Though the currently proposed Health Care Reform Legislation is a disaster, it does contain at least one good proposal. That's the Public Option—the only aspect of the bill that will truly "bend the cost curve."
In my previous post, Health Care Reform Legislation: A 1,000 Page Complete Disaster, I stated my opposition to the current proposal in Congress. My opposition to the current proposal, however, should not be construed as opposition to health care reform in general. To the contrary, quite the opposite is true. I'm a strong advocate of health care reform. But new legislation must bring an improvement to the health care system. It must be at least a small step forward, not a step backward. Unfortunately, the current proposal is the latter.
But there is at least one aspect of the current proposal, however, that is a step forward—the public option. Not surprisingly, it's also the most feared by the many rich special interest groups who oppose the current legislation. But this is the one and only proposal that will actually "bend the cost curve."
And the simplest public option need not cost taxpayers a dime. A public option could be structured such that enrollees pay the entire amount of the premiums, with the premiums based on the actuarially-determined cost of providing medical care for persons in that age range. Though the equivalent premium for a 65+ Medicare enrollee would be $8,000 - 10,000 annually, an actuarially-adjusted premium would be much less for younger enrollees.
Patients over the age of 65 have a higher average total health care cost per year. (Based on Treasury documents, that would appear to be $8,000 to $10,000/year.) This is the amount that Medicare and the patient combined have to pay each year.
The Part B (outpatient care) cost for current, over-65 Medicare enrollees is in the $4,500-$5,500 range. The cost for the under-65 population would obviously be much less.
The Part A (hospital inpatient) cost for over-65 Medicare enrollees is in the same range as the Part B cost—$4,500-$5,500 per year. In contrast, the Part A cost for the under-65 population would be much less than for those over 65, since younger patients rarely need hospitalization. The reduction in cost here could be as much as -$4,000 to -$5,000. Due to this reduction, the premiums needed to cover annual costs would also be that much less.
While the cost of health care for those under age 65 is less, the cost is a lot less for those who are quite a bit younger. Far fewer medical problems occur in younger patients. And even if they do, recovery is much faster (and less costly.) This is true for every age range as one goes down the age ladder. Patients from 60-65 cost less on average than patients 65-70, while patients from 55-60 cost less still. Patients from 50-55 cost even less. Patients 45-50 cost less still, and so on and so forth.
So why not start a plan, administered by the government, that CHARGES enrollees in each age range the average annual individual's cost for that age range? The annual premium would be the estimated average cost of medical care for a person in that age range. For example, if you're 42 and you want to enroll, you're charged the average annual medical cost for an individual age 40-45. The plan would use the same structure as Medicare, including the fee schedule and the 20% co-pay. (I'd personally eliminate the deductible altogether, since it makes no medical sense whatsoever, and discourages initial visits—which have the most value for preventative care.)
The average cost of medical care for a 42 Y/O patient will be FAR less than medical care of a 70 Y/O. So why not start out by offering a non-subsidized Medicare-type plan to that 42 Y/O, with a premium that equals 80% of his estimated annual cost? (Remember, he still has a 20% co-pay.)
Just to get an idea of how much less it would cost than standard over-65 medical care via Medicare, the Part A Hospital component for the 42 Y/O patient would cost almost nothing, since in-patient hospitalizations are rare for people in that age range. (And common for those over 65, and especially over 75.)
Since Part A coverage is approximately 1/2 the total cost of Part A & B combined, the cost of coverage for a 42 Y/0 would be reduced by almost 1/2 that of an over-65 Y/O. If we also consider that a 42 Y/O will require less frequent office visits, then we've really cut down on the actual premiums needed to cover the average costs.
I would not include Part D coverage (prescription drug coverage) for those under 65. Nearly every major medical problem can be well-treated with the generics currently available, especially in those under 65. And most of those generics are quite inexpensive. (The cost of generic statins are anywhere from $2-$6 per month. The same for ACE inhibitors for blood pressure control) The downward price pressure created by the non-coverage of drugs would reduce drug prices even further, thus providing further cost savings.
This Medicare-type plan would be a bare-bones type, in order to keep the cost of the premiums down. Younger patients should be insurable for $2,500 to $4,500/year on such a plan. (And maybe less.)
At least to start with, this plan would be 100% patient paid. The only "subsidization" would be in the administrative costs. (The government would foot the bill for that.) Patients would pay premiums and co-pays to cover the entire costs of actual medical care. But they would be paying nothing toward administrative costs, management salaries, or stockholder dividends.
And, since this IS a bare-bones plan, it would leave plenty of room for private insurers in the market—if they could offer a better plan for a reasonable amount of money.
This plan would not enroll everybody. And not even most everybody. Many would still find it too expensive. But it would be cheaper for many as well. And many would actually enroll. And their enrollment would reduce the demand for private insurance. Since reducing demand for a product causes the price to fall, this would reduce private insurance prices. Through such competition, the price of private insurance coverage would fall.
Thus the public option would accomplish at least one health care reform goal.
It would actually "bend the cost curve."