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A Trigger — With Teeth?

Ben Nelson, the Nebraska-based centrist Democrat who’s vote will almost certainly be among the most difficult for President Obama to get in his push for health-care reform, yesterday signaled that he might support a public-option — but only if it has a so-called “trigger” mechanism under which the plan would kick in after 3-5 years if certain, as-yet-unspecified conditions were met. The “trigger” has also been floated by Maine’s Olympia Snowe, who may be just as essential a vote for the White House.

As with most things on health care, the devil is in the details of a trigger plan. However, there are versions of a trigger compromise that progressive Democrats ought to be willing to accept.

And what, pray tell, might those conditions be? The most obvious is that a trigger couldn’t be overly tolerant of further growth in health insurance premiums. For instance, suppose that the trigger were triggered if the average cost of health care for a represenative cohort of adults rose by more than inflation + 0.5 percent over the next five years. Health insurance premiums, according to an estimate by the Commonwealth Fund, are expected to increase at an annual rate of about 5.5 percent over the next dozen years, whereas inflation typically runs at between 2 and 3 percent. If premiums were to grow at 3 percent per year instead, that would save the typcial family about $5,000 per year by 2020. This is not trivial.

But secondly, the insurance companies would need to have real reason to fear the trigger. And that means having a public option that, if it were triggered, would be able to negotiate at Medicare rates, or perhaps Medicare rates plus a small premium of 5 to 10 percent. This is how the public option was originally envisioned — but the provision appears to have been stripped from the version of the House bill passed by the Energy and Commerce Committee, which arguably represents about the maximal bill that a sufficient number of Blue Dogs would be willing to accept.

Indeed, if the public option were “softened” by having to negotiate at prevailing private-industry rates, and particularly also if it had to offer premiums at prevailing private-industry rates, it is not clear how much good it would do. It would just be another plan in a market of increasingly undifferentiated plans. Perhaps it would be able to generate some savings in terms of administrative and advertising costs — although if premiums were indexed to private-industry norms, this would result in a profit for the government (not necessarily a bad thing; it would reduce the debt) rather than having any direct impact on health care costs for families.

In other words, given a choice between a “robust” public option that would be subject to a trigger, and a non-robust public option that would be prevented from leveraging much of its negotiating power but would be in place from Day One, the former would probably be the better choice for Democrats — particularly as the mere specter of a robust public option could have a lot of deterrent value for the private insurers. Of course, this is an artificial choice: progressives want a public option that is both robust and immediate. But it’s not clear that they have the votes for one.

The other worry that progressives have about the trigger is that it could be compromised — meaning cancelled — by some future, presumably more conservative Congress. I’m not sure, however, that this concern is warranted. For one thing, once the trigger became law, it would probably have to overcome a Democratic filibuster to be overturned. Even under somewhat worst-case scenarios for the Democrats, they are unlikely to be in a situation in the near future where they wouldn’t be able to muster up 40 votes in the Senate. For another, so long as a Democratic president remained in office, even 60 votes might not be enough — such a proposal would probably require 67, in order to overcome a Presidential veto. And for a third, the Republicans would be on the wrong side of the politics. Americans might be a little bit daft when it comes to the impact of various proposals to reform the health insurance system, but a bill which sought to overturn a de facto cap on the growth of health insurance premiums — which is what a well-structured trigger plan would be — would not be very popular.

I don’t mean to sound naive here — and I’m sure that this is not the sort of trigger mechanism that Ben Nelson has in mind. But if Democrats insist on a public option, they ought to recognize that (i) the public option has already been significantly compromised and (ii) there may be better compromises available — some of them involving a trigger.

Nate Silver is the founder and editor in chief of FiveThirtyEight.