PNHP

Sen. Snowe's policy advisor: Single payer in a decade

Sen. Snowe's policy advisor: Single payer in a decade

The Health Care Letdown

By William F. Pewen
The New York Times
March 15, 2010
Should they succeed in blocking reform, Republicans should take no consolation. When Congress next attempts reform, in a decade or more, health costs and the number of uninsured and underinsured will have escalated — and the likely outcome will be the single-payer system that Republicans most abhor.
(William F. Pewen is a former senior health policy adviser for Senator Olympia Snowe, Republican of Maine.)
http://www.nytimes.com/2010/03/16/opinion/16pewen.html

William Pewen expresses the view of the majority of well informed moderates and conservatives: The likely eventual outcome of further deterioration in health care financing will be a single payer system, like it or not.
Although they may be opposed to single payer based on ideology, they understand simple math. A decade from now a family with an income of $100,000 will not be able to pay an insurance premium of $25,000 plus a $25,000 deductible plus a coinsurance of 30% of the balance of the medical expenses.
The private insurance industry never has been and never will be capable of reining in health care costs. Health care costs are now so high that the reliance on pure market forces can never be effective in ensuring that everyone receives the health care that they should have. Only the government has the capability of slowing spending and improving the allocation of our health care resources so that everyone is taken care of.
A decade from now costs will be so high that almost every informed individual will recognize that we can no longer afford the additional waste inherent in our fragmented, dysfunctional financing system. In all reality, only a single payer system will work. Opposition will be limited to the “I got mine” folk who do not accept the enlightened, civilized view that we are all in this together.
We likely are now about to begin an experiment to see if a combination of greater government regulation of private insurers along with a system of government subsidies can provide everyone with the health care that they need without busting the budgets of families, businesses and the government. It is an unfortunate delay since the results are in before the experiment has even begun. Tens of millions will be left out of the system, and by selecting the most expensive model of reform, budget busting will only compound.
So as William Pewen states, if the bill before Congress is blocked, the likely outcome a decade from now will be a single payer system. But health policy science tells us that, if this bill passes, the likely outcome a decade from now will be a single payer system.
We really don’t have to wait another decade. People already understand that health care costs are too high. What they need to understand is that they cannot rely on being able to keep the insurance they have if it becomes unaffordable for themselves or their employers, and they cannot rely on being able to purchase it though an exchange if the premiums are too high and the subsidies are too low. They also need to understand that, even if they have insurance, the relatively low actuarial value of basic coverage will leave them exposed to financial hardship should they develop significant health care needs, so the insurance they have won’t work as it should.
Regardless of the results of the vote on the reform bill, we need to intensify our efforts to inform the public. Health care justice in America is ultimately their decision.

Sen. Snowe’s policy advisor: Single payer in a decade

The Health Care Letdown

By William F. Pewen
The New York Times
March 15, 2010

Should they succeed in blocking reform, Republicans should take no consolation. When Congress next attempts reform, in a decade or more, health costs and the number of uninsured and underinsured will have escalated — and the likely outcome will be the single-payer system that Republicans most abhor.

(William F. Pewen is a former senior health policy adviser for Senator Olympia Snowe, Republican of Maine.)

http://www.nytimes.com/2010/03/16/opinion/16pewen.html

William Pewen expresses the view of the majority of well informed moderates and conservatives: The likely eventual outcome of further deterioration in health care financing will be a single payer system, like it or not.

Although they may be opposed to single payer based on ideology, they understand simple math. A decade from now a family with an income of $100,000 will not be able to pay an insurance premium of $25,000 plus a $25,000 deductible plus a coinsurance of 30% of the balance of the medical expenses.

The private insurance industry never has been and never will be capable of reining in health care costs. Health care costs are now so high that the reliance on pure market forces can never be effective in ensuring that everyone receives the health care that they should have. Only the government has the capability of slowing spending and improving the allocation of our health care resources so that everyone is taken care of.

A decade from now costs will be so high that almost every informed individual will recognize that we can no longer afford the additional waste inherent in our fragmented, dysfunctional financing system. In all reality, only a single payer system will work. Opposition will be limited to the “I got mine” folk who do not accept the enlightened, civilized view that we are all in this together.

We likely are now about to begin an experiment to see if a combination of greater government regulation of private insurers along with a system of government subsidies can provide everyone with the health care that they need without busting the budgets of families, businesses and the government. It is an unfortunate delay since the results are in before the experiment has even begun. Tens of millions will be left out of the system, and by selecting the most expensive model of reform, budget busting will only compound.

So as William Pewen states, if the bill before Congress is blocked, the likely outcome a decade from now will be a single payer system. But health policy science tells us that, if this bill passes, the likely outcome a decade from now will be a single payer system.

We really don’t have to wait another decade. People already understand that health care costs are too high. What they need to understand is that they cannot rely on being able to keep the insurance they have if it becomes unaffordable for themselves or their employers, and they cannot rely on being able to purchase it though an exchange if the premiums are too high and the subsidies are too low. They also need to understand that, even if they have insurance, the relatively low actuarial value of basic coverage will leave them exposed to financial hardship should they develop significant health care needs, so the insurance they have won’t work as it should.

Regardless of the results of the vote on the reform bill, we need to intensify our efforts to inform the public. Health care justice in America is ultimately their decision.

