Part two in our week-long overview of health care reform.

Opponents of health care reform (or, at a minimum, opponents of the reforms being proposed in Congress) often decry “Obamacare” as a move towards (take your pick) socialism, rationing, death panels, bureaucrats controlling your health care, forced euthanasia, and budgetary nightmares.

Yikes. Sounds bad. It’s a good thing the reforms under discussion have nothing to do with any of this.

It’s important to remember that, although “Obamacare” has become synonymous with health care reform legislation like “Hillarycare” was during the ’90s, the White House has yet to propose any legislation. All of the talk about health care reform centers on the legislation working its way through Congress. There are many distinct plans (though the majority are quite similar) – the Senate HELP bill, the forthcoming Senate Finance Committee bill, the tri-committee House bill, Baker-Daschle-Dole, and Wyden-Bennett. And this list is just a selection of the more prominent plans.

To truly be engaged in the debate, we must both understand the underlying issues and what each of these different bills proposes to do.

In February, President Obama listed eight principles that he wanted comprehensive health care reform to follow:

Reduce long-term growth of health care costs for businesses and government

Protect families from bankruptcy or debt because of health care costs

Guarantee choice of doctors and health plans

Invest in prevention and wellness

Improve patient safety and quality of care

Assure affordable, quality health coverage for all Americans

Maintain coverage when you change or lose your job

End barriers to coverage for people with pre-existing medical conditions

How shockingly uncontroversial. These are broad goals that almost all policy wonks would agree with. Of course, the devil is in the details.

And the one detail that somehow became the prime focus of the health care debate was the public option. Many progressives see the inclusion of the public option as a benchmark for considering legislation a success and many conservatives see it as a back-door entrance into “socialized” medicine.

(Note: the term “socialized medicine” gets thrown around a lot, but it is often used incorrectly. In Canada, they have a single-payer system – a government-run insurance plan – called Medicare (!). The doctors work in the private sector, just like in our version of Medicare. In the UK, they have a truly socialized system where the government both pays for health care and employs the doctors. Be wary of pundits who confuse these two, very different systems.)

So what’s the deal with the public option? Here’s a basic definition: it’s a government-run insurance policy that would be offered along side private policies in newly created “health insurance exchanges.” It is not Medicare-for-all (single payer) and it is most definitely not UK-style socialized medicine (this is not even being considered). You will still have to pay premiums and co-pays under the public option.

Proponents argue that a government-run insurance plan could use Medicare’s infrastructure to bargain for lower prices from providers (e.g., hospitals and doctors) to offer effective competition to private insurers, driving down premiums and co-pays. Critics think that there is no way that a taxpayer-funded government plan could “play fair” with private companies and would instead undercut them on price, quickly take over the market, and push us towards single-payer.

In reality, both visions are off the mark. Only two major bills currently include a public option: the Senate HELP bill and the House tri-committee bill. Even the more liberal of the two, the House bill, keeps the public option on a “level playing field” with private insurers. This means that the public plan will have to follow the same rules about cost-sharing, consumer protections, benefit levels, etc. Also, the exchange – and therefore the public option – is only available to those not insured through their employer.

The end result is what some call a “weak public option” – one that can’t use the low Medicare payment rates and use its market clout for volume discounts. It is very much a compromise and, in my opinion, will help somewhat to put competitive pressure on private insurers, but won’t be the cost-cutting savior that many progressives think it will be.

I should note that there are strong arguments for a public option – Paul Krugman wrote an excellent post just yesterday about its importance. There is also a concern that, due to other reforms like a mandate to purchase insurance, prices could actually go up without a public option (because of a decrease in the elasticity of demand and collusion).

Ultimately, though, the public option isn’t the most important facet of reform. Not even close, really. The aforementioned health insurance exchanges win that honor. More about the exchanges tomorrow.