Hillary Clinton is getting serious about health care reform

Now that we've got ObamaCare, the question of where to take health care reform next has been a major rift in the Democratic presidential campaign. But on Monday, Hillary Clinton dropped a pretty big hint she's looking to shrink the gap between herself and Bernie Sanders on the issue.

For most of her campaign, Clinton supported a series of modest tweaks to ObamaCare. Then, a few months ago, under pressure from Sanders and his supporters, Clinton expanded her position. She started backing more generous subsidies on ObamaCare's insurance marketplaces and a "public option." Now she's going even further.

This requires a little unpacking, since there are several versions of the public option, and people tend to blend them together. The first version is the weakest. State governments create an insurer to compete with the private players on the exchanges, but it's otherwise on its own. This watered-down public option appeared to be what Clinton initially meant. The second, much stronger version, would explicitly be able to reimburse providers with the same payment rates Medicare uses. The third version is basically as strong as the second, but it would just let people on the exchanges buy into Medicare's coverage directly, as one possible option for meeting the individual mandate's requirement that they have insurance.

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As of now, Clinton actually appears to be on board with the third version — with the caveat that while she supports extending the Medicare option to some ages below the official retirement threshold of 65, she wouldn't go too far below.

"I'm also in favor of what's called the public option, so that people can buy into Medicare at a certain age," she told voters at a Northern Virginia campaign stop on Monday. "Which will take a lot of pressure off the costs."

If passed, this proposal would be a big step forward from ObamaCare's status quo. Because as beloved as it was by the left, the public option — even the strong version linked to Medicare — was always somewhat redundant.

The point of ObamaCare was to make the private market for insurance more rational and humane. Ideally, private insurers should act as agents and advocates for their customers. And they should make their money by competing to see who could do that the best: Who could provide customers with the best care at the lowest cost.

But before ObamaCare's reform, insurers were actually competing to see who could exclude as many sick people as possible from the pool of people they insured, and thus make their profit by covering mainly healthy people at low cost. ObamaCare cut off that option, forcing insurers to compete based on value, efficiency, and affordability.

"Competition" is the key word there, and that was ostensibly what the public option was there for: An extra player in each marketplace to keep the private insurers on their toes. But of course you only need the public option if you lack enough private insurers in a marketplace. If the number of private competitors is high enough, they'll keep each other on their toes just fine. And there are other policies that can ensure that level of competition other than a public option, in particular moving from 50 state exchanges to one national exchange.

So ObamaCare and the public option are both premised on the idea that American society will continue to rely primarily on the private insurance market for health coverage. Among some on the left there was hope the public options could expand their market share over time, and thus become a de facto single payer system — i.e. where the government serves as the default insurer for everyone.

But if you're a single payer advocate, that's an awfully roundabout way to get there.

Medicare, by contrast, already is a single payer system. It's single payer just for old people, but it's single payer all the same. And it works pretty well: The coverage it provides is popular with voters, and it does a reasonably good job controlling costs.

So why not just lower the retirement age for Medicare? You could imagine a scenario where Clinton manages to push through legislation getting it down to age 60. Or maybe 55 if we're lucky. And then a few elections cycles later, another president and another Congress lower it by another five to 10 years. Until one day, Medicare has become Medicare-for-all.

For anyone aiming for universal health coverage, one of the most fundamental questions is whether to do it via the government or the private markets. Single payer does the first and ObamaCare does the second.

Right now, we have an ungainly system of single payer for old people (Medicare), single payer for poor people (Medicaid), ObamaCare for those on the individual market, and then coverage through your job for everyone else. (Experts basically all agree this last system is terrible and should be replaced with one of the others.) It would be useful for the country to decide which route — government or private markets — it wants to focus on.

Clinton's new proposal would expand on the single payer option. It would be incrementalism, but real incrementalism — not just the cop-out variety.