Massachusetts hospital spending out of control

Massachusetts Hospital Spending Reached 55.4% Per Person Above the U.S. Average in 2007

Most of Excess is Unjustified, and State’s Health Reform Law Is Negligible Factor

Report by Alan Sager and Deborah Socolar
Boston University School of Public Health
March 16, 2010

This report documents and investigates the excess in Massachusetts hospital costs per person above the average for the United States. It examines the recent rise in this excess after a prolonged earlier decline, analyzes the many causes of the excess, assesses their reasonableness, and offers recommendations for addressing the state’s resurgent hospital cost crisis.

http://sph.bu.edu/images/stories/scfiles/healthservices/health_reform/Mass_hospital_cost_55.4_Excess_15Mar10_FINAL.pdf

Comment: 

By Don McCanne, MD

It is difficult to reduce this complex 211 page report on the very high level of spending by Massachusetts’ hospitals into a few paragraphs, but the title and subtitle alone deliver the dominant messages. For those who would like more insight without reading the full report, there is an excellent 30 page summary at the beginning the report.

For those following the health care reform process, one observation stands out. The Massachusetts health reform – a hybrid model of reform not unlike the proposal before Congress – was not a significant cause of the excesses in hospital costs. More importantly from the perspective of those of us concerned about reform, it played no role in slowing cost increases.

All nations struggle with rising health care costs, but all except the United States have been able to maintain a lower trajectory in those increases. Financing systems do make a difference, and they must enable strong government oversight to be effective. Fragmented hybrid systems such as that in Massachusetts, and, more importantly, that in the proposed federal legislation, are not particularly effective. The authors do not discuss this other than to state that in the United States, “Nationally, neither competitive forces of a market nor regulatory actions by government have succeeded in reining in health care costs generally or hospital costs specifically.”

Sager and Socolar do reemphasize an important point that they have made many times about controlling costs: “it is fundamentally about liberating, enabling, and persuading physicians to spend money more carefully on behalf of their patients.” That sure seems like it would be much easier in a single, publicly administered system devoid of the third party money manipulators.

Massachusetts hospital spending out of control

Massachusetts Hospital Spending Reached 55.4% Per Person Above the U.S. Average in 2007

Most of Excess is Unjustified, and State’s Health Reform Law Is Negligible Factor

Report by Alan Sager and Deborah Socolar
Boston University School of Public Health
March 16, 2010
This report documents and investigates the excess in Massachusetts hospital costs per person above the average for the United States. It examines the recent rise in this excess after a prolonged earlier decline, analyzes the many causes of the excess, assesses their reasonableness, and offers recommendations for addressing the state’s resurgent hospital cost crisis.
http://sph.bu.edu/images/stories/scfiles/healthservices/health_reform/Mass_hospital_cost_55.4_Excess_15Mar10_FINAL.pdf

It is difficult to reduce this complex 211 page report on the very high level of spending by Massachusetts’ hospitals into a few paragraphs, but the title and subtitle alone deliver the dominant messages. For those who would like more insight without reading the full report, there is an excellent 30 page summary at the beginning the report.
For those following the health care reform process, one observation stands out. The Massachusetts health reform – a hybrid model of reform not unlike the proposal before Congress – was not a significant cause of the excesses in hospital costs. More importantly from the perspective of those of us concerned about reform, it played no role in slowing cost increases.
All nations struggle with rising health care costs, but all except the United States have been able to maintain a lower trajectory in those increases. Financing systems do make a difference, and they must enable strong government oversight to be effective. Fragmented hybrid systems such as that in Massachusetts, and, more importantly, that in the proposed federal legislation, are not particularly effective. The authors do not discuss this other than to state that in the United States, “Nationally, neither competitive forces of a market nor regulatory actions by government have succeeded in reining in health care costs generally or hospital costs specifically.”
Sager and Socolar do reemphasize an important point that they have made many times about controlling costs: “it is fundamentally about liberating, enabling, and persuading physicians to spend money more carefully on behalf of their patients.” That sure seems like it would be much easier in a single, publicly administered system devoid of the third party money manipulators.

Do premiums correlate with actuarial values?

Actuarial Value: A Method for Comparing Health Plan Benefits

By Roland McDevitt, Ph.D., Director of Health Research, Watson Wyatt Worldwide
California HealthCare Foundation
October 2008

Actuarial value is a summary measure of likely payments by a plan. It measures the percentage of medical expenses paid by a health plan for a standard population, ranging from 0.00 for a plan that pays nothing to 1.00 for a plan that pays all medical expenses.

Actuarial value only measures benefit payments. To fully assess whether a plan is a good purchase, consumers would want to know both the premium and the actuarial value. They may also want to consider other aspects of the plan, such as whether specific benefits like maternity are covered, whether the plan offers a broad choice of providers, and whether the plan has a good record of administrative performance.

