Details of what exactly in this bill are still rather unclear, though not as unclear as the final outcome. While the Medicare buy-in is getting accolades from progressives like Howard Dean, it's important to keep in mind that we don't know that's what we're even go to be getting (and just watch ConservaDem opposition line up to it, now that they know Howard Dean likes it). What looks like a relatively decent idea now could just be a ghost of its former self by the time it becomes sausage.
That said, what are the good and bad parts of what we know about this compromise, and what still needs to be answered?
Number one on the good list: they're even talking about a Medicare expansion. It's a progressive policy that a lot of people wanted to start with (Medicare for All?), while also being a good common-sense move. It's an existing public option, and it has always made more sense to use it than to create a new one from whole cloth.
Also on the good list: two proposals from Jay Rockefeller, "requiring insurers to spend at least 90 percent of premium money on medical care, rather than on administrative costs or profits," and "to reauthorize the Children’s Health Insurance Program, which was set to expire in Oct. 1, 2013."
Additionally, the requirement that insurers would have to spend "at least 90 percent of premium money on medical care, rather than on administrative costs or profits" is an improvement over the 85 percent in the existing bill. Of course, there's not a particularly strong regulatory framework to force insurers to keep premiums affordable, so the result of this one might very well be premium increases (which are going to happen regardless, particularly if there is not a competing public option).
What is not so good:
People from 27-55 are still out of luck in terms of high quality, affordable insurance. In the base bill, the basic, lowest level qualified program in the exchange has a very low actuarial level, 60%, which is worse than 99% of employer-based plans. What that basically means is that patients will have to pay, between premiums and out of pocket costs, 40% on average of their supposedly covered costs. Lots of people, mandated to buy insurance, are going to be choosing this lowest level program because it will be the least expensive. There will be some basic preventive care included in the package, but in the event of a serious illness or injury, the people in this plan will still face huge bills. The House bill sets that lowest level at 70%.
Compounding that, according to "people familiar with the negotiations" Medicaid eligibility expansion has been dropped, apparently confirming what Rockefeller said yesterday. He had been attempting to raise the eligibility to 150% of poverty, but it remains at the level in the base bill, 133%. The House bill sets Medicaid eligibility at 150% of poverty.
Additionally, those eligible for Medicare buy-in won't get subsidies for the first three years. The buy-in would be available in 2011 for people who will end up in the exchanges--those who cannot find affordable individual plans and don't have group coverage. Subsidies won't be available to them until the exchange kicks in in 2014. Meaning, it's going to be expensive. And as Howard Dean told Greg Sargent, "That’s a huge problem that may tip this into being not real reform."
Affordability, one of the keys to this whole conundrum in the first place, hasn't yet been adequately solved. Until it is, the mandate should also be triggered.
And there are all of the questions that remain unanswered until the actual bill comes back from the CBO and we actually see it. Over at TNR, Jon Cohn has a pretty comprehensive list of ten questions that need to be answered before we know if this deal is worth trading a strong public option for.
1. Would funds from the younger people on Medicare mix with the funds from the traditional, over-65 population? This is a critical design question that will impact everything from the premiums people pay to the long-term finances of the Medicare Trust Fund. Previous proposals have tended to segregate the two pools, so that the Medicare Trust Fund would not be affected. And that may well be politically necessary now: Already, Joe Lieberman has released a statement saying he'll consider this idea if, and only if, it doesn't adversely affect Medicare finances. Of course, if the government let all 55 year olds opt into the program, their premiums could actually help the Medicare Trust Fund, since they'd be--on average--healthier and younger than typical Medicare beneficiaries. But you can safely assume the same senators skeptical of expanding government programs will raise eyebrows about that.
2. Which older workers get to buy Medicare--and when? Starting in 2014, people over 55 buying insurance through the newly created exchanges--that is, people without access to group coverage or eligible for an existing government plan--could choose Medicare. But what happens before then? The plan is to make Medicare available to workers older than 55 starting in 2011--which is great, since this is an initiative the government can, and should, get up and running as fast as possible. But it's not clear yet whether, during those early years, only people that qualify as "high risk" because of pre-existing medical conditions would have the option available to them. If it's just a program for high-risk people--and if, as I expect, the new Medicare funds are treated separately--that'd turn the new program into a dumping ground for sick patients. In other words, it'd be an actuarial disaster.
3. Would the Medicare buy-in have some sort of risk adjustment? Even if the program is open to all people over 55 without access to group of government insurance, it could still attract disproportionately unhealthy people, driving up the program’s premiums--which, again, could make the program unaffordable and ultimately unsustainable. This is a common problem of systems with competing insurance plans, one the new exchanges would solve via "risk adjustment"--that is, taking money from plans attracting unusually healthy people, then giving it to plans attracting unusually sick ones. But will Medicare for older workers be part of this scheme? Or will it be excluded somehow?
4. Will there be subsidies or some other form of financial assistance before 2014? Once Medicare operates through the new insurance exchanges, people buying into it will be eligible for subsidies. But what happens before then? The premiums will likely be higher than many people can afford. The government could provide financial assistance in any number of ways--tax credits, charging higher premiums in subsequent years. Either way, though, it means asking somebody to pay a little more money, at some point.
5. Would the Medicare buy-in include supplemental benefits--or an option to buy them? The basic Medicare package (Parts A and B) covers most physician and hospital services. But it comes with reasonably high cost-sharing. Most senior citizens end up buying supplemental coverage to cover the cost-sharing, partially or fully. They also buy drug coverage through the new Medicare Part D. Would young workers on Medicare be able to purchase supplemental policies as well? If not, would there be some other enhancements of the Medicare benefit for them?
6. Would the Medicare buy-in pay Medicare rates? Yes, this is the exact same argument we had over the public option before. Don't think for a second we couldn't have it again. (The hospital lobby is already attacking the idea.) Senators could decide, instead, to have it negotiate rates with providers. And if it's negotiating rates, it will have to charge higher premiums.
7. Has somebody thought through the expansion and retooling of the Office of Personnel Management? OPM does a great job of managing policies for federal employees, but it’s a relatively small staff--and not necessarily equipped to manage a whole new series of plans, each with its own networks of doctors, hospitals, etc. If they’re going to take charge of this new national non-profit option, they’re going to need more bodies--and, perhaps, wider authority.
8. If there is a trigger mechanism, what conditions pull it? Level of premiums? Growth in premiums? The number of insurance options in a given area?
9. If there is a trigger mechanism, what kind of plan appears if the trigger gets pulled? Is it a real public plan? Or are we back to the watered down compromise versions?
10. How do you enforce the 90 percent rule? The idea here, which Rockefeller has been pushing for a while, is to require that all insurers show a "medical-loss ratio" of at least 90 percent--that is, to make sure they spend at least 90 cents of every dollar in premiums on actual patient care. The good plans do this already--the not-so-good ones, not so much. But the regulation is meaningless if you can't enforce it. And, lord knows, insurance companies know how to get around regulations.
Again, we don't know if this deal is really a deal that will be survive. Lieberman is already whining about the trigger that is included. Providers--including hospitals, doctors, and insurers- and rural state senators, including Conrad and Dorgan, are raising hell about the buy-in, arguing that "Medicare’s lower reimbursement rates would shift costs to private payers and disadvantage hospitals in rural districts."
Until some of these details are made clearer and these problems resolved, there is one thing that cannot happen. The House cannot agree to forego conference and allow this bill to be ping-ponged.
