It's baaaack.
The government-run public option, which seemed all but dead just a few weeks ago, much to the joy of health insurers such as UnitedHealth Group (NYSE:UNH), Coventry Health Care (NYSE:CVH), and WellPoint (NYSE:WLP), is looking as though it might make a comeback.
Sort of.
Yesterday, Senate Majority Leader Harry Reid said the bill that comes to the floor will contain a public option that individual states can opt out of.
It's a public option; no, it's a government-run plan
While finances and politics often go hand in hand, Fools try out best to keep our political leanings out of the articles we write. Except when limited by space, I'll try to refer to it as a government-run public option to keep everyone happy.
Naturally, the lawmakers in Washington are a little more partisan. You'll hear the Democrats call it a public option and the Republicans call it a government-run plan. You can tell by the subliminal message in the labels who's for the public option and who's against the government-run plan.
By giving states the right to opt out, there's potential to make enough people happy to get a bill passed. Red states that want to keep the government from encroaching further into health care could opt out of the plan while still giving blue states the option of giving the evil insurance companies some much-needed competition.
If I sound a little snarky, that's because I am. I don't care if there is or isn't a government-run public option in the final bill. I doubt it'll make much of a difference to the cost of health care one way or the other. What's important is that we get a reform bill passed that lowers health-care costs so we can all get back to making money. We should know fairly soon how well the merged bill from the Senate Finance Committee and the Senate's health and labor committee does at lowering costs; Reid has already sent it off to the Congressional Budget Office.
The backup-backup plan
If the Senate leadership can't get enough support for an opt-out plan, the backup plan seems to be a trigger that would cause a public plan to be set up in states where insurers weren't able to expand coverage quickly enough.
That might be palatable enough to bring in some people opposed to the government-sponsored public option, but it could also upset some lawmakers who feel strongly that a public plan is a necessity.
How bad would it hurt insurers?
It's hard to tell; there are still lots of details to be worked out: How do states opt out? Governor? Legislature? Special referendum? Can states opt back in? One report said that the public plan might be structured so that states had to be in the program for two years before they could opt out.
Clearly, some public option is worse for the insurers than no option, although I'm not convinced that they can't compete well against a government plan that'll probably be run as inefficiently as every other government program.
Unfortunately, until a bill is signed by the president, the stock prices of health insurers are likely to move up and down at the ebbs and flows of the government's debate and actions, just as Bank of America (NYSE:BAC), Citigroup, AIG (NYSE:AIG), General Motors, Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) have done in the not so distant past.
For everyone's sake, let's hope some compromise is reached as quickly as possible.
What say you, Fools? Is this a good compromise to get the legislation passed, or is any government involvement still intolerable? Let us know in the comments.