Individual market plans in Los Angeles County, 2006
32 plans listed at ehealthinsurance.com
Actuarial value and premium for a 32-year-old

0.86 – $194
0.83 – $289
0.83 – $242
0.82 – $204
0.70 – $257
0.69 – $198
0.67 – $56
0.67 – $448
0.64 – $186
0.63 – $110
0.62 – $62
0.62 – $403
0.59 – $244
0.58 – $222
0.57 – $81
0.56 – $50
0.56 – $69
0.49 – $193
0.49 – $283
0.47 – $244
0.46 – $83
0.46 – $111
0.46 – $278
0.46 – $87
0.45 – $77
0.44 – $298
0.44 – $72
0.44 – $166
0.41 – $93
0.41 – $60
0.39 – $149
0.34 – $75

If the policy goal is to provide a single number that consumers can use to compare the relative value of different benefit packages, actuarial value presents a more robust measure than any single cost-sharing provision.

http://www.chcf.org/documents/insurance/HealthPlanActuarialValue.pdf

And…

H.R. ____

House of Representatives
March –, 2010

To provide for reconciliation…

Table of premium percentage limits and actuarial value percentages based on income tier

Family income of 350% through 400% of federal poverty level (FPL)
Final premium percentage – 11%
Actuarial value percentage – 70%

Reference premium amount – average premium for the 3 basic plans in the area for the plan year with the lowest premium levels

http://budget.house.gov/doc-library/FY2010/03.15.2010_reconciliation2010.PDF

Comment: 

By Don McCanne, MD

An important finding in this Watson Wyatt report is that the premium paid for a private insurance plan has a very poor correlation with the percentage of medical expenses that are paid by that plan on average, as represented by the actuarial value. In this list from 2006, a plan that paid 86% of the medical expenses had a premium of $194, whereas another plan that paid 44% of expenses had a premium of $298.

Another important observation is that most of these plans in the individual market have a comparatively low actuarial value. Almost half of them don’t even pay one-half of the medical expenses on average. Think of the burden on the typical family of a year’s worth of premiums plus one-half of all medical expenses.

Although following the numbers reminds you of a shell game, it is instructive to look at the reconciliation bill released by the House Budget Committee last night (link above). With a family income of 350% to 400% of the federal poverty level, the family would be required to purchase a plan with an actuarial value of 70%, and they would be required to pay up to 11% of their income for the premium. Thus the family would  be responsible for 11% of their income plus, on average, 30% of the medical expenses covered by the plan, plus all other costs not covered by the plan.

That family also would be limited to providers selected by the private insurer. In addition, that 11% of income cap on premiums applies only to the average of the three cheapest plans with a 70% actuarial value. Seeing the poor correlation with actuarial value, the family may feel compelled to purchase a much more expensive plan with the same 70% actuarial value if the cheapest plans do not include their personal health care professionals with whom they have an established relationship.

Furthermore, most would prefer to have a plan that has benefits closer to typical employer-sponsored plans which until now have had an actuarial value of about 80%, and sometimes more. The family would be responsible for the full additional costs of any such plan if they should upgrade. (Upgrade really isn’t the best choice of terms since all trends today actually constitute a downgrade from the traditional standard.)

The bottom line is that a family at 400% FPL is being priced out of health care, and a major factor contributing to this is that we are relying on an incompetent private insurance industry that can’t even price its products properly. And Congress is… yes… cramming that down our throats!

We can learn from LBJ in drafting health care reform

By RICHARD PROPP
Albany Times-Union
Saturday, March 13, 2010

After seven years of academic medicine, 20 years of private practice and 10 years at the state Health Department in patient safety, I became convinced by my studies that uninsurance and underinsurance were our biggest public health problems, responsible for extensive unnecessary illness, deaths, bankruptcies and economic noncompetitiveness. I retired from state government in 2005 to help form an interfaith alliance to work on this issue.

Let me tell you what I think some of the main problems in this debate are:

Denial: Otherwise intelligent people have not really studied this issue. They are thus susceptible to extremist propaganda and hysteria. Some do not realize they are one pink slip away from health care insecurity. For irrational reasons, they are not willing to really work for an affordable health care system for all Americans. It is possible that some reasons are inspired by classism and racism, as was the case leading up to Medicare’s passage in 1965.

The debate in Washington: The insurance companies have owned the debate table from the beginning, after we were promised during Barack Obama’s presidential campaign that this would not be so. This has poisoned the debate and led to the exclusion, humiliation and alienation of the Medicare for All movement, which represents a very supportive, intelligent, loyal and progressive group of Democrats. We argued that the public option people were starting with was a poor compromise and would waste the energy of the progressives.

Valuable lessons have not been studied or learned: Jill Quadagno’s classic 2005 history, “One nation uninsured,” describes President Lyndon Johnson’s brilliant maneuvering to pass Medicare. Johnson did not ask for directions from the insurance industry. He, House Ways and Means Committee Chairman Wilbur Mills and Wilbur Cohen, undersecretary of health, education and welfare, decided what they wanted and figured out how to get it. President Obama and his advisers have approached this backward.

The Massachusetts plan, on which the proposed reforms are based, is deeply in debt, with hospitals suing the state for millions of dollars of unreimbursed care. Costs are up. Emergency room visits are up and physicians are overwhelmed. Many people forced to pay high prices for high-deductible policies are very angry. Other states that have tried similar plans, like Maine, have failed.

What to do? The choices are forcing through some sort of public option, which will only add to provider overhead; forcing everyone to buy insurance, which will lock in insurance company profits and power, and fail to control costs; or going back to the drawing board and discussing this problem based on evidence.

What would Lyndon Johnson do?

Why Johnson? Because he brought in Medicare, the most successful public health initiative of the 20th century. I believe he would reject both the failed private insurance system and the failing Massachusetts plan as fatally flawed both conceptually and by history.

I believe Johnson would fight for an immediate total or partial expansion of Medicare as the best history- and evidence-based solution, with improved, careful funding, and financial and quality oversight.

