CBO's Elmendorf on single payer, and a Medicare-like option
Expanding Health Insurance Coverage and Controlling Costs for Health Care
Testimony of Douglas W. Elmendorf, Director, Congressional Budget Office
United States Senate
Committee on the Budget
February 10, 2009
The government could also design an insurance option based on Medicare that would be made more broadly available, on a voluntary basis, to the nonelderly population. The federal costs per enrollee would depend primarily on the benefits that system provided; the rates used to pay doctors, hospitals, and other providers of health care; and the extent of any premium subsidies that were offered to enrollees — all of which could differ from Medicare’s current design. As for whether such a plan would be more or less costly than a private health insurance plan that provided the same benefits to a representative group of enrollees, the answer would vary geographically. Assuming that Medicare’s current rules applied, those costs would be comparable in many urban areas, but in other areas, the cost of the government-run plan would be lower (as is evident in the current program through which Medicare beneficiaries may enroll in a private health plan). At the same time, because Medicare currently provides broad access to doctors and hospitals and employs little benefit management, a Medicare-based option might attract relatively unhealthy enrollees, which could drive up its premiums, federal costs, or both.
Many of the same considerations would arise in designing a single-payer, Medicare-for-all system, but that approach might raise some unique issues as well — and the scale of its impact on federal costs could obviously be much larger if nearly all of the population was covered. Enrollees could be offered a choice of plans under a single-payer system (as happens in Medicare). If, instead, only one design option was offered and all residents were required to enroll in it, then concerns about adverse selection would not arise. That approach could also reduce the administrative costs that doctors and hospitals currently incur when dealing with multiple insurers. The lack of alternatives with which to compare that program, however, could make it more difficult to assess the system’s performance. More generally, that approach would raise important questions about the role of the government in managing the delivery of health care.
Douglas Elmendorf’s written testimony (34 pages):
http://budget.senate.gov/democratic/testimony/2009/02-10-HealthElmendorf_Testimony.pdf
Comment:
By Don McCanne, MD
In his testimony before the Senate Budget Committee, CBO Director Douglas Elmendorf discussed considerations for expanding coverage, and considerations and options for controlling costs and improving efficiency, including a discussion of options under consideration that might not be effective in controlling spending. Most of his comments were confined to various policies that currently are hot topics in the Washington dialogue on reform.
It is no surprise that his discussion of single payer was no more than a tangential paragraph buried in the middle of his written testimony. This seems to reflect their view that single payer has been dismissed as a serious proposal that might have any chance of being enacted.
What might surprise the progressive community is that the proposal to offer the option of purchasing a Medicare-like plan within a market of private health insurance plans has also been relegated to a tangential paragraph, adjacent to the single payer paragraph. It appears that the Congressional Budget Office and the Senate Budget Committee do not consider the controversial Medicare-like option to be a proposal worth serious consideration (likely because of strong Republican opposition, not to mention AHIP’s opposition).
What Elmendorf does say about a Medicare-like option is that design is very important in determining the impact that it would have. He also states, as we have stated before, that a Medicare-like option would be subject to adverse selection, creating much greater challenges in the financing of such an option.
But look at what he says about single payer with “only one design option” (an improved Medicare program). It would cover everyone, eliminate adverse selection, shift funding to the federal government (through equitable tax policies), and reduce administrative costs. Sounds pretty good.
Though he states that single payer would “raise important questions about the role of the government,” aren’t those the questions that are already being raised today. When the financial systems don’t work, the government needs to step in.