Maine Senator Olympia Snowe said on Sunday that the Baucus bill wouldn’t contain a trigger for a public option — because it would include co-ops instead. But the trigger isn’t dead.

Snowe’s public option trigger idea will be back, because they’ll need her vote but the changes she wants in the Baucus reform bill will tend to push her towards affordability features in the Senate HELP and House bills. Those bills — and their supporters — provide more generous subsidies, but they also insist a mandate with an exchange isn’t acceptable unless those required to purchase insurance on the exchange(s) also have the choice of a public health insurance option.

To her credit, Snowe is concerned about affordability, and much of her unwillingness to sign on to Baucus’ plan stems from her desire to provide larger subsidies to more low- to moderate- income persons who don’t currently have or can’t afford insurance. She likely understands that concern will only grow over time, as insurance premiums rise and more and more businesses raise employee costs or drop insurance completely.

It’s obvious we’re moving inexorably away from employer-based insurance, which means more people will be pushed into the individual markets and need subsidies in the exchange(s) and better choices. What will they find there?

At least 55 to 75 percent of Americans (and their doctors) can see what’s coming and support having the choice of a public option from day one. Those numbers are only likely to grow as people are forced to accept larger co-pays or less coverage or are pushed out of employer-based coverage and into the individual markets.

Unlike many in her party, Snowe is smart enough to see this coming. She knows we’ll need a different model and we’d better start building it now and improving the choices consumers will face.

She’s has never publicly defined how a "trigger" would work, but it presumably would have something to do with how well the private plans offered in the exchange brought costs under control and complied with the new regulations outlawing the insurers’ denial and exclusionary practices. As I noted in this post, there’s every reason to expect insurers to evade the regulations, so what about cost control?

It so happens that Massachusetts has been running an insurance exchange without a public option since 2007. Like the Congressional proposals, the Massachusetts plan imposes, with some exceptions, a mandate on businesses to offer (or pay) and individuals to purchase health insurance. If you don’t get insurance at work, or are self-employed or work for a small business, you can satisfy that mandate by purchasing insurance on a state-wide exchange, a web-site really, called the Connector.

So after three years, how is Massachusetts doing with the mandate/exchange framework Congress is considering? From today’s Boston Globe:

The state’s major health insurers plan to raise premiums by about 10 percent next year, prompting many employers to reduce benefits and shift additional costs to workers.

Increases will range from 7 to 12 percent, capping a decade of consecutive double-digit premium increases, according to a Globe survey of the state’s top health insurers. Actual rates for 2010 will depend on the size of the employer and the type of coverage, with small businesses and individuals expected to be hit hardest. Overall, premiums are more than twice as high as they were 10 years ago.

The higher insurance costs undermine a key tenet of the state’s landmark health care law passed two years ago, as well as President Obama’s effort to overhaul health care. In addition to mandating insurance for most residents, the Massachusetts bill sought to rein in health care costs. With Washington looking to the Massachusetts experience, fears about higher costs have become a stumbling block to passing a national health care bill. . . .

Insurers predicted many employers, perhaps a majority, will seek to trim costs by instituting “cost sharing," which boosts co-payments for doctor visits, or by offering less comprehensive coverage. That means the effective premium rate increases could fall more on employees than their companies.

Massachusetts has shown it can get most folks covered by some insurance by imposing a mandate with penalties — the State only has about 2.6 percent uninsured (not counting undocumented) — but it hasn’t shown we can sustain quality coverage at affordable prices. Masachusetts still has the highest premiums in the nation, and they’re going up again next year.

“Health insurance is increasingly unaffordable for average working people and for employers, especially small employers," said Drew Altman, president of the Kaiser Family Foundation, a nonprofit research group in Menlo Park, Calif. “It underscores the need to reach a consensus on how to reform health care and provide some help for low- and moderate-income people who can’t pay their insurance bills."

And the large cost increases are coming from all the major insurers: BlueCross/BlueShield, which covers 2.5 million, Harvard Vanguard, which has 1.07 milion, and Tufts, which covers 700,000 — they’re all going up about the same rate.

Massachusett’s experience should be enough to answer Sen. Snowe’s notion that we need to see what happens before trigging a public option. We’ve seen the future, and it doesn’t work. Just having an exchange in which the existing private insurers compete doesn’t seem to create more price competition or produce significant downward pressure on insurance premiums on provider costs.

We can’t be certain that a public option would reverse these trends, so it would make sense to begin testing the idea in regional markets, beginning next year. The last CBO assessment (response to Mike Enzi) concluded a public option would lower costs and put downward pressure on insurance premiums, but it wasn’t certain how much. In contrast, the CBO’s assessment of the co-ops (see Marcy, h/t Ezra Klein) in Baucus plan found them to be too weak to be effective, exactly what co-op critics like Jay Rockefeller have been saying.

Given her concerns, Snowe must now see that it makes sense to have a public option built on Medicare (think Medicare II) that could serve as a model for cost control and help alleviate her affordability and open access concerns. Rather than wait for a national trigger to prove what Massachusetts has already shown, the public option would provide a readily availble, fully operating backstop if, as looks more and more likely, the current private insurance system can’t do the job.

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Donkeylicious provides a handy chart comparing Massacussetts with variations of the Baucus bill, but the numbers are being recalculated, so check back.