By Carrie Budoff Brown & Patrick O’Connor
December 9, 2009
Senate Democrats have reached a “broad agreement” on a health reform bill, Majority Leader Harry Reid said Tuesday night — a plan that would replace the public option in the current Senate bill with a new national insurance plan offered by private insurers, and a chance for older Americans to “buy in” to Medicare.
To win over liberals disappointed at losing the public option, Democrats would allow older Americans starting at age 55 to buy into Medicare, the popular program for the aged. The Medicare expansion would be a significant victory for Democrats, who spent years pushing for it. The proposal would in effect create a public health insurance option for older Americans, since Medicare is government-funded and government-run.
By Don McCanne, MD
The most efficient, most effective, and least expensive method of providing reasonably comprehensive health care for everyone would be to replace all current public and private financing programs with a single, improved Medicare program that covered absolutely everyone. Some have suggested that we can do this incrementally, with the first step being to allow individuals 55 and over to buy into Medicare. Is this a good idea?
Harvard professor Steffie Woolhandler provides us with some insight: “Lowering the eligibility age for Medicare to 55 only works if it is mandatory. Otherwise it becomes the place where all the sickest patients get dumped. That might be okay for the sick people since Medicare is often better and more secure than private coverage, but it would drive total health care costs (and premiums) up, not down.”
The current Medicare risk pool is composed of seniors with a high rate of chronic disease and with the expenses of end-of-life care, plus younger individuals with long-term disabilities. Since this is a very high cost population, the prorated premiums would be unaffordable for most individuals 55 thru 64. A separate risk pool would have to be established that would be limited to this age bracket. Unfortunately, 55 thru 64 is still the most expensive age sector of all individuals under 65 and so premiums would still be unaffordable for most, especially after you add in the impact of adverse selection as Steffie Woolhandler has described.
Suppose that a Medicare buy-in for those over 55 were to be established, and that higher government subsidies were provided to cover the higher costs, then what do you have? You have created a public option. Yet the reason being given for the Medicare buy-in is that it is a trade-off to get the progressives to agree to abandoning the public option.
So the agreement seems to be to eliminate the public option from consideration by establishing a public option. But is the proposal a public option that would allow everyone the opportunity to buy into Medicare? Apparently not. After all, this is Congress at work.
Although details have not been released, it appears that this Medicare buy-in would be limited by the same rules already proposed for the public option. Individuals who already are eligible for employer-sponsored coverage, Medicare, or Medicaid would not be eligible to participate in the insurance exchange, yet the Medicare buy-in would not be available outside of the exchange (except perhaps during a transition before the exchange is established). Thus the net effect of this buy-in is to further limit the public option only to those 55 and over who meet all other qualifications for the exchange – a ratcheted-down version of the public option.
An elective buy-in for Medicare will only add to the perpetuation of inequities, fragmentation, administrative inefficiencies, inadequate fiscal supervision and other deficiencies that plague our health care financing system. Adding to our dysfunctional system only compounds the dysfunction. We need to replace the system with an efficient single payer model.
Could we do that in incremental steps by first moving absolutely everyone over 55 into our existing Medicare program? Yes, but why would we do that? There would be complex transitional issues in changing this sector from a revenue source for Medicare into both a revenue source and an expense as they become beneficiaries of the program. Another increment could be MediKids for all children, though that would involve other transitional issues. Then how soon would we phase in everyone else, with yet still more transitional issues?
Incremental steps increase the complexities and costs of the transition while delaying access for many who already have impaired access and financial burdens caused by our dysfunctional system.
A single, disruptive transition would actually be more efficient administratively, while lowering transitional costs. Much more important, a single transition would ensure that no person would have to wait any longer to access the care that he or she needs merely because of an inability to pay for that care.
If we advocate for less than we need, we’ll end up with cheap chits that will eventually be traded away, and then what are we left with?