Quadagno’s book makes me think he would allow the insurance companies to be involved with the secondary insurance, approximating 20 percent of the pie. I would not want that, but I’m not a politician. But we would then have a plan with health security for all Americans, separate from employment. We would have much more control over spending, and we would have a publicly funded system run by private physicians and hospitals.

Health care is essential and the majority of the American public and physicians believe it should be a right. The current for-profit system with health care as a commodity is wasteful and covers too few well.

We need a one-tiered system for all Americans. Improved Medicare for All is the most cost-effective and proven system to enact.

Take action and tell President Obama what you want.

Richard Propp, M.D., of Albany chairs the Capital District Alliance for Universal Healthcare, Inc.

http://www.timesunion.com/AspStories/story.asp?storyID=911204

Do premiums correlate with actuarial values?

Actuarial Value: A Method for Comparing Health Plan Benefits

By Roland McDevitt, Ph.D., Director of Health Research, Watson Wyatt Worldwide
California HealthCare Foundation
October 2008
Actuarial value is a summary measure of likely payments by a plan. It measures the percentage of medical expenses paid by a health plan for a standard population, ranging from 0.00 for a plan that pays nothing to 1.00 for a plan that pays all medical expenses.
Actuarial value only measures benefit payments. To fully assess whether a plan is a good purchase, consumers would want to know both the premium and the actuarial value. They may also want to consider other aspects of the plan, such as whether specific benefits like maternity are covered, whether the plan offers a broad choice of providers, and whether the plan has a good record of administrative performance.
Individual market plans in Los Angeles County, 2006
32 plans listed at ehealthinsurance.com
Actuarial value and premium for a 32-year-old
0.86 – $194
0.83 – $289
0.83 – $242
0.82 – $204
0.70 – $257
0.69 – $198
0.67 – $56
0.67 – $448
0.64 – $186
0.63 – $110
0.62 – $62
0.62 – $403
0.59 – $244
0.58 – $222
0.57 – $81
0.56 – $50
0.56 – $69
0.49 – $193
0.49 – $283
0.47 – $244
0.46 – $83
0.46 – $111
0.46 – $278
0.46 – $87
0.45 – $77
0.44 – $298
0.44 – $72
0.44 – $166
0.41 – $93
0.41 – $60
0.39 – $149
0.34 – $75
If the policy goal is to provide a single number that consumers can use to compare the relative value of different benefit packages, actuarial value presents a more robust measure than any single cost-sharing provision.
http://www.chcf.org/documents/insurance/HealthPlanActuarialValue.pdf

And…

H.R. ____

House of Representatives
March –, 2010
To provide for reconciliation…
Table of premium percentage limits and actuarial value percentages based on income tier
Family income of 350% through 400% of federal poverty level (FPL)
Final premium percentage – 11%
Actuarial value percentage – 70%
Reference premium amount – average premium for the 3 basic plans in the area for the plan year with the lowest premium levels
http://budget.house.gov/doc-library/FY2010/03.15.2010_reconciliation2010.PDF

An important finding in this Watson Wyatt report is that the premium paid for a private insurance plan has a very poor correlation with the percentage of medical expenses that are paid by that plan on average, as represented by the actuarial value. In this list from 2006, a plan that paid 86% of the medical expenses had a premium of $194, whereas another plan that paid 44% of expenses had a premium of $298.
Another important observation is that most of these plans in the individual market have a comparatively low actuarial value. Almost half of them don’t even pay one-half of the medical expenses on average. Think of the burden on the typical family of a year’s worth of premiums plus one-half of all medical expenses.
Although following the numbers reminds you of a shell game, it is instructive to look at the reconciliation bill released by the House Budget Committee last night (link above). With a family income of 350% to 400% of the federal poverty level, the family would be required to purchase a plan with an actuarial value of 70%, and they would be required to pay up to 11% of their income for the premium. Thus the family would  be responsible for 11% of their income plus, on average, 30% of the medical expenses covered by the plan, plus all other costs not covered by the plan.
That family also would be limited to providers selected by the private insurer. In addition, that 11% of income cap on premiums applies only to the average of the three cheapest plans with a 70% actuarial value. Seeing the poor correlation with actuarial value, the family may feel compelled to purchase a much more expensive plan with the same 70% actuarial value if the cheapest plans do not include their personal health care professionals with whom they have an established relationship.
Furthermore, most would prefer to have a plan that has benefits closer to typical employer-sponsored plans which until now have had an actuarial value of about 80%, and sometimes more. The family would be responsible for the full additional costs of any such plan if they should upgrade. (Upgrade really isn’t the best choice of terms since all trends today actually constitute a downgrade from the traditional standard.)
The bottom line is that a family at 400% FPL is being priced out of health care, and a major factor contributing to this is that we are relying on an incompetent private insurance industry that can’t even price its products properly. And Congress is… yes… cramming that down our throats!

Grayson's "Public Option Act" or "Medicare You Can Buy Into Act"

Grayson Introduces Public Option Act

Congressman Alan Grayson
Press Release
March 9, 2010

Congressman Alan Grayson, D-Fla., today introduced a bill (H.R. 4789) which would give the option to buy into Medicare to every citizen of the United States.  The “Public Option Act,” also known as the “Medicare You Can Buy Into Act,” would open up the Medicare network to anyone who can pay for it.

Congressman Grayson said, “Obviously, America wants and needs more competition in health coverage, and a public option offers that.  But it’s just as important that we offer people not just another choice, but another kind of choice.   A lot of people don’t want to be at the mercy of greedy insurance companies that will make money by denying them the care that they need to stay healthy, or to stay alive.  We deserve to have a real alternative.”

