of Democrats -- really are on the wrong side of this debate. The public option isn't about creating an expensive new government program that would give Ronald Reagan nightmares -- it's about making health care insurance cheaper and better for more people.

The public option is a simple idea, it's a good idea, and it's popular. There is no reason it shouldn't happen.

http://www.alternet.org/blogs/peek/cbo%3A_...pproach/#142893

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Saves $85 billion = Will cost the taxpayer $915 billion instead of $1 trillion

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The public plan saves money because it pushes down premium prices. Lower premium prices across the country would mean the government would have to pay less in subsidies to low-income people who buy insurance through the exchange, according to CBO. Medicare rates are typically lower than those paid by private insurers, so using that formula would allow the public plan to charge considerably lower premiums to stay solvent. If the government has to negotiate the same way insurance companies do, public plan premiums likely won't be as low -- hence less savings.

Blue Dogs argue this would be bad for physicians. "We can't save costs on the backs of people who represent constituent patients and providers who've been at a competitive disadvantage," Herseth Sandlin said.

She also said discontent with a Medicare-based public option goes outside the Blue Dogs. "I think they [leadership] realize that outside of Blue Dogs, there are people who are not happy with pegging it to Medicare and believe there are other adjustments we can make to bringing the costs down," she said.

Along those lines, the Caucus is also discussing additional ways to bring down the cost of the bill, which was originally scored at $1.1 trillion. President Obama has set a target of $900 billion.

http://www.nationaljournal.com/congressdai...090925_6347.php