The Alan Katz Health Care Reform Blog

Health Care Reform From One Person's Perspective

New Elements Added to Health Care Reform Debate

Posted by Alan on December 7, 2009


I haven’t been writing much of late. The Senate debate has simply been too predictable to merit much comment. The partisan attacks could have been scripted months ago. The votes unsurprising, and the difficulty Democratic Leaders face in fashioning a 60-vote majority is to be expected.

Consider: Republicans charge the Democrats will destroy Medicare. The fact that not long ago it was the GOP wanting to eliminate waste and abuse from the program seems to be forgotten. Democrats, meanwhile, seem incapable of understanding the relationship between medical costs and insurance costs. Listening to their claims that cracking down on evil insurance companies will lower health care spending is disappointing. It would be nice if now and then a Senator would acknowledge that medical costs drives up premiums and not vice versa – a wish not likely to be realized any time soon.  I heard on the radio last week (sorry, not sure what station) a lawmaker complaining that health insurance companies use actuaries, an unfair advantage they wield to the detriment of consumers.

But in the past few days some ideas seem to be gaining traction that could mix things up considerably. One proposal is to allow 55 through 64 year olds to buy into Medicare. The Washington Post’s Ezra Klein seems to be the first blogger to report the Medicare buy-in proposal is “attracting the most interest” as an alternative to creating a new government-run health plan to compete with private carriers. The under 65 cohort would not get basic Medicare coverage for free nor does it look like this approach includes subsidies not already on the table. It simply is a way to create access for some Americans to a public health plan without creating a new public health plan. And as with the public option, participation by 55 year olds would be voluntary.

That the idea of a Medicare buy-in option is gaining traction would seem to indicate that chances for a “true public option” are diminishing. Even liberal bloggers like AntonRobb at Benzinga.com are reaching this conclusion. “… proponents of the public option may be compelled to get behind this plan as an alternative. The severeley (sic) comprised … versions of the public option that have any chance of passing … would probably be worthless and probably do more damage politically to the Dems than good,” he writes.

The other interesting idea to emerge is to, as CBS News describes it, “establish national health insurance options, which would be administered by the Office of Personnel Management (OPM) but operated by private, nonprofit insurers ….” Since the OPM already administers the Federal Employees Health Benefit Program (FEHBP), which insures members of Congress and their staffs among others, this alternative to a public option is being viewed as the equivalent of opening up the FEHBP to non-government workers. (Incidentally, although the CBS reports implies the plans would be administered only by nonprofit carriers, this is far from certain. None of the other news reports mentioned this restriction – and there are for-profit carriers participating in the FEHBP.)

The “what’s good for Congress is good for the public” approach seems to appeal to moderate and conservative Democrats who have been objecting to the creation of a new government-run health plan run by the Department of Health and Human Services. As CBS notes, Senators like Ben Nelson describes this proposal as an alternative to, not a version of, a public option.

The import of these proposals go beyond the fact that new ideas are on the table. It also shows the influence likely to be wielded by the “gang of 10” Senators formed over the weekend. These 10 Senators, five liberals and five moderates, are charged with hammering out a compromise on the public option, according to MSNBC. While focused on the public option, it is likely this group of lawmakers will be called on to bridge the chasm that separates liberal Democratic Senators from their moderate and conservative colleagues. Remember, liberals have long claimed that health care reform without a public option is no reform at all. So if the gang of 10 manages to find a way to remove a government-run health plan from the legislation while still keeping liberals on board, they will position themselves to fashion compromises on other divisive issues as well.

(For those interested, the gang of 10 is comprised of Senators Sherrod Brown, Russ Feingold, Tom Harkin, Jay Rockefeller, and Charles Schumer from the liberal wing of the party and moderate Democratic Senators Tom Carper, Mary Landrieu, Blanche Lincoln, Ben Nelson and Mark Pryor).

As noted above, the momentum building behind the Medicare buy-in and an FEHBP-type proposal is that the public option is not going to make it into the Senate bill. Not with a trigger. Not with an opt-out. Instead it appears the public option won’t be in the legislation at all. This should mollify Senator Joe Lieberman who has promised to vote with Republicans against bringing a health care reform bill to the floor if it contains a public option.

All of this also makes clear the strong desire of Democrats, regardless of their ideology, to pass health care reform. The New York Times reports on various lawmakers’ description of President Barack Obama’s message to Senate Democrats on Sunday. “He reminded us why we are here. He reminded us why we run for office. And he reminded us how many people are counting on us to come through.” “Decades from now this will be the kind of vote you remember. It will be written in the faces of children and families who are relieved of the burden of anxiety and sorrow.”

Democrats consider this a historic moment. While grasping it carries political risk in the upcoming 2010 elections, failing to seize the opportunity poses even greater dangers. And the crushing of a dream many of these lawmakers have held for decades.

There are still controversies that could scuttle health care reform. And there will enough political charges and counter-charges bandied about to satiate even the most verbose pundits. But Senators are serious about finding a path to passage and it is increasingly likely they will pass some version of health care reform before years-end. Of course, this will only set the stage for the real work to begin: the House-Senate Conference Committee likely to convene shortly after New Year’s Day.