The bill would require the Secretary of Health and Human Services to establish enrollment periods, coverage guidelines, and premiums for the program.  Because premiums would be equal to cost, the program would pay for itself.

“The government spent billions of dollars creating a Medicare network of providers that is only open to one-eighth of the population.  That’s like saying, ‘Only people 65 and over can use federal highways.’  It is a waste of a very valuable resource and it is not fair.  This idea is simple, it makes sense, and it deserves an up-or-down vote,” Congressman Grayson said.

http://grayson.house.gov/News/DocumentSingle.aspx?DocumentID=175363

H.R. 4789 – “Public Option Act” or “Medicare You Can Buy Into Act”:
http://thomas.loc.gov/  Click Bill Number. Enter H.R. 4789. Click Search. From there you can access the text of the legislation (very short bill), cosponsors, and other information.

Video of Grayson’s introduction of H.R. 4789 to House (5 minutes):
http://www.huffingtonpost.com/2010/03/10/grayson-offers-medicare-b_n_492831.html

Article XVIII, Sec. 1818
http://www.ssa.gov/OP_Home/ssact/title18/1818.htm

Article XVIII, Sec. 1818A
http://www.ssa.gov/OP_Home/ssact/title18/1818A.htm

Medicare premiums for 2010
http://questions.medicare.gov/cgi-bin/medicare.cfg/php/enduser/std_adp.php?p_faqid=2260

Comment: 

By Don McCanne, MD

Throughout the reform process members of Congress have been fighting over whether or not the reform legislation should include the option of purchasing a government-sponsored plan through the proposed insurance exchanges – the so-called “public option.” Since Congressman Alan Grayson introduced the “Public Option Act” or “Medicare You Can Buy Into Act” three days ago, a wave of enthusiastic support has been generated based on the perception that this is the perfect solution. Today’s comment briefly discusses this legislation, and it will sound really great at first blush, but do not draw any firm conclusions until you read through to the end.

Okay. What does this bill do? It simply allows any legal resident of the United States under age 65 to buy into Medicare. The program will be paid for by the premiums to be collected from the individuals purchasing the coverage. Six age brackets are established for purposes of pooling funds. This reduces the financial burden on younger, healthier individuals by requiring older individuals to pay the higher premiums that would be required to fully fund their less healthy risk pool.

Many are not aware of this, but Medicare already has a buy-in program. Under Title XVIII, Sec. 1818, individuals over 65 who have fewer than 40 quarters of Medicare-covered employment who would otherwise not be eligible for Medicare can still participate by paying a full premium for Part A coverage (hospital) or a reduced premium if they have 30 to 39 quarters of Medicare-covered employment. Likewise, under Sec. 1818A, disabled individuals whose entitlement ends due to having earnings that exceed the qualification level can also purchase Medicare Part A. Grayson’s bill adds a new Sec. 1818B to Title XVIII to expand the buy-in option to anyone under 65.

For 2010, the premium under Sec. 1818 and Sec. 1818A to buy into Medicare Part A is $461 per month. The premium for Part B (supplemental medical) is the same as for qualified retirees – $110.50 and up, based on income (ignoring the hold harmless exception). Thus the buy-in is about $571 per month, or more for those with higher incomes.

Although Medicare beneficiaries have a high rate of chronic disease plus the costs of end-of-life care, the risk pool is diluted with a very large number of healthy seniors, thus the premiums are not as high as one might think. On the other hand, it is likely that the risk pools for the older but still under 65 age groups in the Grayson proposal would be subject to adverse selection. Since the premiums must pay all costs, they may be higher, perhaps much higher, than the diluted post 65 risk pool. Grayson has not included any risk adjustment mechanism to compensate for this.

At any rate, the Grayson proposal seems to be the true public option, run by the government, that progressives have been fighting for. So what could be wrong with it?

The greatest concern of all is that it still does not fix our outrageously expensive, administratively wasteful, highly inequitable, fragmented method of financing health care. It merely provides another expensive option in our very sick system of paying for health care. Providing yet one more option that people can’t afford really hasn’t moved the process.

Although Medicare is a very popular program, it is highly flawed. It has an oppressive central bureaucracy. It fails to use more efficient financing systems such as global budgeting for hospitals and negotiation to obtain greater value in health care purchasing. There are serious questions about whether Medicare funds are being distributed equitably and in a manner to promote greater efficiency. Its benefit package is relatively poor, covering only about half of health care costs for our seniors. Most Medicare beneficiaries feel that they essentially are forced either to purchase Medigap plans, which provide the worst value of all private health plans, or to enroll in Medicare Advantage plans, which waste too many tax and premium dollars. It would be both much less expensive for all of us and better for Medicare beneficiaries if the extra benefits of these private plans were rolled into the traditional Medicare program. Part D should be stripped of its private market administrative and profit excesses and also be rolled into the traditional program. Medicare also has failed to introduce beneficial innovative programs such as the British NICE system, which would improve both quality and value in our health care.

When we advocate for an improved Medicare for all, we really aren’t advocating for Medicare with a few tweaks. We are advocating for replacing Medicare with a single payer national health program that covers everyone, which we can still call Medicare, just as the Canadians do. Adding another buy-in program to the two buy-in programs that already exist in our highly dysfunctional system will do virtually nothing to fix these flaws we now have. It does nothing to slow the growth in our national health expenditures, and the high premiums for a package of mediocre benefits will do little to reduce the numbers of uninsured.

