Sunday, November 1, 2009

Is 2% Worth It?

Now we’re hearing that the public option is too puny to work. Is it true?

Let’s back up a minute, and look at the choices before us right now.

1. No change.
2. A reform bill with no public option.
3. A reform bill with a public option.

The insurance industry thinks #1 and #2 are just grand. (Despite what they say in public.) They’d like us to believe that #3 is so useless that we should settle for #1 or #2. Here’s why they are wrong:

The existence of a public option creates a wedge for the public sector. The public sector already covers people who are over 65, low-income, in the military, and others. Now it will start slicing into working age Americans. It will have the most bargaining clout to pay lower rates to providers – drug companies, hospitals and doctors - if it includes most of us right away, and can base reimbursement rates on Medicare, plus 5% for wiggle room.

Nancy Pelosi tried to get that. She came up short of the 218 votes needed. After a week of “whipping,” she proposed 2nd best: a public option that will negotiate rates with providers. It won’t save as much money as “Medicare plus 5%” version. Not a great performance by our elected members of Congress, who could’ve sided with the voters who use health care services instead of the industries that provide health care, or by the President of Change, who kept his elegant neck tucked in on that subject.

The Congressional Budget Office and Joint Tax Committee did some pretty quick math:
“By 2019, CBO and JCT estimate, the number of nonelderly people who are
uninsured would be reduced by about 36 million, leaving about 18 million
nonelderly residents uninsured (about one-third of whom would be
unauthorized immigrants). Under H.R. 3962, the share of legal nonelderly
residents with insurance coverage would rise from about 83 percent
currently to about 96 percent. Roughly 21 million people would purchase
their own coverage through the new insurance exchanges, and there would
be roughly 15 million more enrollees in Medicaid than the total number
projected for Medicaid and CHIP combined under current law. (Under the
bill, CHIP would no longer exist in 2019.) Relative to currently projected
levels, the number of people purchasing individual coverage outside of the
exchanges would decrease by about 6 million, and the number obtaining
coverage through employers would increase by about 6 million.

“Under the proposal, certain employers could allow all of their workers to
choose among the plans available in the exchanges, but those enrollees
would not be eligible to receive subsidies via the exchanges (and thus are
shown in Table 2 as enrollees in employment-based coverage rather than as
exchange enrollees). CBO and JCT expect that approximately 9 million
people would obtain coverage in that way in 2019, bringing the total
number of people enrolled in exchange plans to about 30 million in that
year. Roughly one-fifth of the people purchasing coverage through the
exchanges would enroll in the public plan, meaning that total enrollment in
that plan would be about 6 million.

“That estimate of enrollment reflects CBO’s assessment that a public plan
paying negotiated rates would attract a broad network of providers but
would typically have premiums that are somewhat higher than the average
premiums for the private plans in the exchanges. The rates the public plan
pays to providers would, on average, probably be comparable to the rates
paid by private insurers participating in the exchanges. The public plan
would have lower administrative costs than those private plans but would
probably engage in less management of utilization by its enrollees and
attract a less healthy pool of enrollees. (The effects of that “adverse
selection” on the public plan’s premiums would be only partially offset by
the “risk adjustment” procedures that would apply to all plans operating in
the exchanges.)”

This is a possible scenario. CBO and JCT are about as smart as anyone, and we need a guidepost in all this, Lord knows. But honestly. We know for sure the public plan will have lower administrative costs and no profits. Will it engage in less utilization management (read, frivolous denial of claims) compared to private insurance plans? We hope so – and we damn well plan to stop the insurance industry from that deadly business plan, too. Will it enroll fewer people, therefore be more expensive, therefore enroll sicker people, therefore be more expensive and enroll fewer people, etc.? Beats me.

Here’s what I’m pretty sure about. I don’t like Options #1 and #2. The public doesn’t either.

I think Option #3 gets us to the next step: coming out of this battle with a victory, and going back to the states to fight for single payer.

Some on the left meet up with the right on this point: they prefer Options #1 and #2. They say the House bill (Option #3) gives more money and power to the insurance industry than they have now. True. But so do Options #1 and #2. In fact, the only way the insurance industry gets less money is to get rid of them. A single payer program funded entirely by the government would accomplish this. We haven’t won the public’s support for that yet, and it’s not just because Max Baucus wouldn’t hold hearings on it.

A bill with Option #3 gives more power to the public sector, and arguably will save some money. It includes the following important benefits for people:

For the first time, most employers will have to contribute to the cost of health insurance. We’re the only system in the world that relies primarily on the workplace to get insurance, but we also have no requirement on employers to actually offer insurance or help pay for it. Right now about 130 million people get insurance through work, but another 27 million workers do not.

It requires individuals to buy insurance, but it provides subsidies to low- and middle-income individuals and families, so they can afford it. Is it affordable enough? Probably something to fight about.

Insurance company abuses will be prohibited: They won’t be able to exclude people with pre-existing conditions, or stop paying for your treatment once it turns out your sick. They’ll have to spend 85% of our premium dollars on actual health care, not executive bonuses and administration.

Costs: gives the government the authority to negotiate for drug prices.

Access: Many more people will qualify for Medicaid, the federal-state program for low-income people. The feds pick up most of the tab. People with COBRA can keep it until the new exchanges kick in, in 2013, and young people can stay on their parents’ plans til age 27. We still need it to start sooner.

Quality: Reform Medicare to encourage better quality of care, eliminate copayments for preventive care, and increase the number of primary care providers.

Is any old thing ok then? I think the victories so far on the public plan are important. We have to fight hard to keep it and strengthen it on the House side, and make sure it gets into the Senate bill in conference. And let’s hold on to each others’ email addresses. We’ll need them for the state single payer fights.

No comments:

Post a Comment