9 Responses to “New Elements Added to Health Care Reform Debate”

  1. While a Medicare buy in makes sense the basic problem with this bill is that it does nothing to control cost. The bill is designed for special interest groups and not the people that it was suppose to help. Making insurance companies into villains does nothing to eliminate waste and fraud in a broken system.

  2. JimK said

    I went back and read the list of Senators who comprise the Group of Ten and seen that Blanche Lincoln was one of the proponents of this plan. The fact that the Senator from Arkansas is on board with this plan tells me that this plan probably has the endorsement of Wal-Mart. In a documentary on Wal-Mart it was reported that a large number of their employees cannot afford the premiums for the Wal-Mart Healthcare Insurance plan and they are encouraged to sign up for Medicaid. If this legislation is passed I can see Wal-Mart discontinuing its plan and encouraging all of their employees to sign on to the federal plan. Given the fact that Wal-Mart pays poverty level wages the US taxpayer will be paying 97% of the cost of insuring Wal-Mart employees and will receive 8% from Wal-Mart in return.

  3. JimK said

    To be eligible for FEHBP a federal employee must have participated in the program for the five years prior to their retirement. I presume this eligibility requirement is in place to minimize the possibility of burden shifting. Opening up the FEHBP for all citizens will lead to cost shifting to retired federal employees. If anyone can opt in to the program at anytime regardless of their medical condition, most enrollees will probably defer signing on until it becomes medically necessary.
    In addition, the government currently subsidizes 65% of federal retiree healthcare premiums, I am assuming that non-federal enrollees will not receive this subsidy but will receive the FPL based subsidy. Without the subsidy most federal plans are expensive. In a previous post I provided the cost of Blue Cross coverage in NY State. The cost for a family plan ranged between 12 and 14K per annum. These figures only reinforce my belief that the burden for healthcare costs will fall on the backs of retired federal employees.
    Some federal employees may benefit if they are eligible for the FPL subsidies as their premium contributions may actually drop, but I believe for the most part federal premiums will rise if this legislation is passed. Who needs reagan when we have our so-called liberal allies looking to sell us out one more time.

    • Nosedoc said

      Are the NY State premiums for federal employees inflated by the number and scope of state coverage mandates as they are for the private sector employees? If so, how much potential for savings would there be if a less liberal federal standard for coverage requirements for this program were to override the state mandates?

  4. Nosedoc said

    These are interesting developments, Alan.

    The Medicare buy-in option strikes me as a “foot in the door” approach to a public option, as it is not hard to imagine a push to expand the program to the 45 to 54 age group sometime thereafter. That said, this is a much more limited expansion of the Medicare program than the original public option, and would likely allow time for the Obama Administration and the Congress to fulfill the promise of controlling costs through the elimination of waste and fraud within this program before any further expansions were to be proposed.

    I find the FEHB-type proposal more intriguing, as this seems to parallel the Dutch or Swiss health systems which I believe are acceptable business models for the U.S.. I look forward to reading more detailed analysis if this plan gains momentum in the coming weeks. I do not have an educated opinion on the inclusion or exclusion of for-profit carriers from participating, although my personal bias right now favors exclusion (while remaining open to compelling arguments).

    • Nosedoc said

      After re-reading what I wrote in the first paragraph above, I want to make it clear that I am not voicing optimism that our leadership will succeed in demonstrating the savings on waste and fraud. I am just relieved that this compromise would seemingly “limit the damage” in the event that they don’t.

    • Rick said

      “I do not have an educated opinion on the inclusion or exclusion of for-profit carriers from participating, although my personal bias right now favors exclusion”

      No one will be compelled to purchase from a for-profit, so why would you want to eliminate this choice? Many times a for-profit is more competitive then a non-profit. That moves me to another issue, that of, for-profit doctors and hospitals. Should this country have only non-profit doctors and non-profit hospitals?

      • Nosedoc said

        I agree with your first point. The important element to me (I had been thinking about this even before your comment) is the presence of choice and competition in the marketplace. I have no issue if a for-profit carrier can provide its subscribers with cost-effective coverage without abusive practices, as long as it is one of multiple options for the public. Any issues I have personally against the for-profits exists because of de-facto monopolies that individual companies may have in a given region, like the 70% stake Wellpoint has in Maine, or the nearly as large stake that Horizon BC/BS (again trying to go for-profit so it can be bought by Wellpoint) has in New Jersey.

        As for “non-profit doctors” –this is an unrealistic comparison because doctors and hospitals cannot effect a raise in revenues by raising fees, and because anti-trust laws prevent doctors from forming monopolies. All doctors can do is increase volume to increase revenues, which only helps if there is an acceptable profit margin for the time spent. There is no negotiating with MCMS on Medicare fees, and negotiations with the private carriers are limited at best. Besides, we may yet get “non-profit” doctors if the Medicare SGR formula is not repealed or the scheduled 20% across-the-board fee cut is not cancelled by Congress before January 1. This would result in a financial loss with virtually every Medicare patient seen in the office. In that case, private practices will shut their doors and many doctors will be looking for salaried positions, with collective bargaining not far off.

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