For those who say that a Medic
are buy-in is an incremental step towards health care utopia, explain precisely how that is going to work. Explain each problem that it solves. Explain how it is going to morph into a universal or near universal system in which each individual is paying the full actuarial value of the coverage. It won’t happen.

Playing with a Medicare buy-in is an unnecessary diversion at a time that we need to get serious about reform. We need to fix Medicare and expand it to cover everyone.  Nothing less will do.

Grayson’s “Public Option Act” or “Medicare You Can Buy Into Act”

Grayson Introduces Public Option Act

Congressman Alan Grayson
Press Release
March 9, 2010

Congressman Alan Grayson, D-Fla., today introduced a bill (H.R. 4789) which would give the option to buy into Medicare to every citizen of the United States.  The “Public Option Act,” also known as the “Medicare You Can Buy Into Act,” would open up the Medicare network to anyone who can pay for it.

Congressman Grayson said, “Obviously, America wants and needs more competition in health coverage, and a public option offers that.  But it’s just as important that we offer people not just another choice, but another kind of choice.   A lot of people don’t want to be at the mercy of greedy insurance companies that will make money by denying them the care that they need to stay healthy, or to stay alive.  We deserve to have a real alternative.”

The bill would require the Secretary of Health and Human Services to establish enrollment periods, coverage guidelines, and premiums for the program.  Because premiums would be equal to cost, the program would pay for itself.

“The government spent billions of dollars creating a Medicare network of providers that is only open to one-eighth of the population.  That’s like saying, ‘Only people 65 and over can use federal highways.’  It is a waste of a very valuable resource and it is not fair.  This idea is simple, it makes sense, and it deserves an up-or-down vote,” Congressman Grayson said.

http://grayson.house.gov/News/DocumentSingle.aspx?DocumentID=175363

H.R. 4789 – “Public Option Act” or “Medicare You Can Buy Into Act”:
http://thomas.loc.gov/  Click Bill Number. Enter H.R. 4789. Click Search. From there you can access the text of the legislation (very short bill), cosponsors, and other information.

Video of Grayson’s introduction of H.R. 4789 to House (5 minutes):
http://www.huffingtonpost.com/2010/03/10/grayson-offers-medicare-b_n_492831.html

Article XVIII, Sec. 1818
http://www.ssa.gov/OP_Home/ssact/title18/1818.htm

Article XVIII, Sec. 1818A
http://www.ssa.gov/OP_Home/ssact/title18/1818A.htm

Medicare premiums for 2010
http://questions.medicare.gov/cgi-bin/medicare.cfg/php/enduser/std_adp.php?p_faqid=2260

Comment: 

By Don McCanne, MD

Throughout the reform process members of Congress have been fighting over whether or not the reform legislation should include the option of purchasing a government-sponsored plan through the proposed insurance exchanges – the so-called “public option.” Since Congressman Alan Grayson introduced the “Public Option Act” or “Medicare You Can Buy Into Act” three days ago, a wave of enthusiastic support has been generated based on the perception that this is the perfect solution. Today’s comment briefly discusses this legislation, and it will sound really great at first blush, but do not draw any firm conclusions until you read through to the end.

Okay. What does this bill do? It simply allows any legal resident of the United States under age 65 to buy into Medicare. The program will be paid for by the premiums to be collected from the individuals purchasing the coverage. Six age brackets are established for purposes of pooling funds. This reduces the financial burden on younger, healthier individuals by requiring older individuals to pay the higher premiums that would be required to fully fund their less healthy risk pool.

Many are not aware of this, but Medicare already has a buy-in program. Under Title XVIII, Sec. 1818, individuals over 65 who have fewer than 40 quarters of Medicare-covered employment who would otherwise not be eligible for Medicare can still participate by paying a full premium for Part A coverage (hospital) or a reduced premium if they have 30 to 39 quarters of Medicare-covered employment. Likewise, under Sec. 1818A, disabled individuals whose entitlement ends due to having earnings that exceed the qualification level can also purchase Medicare Part A. Grayson’s bill adds a new Sec. 1818B to Title XVIII to expand the buy-in option to anyone under 65.

For 2010, the premium under Sec. 1818 and Sec. 1818A to buy into Medicare Part A is $461 per month. The premium for Part B (supplemental medical) is the same as for qualified retirees – $110.50 and up, based on income (ignoring the hold harmless exception). Thus the buy-in is about $571 per month, or more for those with higher incomes.

Although Medicare beneficiaries have a high rate of chronic disease plus the costs of end-of-life care, the risk pool is diluted with a very large number of healthy seniors, thus the premiums are not as high as one might think. On the other hand, it is likely that the risk pools for the older but still under 65 age groups in the Grayson proposal would be subject to adverse selection. Since the premiums must pay all costs, they may be higher, perhaps much higher, than the diluted post 65 risk pool. Grayson has not included any risk adjustment mechanism to compensate for this.

At any rate, the Grayson proposal seems to be the true public option, run by the government, that progressives have been fighting for. So what could be wrong with it?

The greatest concern of all is that it still does not fix our outrageously expensive, administratively wasteful, highly inequitable, fragmented method of financing health care. It merely provides another expensive option in our very sick system of paying for health care. Providing yet one more option that people can’t afford really hasn’t moved the process.

