The Politics of an Opt-Out Public Option in the States

The new plan in the U.S. Senate is to include a public insurance option in the health care overhaul, but to allow states to ...
by | October 27, 2009

The new plan in the U.S. Senate is to include a public insurance option in the health care overhaul, but to allow states to opt out of the public plan. While the policy implications of this compromise are opaque, the political implications are clear: The move would be politically convenient for Congress and politically inconvenient for state lawmakers.

The opt-out seems designed to allow Democrats in Congress who represent conservative areas -- senators such as Nebraska's Ben Nelson and Louisiana's Mary Landrieu as well as many of the Blue Dogs in the House -- to explain their vote for health care legislation to their constituents.

If these Democrats vote for health reform, they will face criticism for backing an expanded role for government in health care. But, with an opt-out, they will be able to say that the legislation not only didn't require any individual to obtain government-managed health insurance (it's a public option), but that it didn't require any state to allow government-managed health insurance either. Would the voters of Nebraska really blame Ben Nelson for voting for socialized health insurance, if the public option never existed within their state's borders?

For state lawmakers, though, what we're likely to see is something similar to the stimulus debate all over again. As with the stimulus, every state will be faced with a choice: Do we take what the federal government is offering or not? Republican lawmakers will face considerable pressure from their base to oppose a controversial component of legislation championed by President Obama and Democrats in Congress.

In fact, there's a good case to be made that the state-level debate over the public option would be more contentious than the state-level debate over the stimulus. With the stimulus, lots of Republican legislators and governors accepted the federal help simply because they thought the alternative was worse.

Maybe these Republicans weren't ideologically sympathetic to the idea of government-funded stimulus and maybe their most loyal supporters were clamoring for them to reject the money, but they understood that without the federal help they would have needed to cut programs or raise taxes even more than they already planned. Any state lawmaker merely had to look to California to see the political consequences of a truly calamitous budget situation.

Republican legislators wouldn't be as shy about opposing the public option. While the public option generally polls well with the public, support or opposition to it could easily become a litmus test for Republican voters. Anywhere that Republican lawmakers have a degree of power, I'd expect them to try to opt out, setting up a major political fight.

That doesn't mean they'd be likely to succeed, however. We don't have a lot of details on the particulars of the Senate bill, but let's assume that the opt-out would require legislation to be passed by both houses of a state legislature and signed by the governor.

My guess is that the states likely to opt out would include those where Republicans have complete control of state government or ones carried by John McCain in 2008 (i.e. the nation's more conservative states). Some McCain states probably don't deserve to be included on this list (would West Virginia, home to public option champion Jay Rockefeller, really opt out? How about Montana, with its ambitious Democratic governor, Brian Schweitzer?), but this list gives you some crude idea of where the playing field would be.

Besides the political implications, the policy implications would be massive. The McCain states and/or Republican-controlled states contain more than 112 million people and more than 20 million of the nation's uninsured, as you can see in the chart below:

Opt Out States  

Even in states that would be unlikely to opt-out, state lawmakers of both parties would likely have to stake out positions on the issue. The public option has been a central topic of debate in the nation's capital this year. Under an opt-out plan, it's likely to be just as central a topic of debate in the 50 state capitals next year.

Josh Goodman
Josh Goodman  |  Former Staff Writer

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