Opt-out Gambit is Not Meaningful

Posted by John LaPlante in Public Option on Oct 28th, 2009 | no responses

Sen. Harry Reid’s proposal to let states opt out of a “public option” shows that the idea of a government-owned insurance company isn’t wildly popular. It is also a wave, if only of a pinky finger, towards federalism.

Today Stateline.Org, a web site dedicated to covering policy issues from the perspective of state governments, says the proposal, puts the focus on states and state-level politicians. The short article focuses on Utah and Nevada, and concludes by predicting, “With the opt-out clause dominating news coverage this week, expect to see more state officials weigh in as the health care debate in Washington evolves.”

But is the offer being made by Sen. Harry Reid, the Senate majority leader, any good?

The Heritage Foundation says It’s Still Just Just Government-Run Health Care. It argues that the result will be government health care in most of the country, since Republicans “run the entire show” in only 9 of 50 states. (I think that puts too much hope on the Republican Party, frankly.)

Roger Pilon, constitutional scholar at the Cato Institute, calls the opt-out proposal smoke and mirrors. He asks, “Will residents in states that opt-out be able to opt-out of the taxes needed to support the public option? (Please don’t say the public option will be self-supporting: we’re grown-ups.)”

Michael F. Cannon, Cato’s director of health policy studies, says the chief accomplishment of the proposal is that it lets Reid keep his job as majority leader, and calls it a ruse within a ruse.

The first ruse is a government-run health care plan that Cannon calls “Fannie Med.” The second ruse is the idea that state officials would actually agree to opt out, which is to say, pay taxes to Washington but not participate in Fannie Med: “State officials are obsessed with maximizing their share of federal dollars. Voters will crucify officials who opt out. Fannie Med supporters know that. They’re counting on it.”