Although Medicare is a very popular program, it is highly flawed. It has an oppressive central bureaucracy. It fails to use more efficient financing systems such as global budgeting for hospitals and negotiation to obtain greater value in health care purchasing. There are serious questions about whether Medicare funds are being distributed equitably and in a manner to promote greater efficiency. Its benefit package is relatively poor, covering only about half of health care costs for our seniors. Most Medicare beneficiaries feel that they essentially are forced either to purchase Medigap plans, which provide the worst value of all private health plans, or to enroll in Medicare Advantage plans, which waste too many tax and premium dollars. It would be both much less expensive for all of us and better for Medicare beneficiaries if the extra benefits of these private plans were rolled into the traditional Medicare program. Part D should be stripped of its private market administrative and profit excesses and also be rolled into the traditional program. Medicare also has failed to introduce beneficial innovative programs such as the British NICE system, which would improve both quality and value in our health care.

When we advocate for an improved Medicare for all, we really aren’t advocating for Medicare with a few tweaks. We are advocating for replacing Medicare with a single payer national health program that covers everyone, which we can still call Medicare, just as the Canadians do. Adding another buy-in program to the two buy-in programs that already exist in our highly dysfunctional system will do virtually nothing to fix these flaws we now have. It does nothing to slow the growth in our national health expenditures, and the high premiums for a package of mediocre benefits will do little to reduce the numbers of uninsured.

For those who say that a Medicare buy-in is an incremental step towards health care utopia, explain precisely how that is going to work. Explain each problem that it solves. Explain how it is going to morph into a universal or near universal system in which each individual is paying the full actuarial value of the coverage. It won’t happen.

Playing with a Medicare buy-in is an unnecessary diversion at a time that we need to get serious about reform. We need to fix Medicare and expand it to cover everyone.  Nothing less will do.

‘President Obama is fighting for something that shouldn’t pass’

By Dr. Marcia Angell
PBS Bill Moyers Journal
March 5, 2010

[The following is an excerpt from an interview with Dr. Marcia Angell, editor emeritus of the New England Journal of Medicine, on the second half of Bill Moyers Journal on March 5. The full interview can be watched here.]

BILL MOYERS: Dr. Marcia Angell has been one of the foremost champions of a “single payer” nationalized health system, a kind of Medicare for everyone that was a plan favored by Barack Obama before he was president. But he backed off in the health care debate, saying it’s just not viable in the current climate.

You’ve seen Marcia Angell at this table before. A physician trained in both internal medicine and pathology, she was the first woman editor-in-chief of “The New England Journal of Medicine.” She’s now senior lecturer in the Department of Social Medicine at Harvard University Medical School and writes extensively and often about health care. On her previous visit to the Journal last July, she had this to say:

MARCIA ANGELL: I would rather see Obama go down fighting for something coherent and practical that the public could mobilize behind, than go down fighting for this amorphous plan that tries to keep the private insurance industry in place.

BILL MOYERS: Since then, health care reform has gone through more twists and turns than a mountain road. And Dr. Marcia Angell is back to tell us what she thinks now. Welcome to the Journal.

MARCIA ANGELL: Thank you very much. Good to be here.

BILL MOYERS: So, has President Obama been fighting as hard as you wished?

MARCIA ANGELL: Fighting for the wrong things and too little, too late. He gave away the store at the very beginning by compromising. Not just compromising, but caving in to the commercial insurance industry and the pharmaceutical industry. And then he stood back for months while the thing just fell apart. Now he’s fighting, but he’s fighting for something that shouldn’t pass. Won’t pass and shouldn’t pass.

What this bill does is not only permit the commercial insurance industry to remain in place, but it actually expands and cements their position as the lynchpin of health care reform. And these companies they profit by denying health care, not providing health care. And they will be able to charge whatever they like. So if they’re regulated in some way and it cuts into their profits, all they have to do is just raise their premiums. And they’ll do that.

Not only does it keep them in place, but it pours about $500 billion of public money into these companies over 10 years. And it mandates that people buy these companies’ products for whatever they charge. Now that’s a recipe for the growth in health care costs, not only to continue, but to skyrocket, to grow even faster.

BILL MOYERS: But given that, why have the insurance companies, health insurance companies been fighting reform so hard?

MARCIA ANGELL: Oh, they haven’t fought it very hard, Bill. They really haven’t fought it very hard. What they’re fighting for is the individual mandate. And if they get that mandate, if everyone does have to buy their commercial products, then they’re going to be extremely happy with it.

BILL MOYERS: But this is all about politics now. It’s not about pure health care reform. So given that reality, what would you have the President do?

MARCIA ANGELL: Well, I think you really do have to separate the policy analysis from the political analysis and I’m looking at it as policy. And it fails as policy. Moreover, a lot of people say, “Let’s hold our nose and pass it, because it’s a step in the right direction.” And I say it’s a step in the wrong direction.

You’re right. Politics is different and there are a lot of people who say, “Look, it’s a terrible bill. Even a step in the wrong direction as policy goes. But we need to get Obama elected again and we need to continue with the Democratic majority in Congress. And so we need to give Obama and the Democrats a win. If we don’t, the Republicans will come in and take over Congress in the fall, and then the White House in 2012.” But the problem with a political analysis is sometimes you’re right and sometimes you’re wrong. And Democrats and particularly liberals have a history of outsmarting themselves.

