The Senate has taken a big step by announcing that its health care reform bill will include a public option, the details of which we've yet to see. But if we hope to have a fighting chance to reform the system, the public option will have to be more than the weak thing this one likely is.

With Senator Reid's announcement, we appear to be putting the finishing touches on dividing the health insurance risk pool in two:

• The high-risk public pool of elderly, unemployed or underpaid, chronically ill and dying individuals, along with children of low-income families, and
• The low-risk private pool of relatively healthy, employed and decently paid individuals.

The health care costs of the high-risk public pool are paid for with public funds. The health care costs of the low-risk private pool are paid for with private funds.

Here's the makeup of the high-risk public pool, broadly speaking:

• Medicare covers everyone over 65 along with end-stage renal disease patients, totalling about 35-40 million.
• Medicaid covers about 50 million low-income individuals, mostly children, pregnant women, elderly (dual eligible) or disabled. Among those covered by Medicaid are people whose very expensive chronic illnesses have caused them to "spend down" their assets to the point where they no longer have the ability to pay for health care.
• The limited public option, restricted to those qualified to participate in the insurance exchange and estimated to cover about 10 million people. The exchange risk pool will be a grab bag, including some self-employed, some employed by small companies, some unemployed and underemployed, some chronically ill with assets too high to qualify for Medicaid, and so on.

The high-risk public pool will cover 90-100 million Americans. The low-risk private pool will cover 180-200 million Americans. 10 or 20 million will remain uninsured and continue to drain the public and charitable side of the system.

Private health plans will operate in both the low-risk and high-risk pools. Public plans are forbidden to operate in the low-risk pool.

What we have here is reverse cherry-picking. Private insurors may no longer be able to deny coverage for pre-existing conditions, or cancel coverage when you need it most, but they are rewarded by a system that provides no public-sector competition in the lucrative low-risk private pool, and will drive more and more of the highest cost patients into the high-risk public pool.

There is only one risk pool that makes any sense, and that is "everone." Absent a public option that is available to everyone (the "E" in Medicare E) there remain too many ways for private insurors to game the system, skimming the more profitable portions of the pie while avoiding competition where it could truly make a difference.

Rejoice that the Senate can say "public option." Now it's time to be sure the words mean something.