And I’m not so sure that if this bill goes down, it’s going to make it any harder for them politically. So I think it’s difficult times for the President and for the Democrats. But if you look at it as a matter of policy, the President’s absolutely right that the status quo is awful. If we do nothing, costs will continue to go up. People will continue to lose their coverage. Employers are dropping health benefits. Things will get very bad. The issue is will this bill make them better or worse? And I believe it will make it worse.

BILL MOYERS: The President, with all due respect, would disagree with you. Let me show you something he said–

MARCIA ANGELL: Yes.

BILL MOYERS: –in his speech on Wednesday.

MARCIA ANGELL: Yes.

PRESIDENT BARACK OBAMA: My proposal would bring down the cost of health care for millions, families, businesses, and the federal government. Our cost-cutting measures mirror most of the proposals in the current Senate bill, which reduces most people’s premiums and brings down our deficit by up to one trillion dollars over the next two decades. Brings down our deficit. Those aren’t my numbers. Those are the savings determined by the Congressional Budget Office, which is the Washington acronym for the nonpartisan, independent referee of Congress.

BILL MOYERS: Not good enough for you?

MARCIA ANGELL: Well, first of all, you have to look at what the CBO is looking at.

BILL MOYERS: Congressional Budget Office.

MARCIA ANGELL: Yes. They’re not looking at the cost to the system as a whole, to the larger system. They’re not looking at the private system. They’re simply looking at the federal budget as a budgetary item.

BILL MOYERS: Right. They look at the government–

MARCIA ANGELL: The government part of that. So if they can save money in Medicare, then they come out ahead, no matter what happens out in the private sector. And so that’s what he’s talking about. It will take money out of Medicare and put it into the private sector. Medicare is the source for a lot of the funds that are going to go to subsidize the private health insurance industry. So that’s the first thing. The second thing is the CBO has to build in assumptions. And those assumptions are arguable, to put it mildly.

And as far as cost-cutting, there are sort of promissory notes. ‘We’ll get a committee to look at the cost of effectiveness, of various medical procedures.’

BILL MOYERS: Well, you remind me 45,000 people, as Wendell Potter said earlier, die every year for lack of health insurance. That should be– they’re–

MARCIA ANGELL: It’s not lack of health insurance. It’s lack of health care. There is a difference between health insurance and health care. You can have insurance offered that is too expensive to buy or too expensive to use. What good does it do? And what happens when this occurs, is that what you see is instead of improvements, look at my state of Massachusetts.

Instead of seeing improvements, you see i
t shredded even further. You see more people denied access anyway. Now they’re about, I think over 60,000 people in my state who are exempted from the plan for financial hardship and this is also in the Obama plan. If you’re really poor, you don’t have to participate, and these are the very people who should be in a plan to cover them.

BILL MOYERS: But, the very poor do get Medicaid.

MARCIA ANGELL: Yes, yes. And one of the things about the Obama plan that I do like is that it expands Medicaid up to 133 percent of the federal poverty level and that’s fine. The problem is that could have been a stand alone measure. You didn’t need to have it incorporated in this massive Rube Goldberg apparatus.

BILL MOYERS: Is there anything else in there you like, in the Obama plan?

MARCIA ANGELL: Oh yeah. I mean–

BILL MOYERS: What?

MARCIA ANGELL: First of all, the intention is very good. The expansion of Medicaid is very good. Raising the age of dependents to 26, and saying that they have to be covered under parents’ plans. I think that’s very good. Looking at the cost-effectiveness of various procedures is a good thing to do in its own right.

So yes, there are things in it. But the bill as a whole, the more I look at it, the worse it gets. It’s going to increase costs, not decrease them. And it’s going to increase the rate of growth. It’s not going to bend the curve, except in Medicare.

I think in order to look at a reform and to measure a reform, you have to look at the problem it’s designed to answer. You have to look at what’s wrong with our system, in order to evaluate a reform. You have to ask yourself, “Why is it that we spent over twice as much per person on health care and yet don’t manage to cover everyone?”

BILL MOYERS: Why is that?

MARCIA ANGELL: And the reason is that we have chosen, alone among all advanced countries, to leave health care to for-profit industries, to leave health care to businesses that then distribute health care as a market commodity according to the ability to pay and not according to medical need.

So if you look at what’s causing the problem, the causes are not being targeted in this plan. They’re not being addressed. Maybe some of the symptoms of the causes are being addressed like let’s stop excluding people from pre-existing conditions. But it doesn’t stop the insurance industry from raising its premiums.

BILL MOYERS: So how can you be sure, just as you say politics often goes off-track. We don’t get the politics or the policy we want. How can you be sure that these terrible things are going to happen?

MARCIA ANGELL: Well, if you get– I think it was Senator Rockefeller who said, I mean, that was a wonderful comment he made in the summit last week. Senator Rockefeller referred to the private insurance companies as rapacious, rapacious, and said, “Like sharks, they swim under the water, and you don’t know they’re there until you feel their teeth.” Now there are not many people in America who would disagree with that description and so what this plan does is says, “This is a terrible industry, so let’s force people to buy their commercial products. And let’s subsidize it and put a lot of money into it.”

And what do you think they’re going to do? If you were an insurance company, you would say, “Well, thank you, Santa Claus. I’ve got all of these captive customers. Young ones are healthy. They probably won’t even use the insurance. There’s nothing to stop me from raising my premiums. I have all of these subsidies coming in.” Don’t you think that the prices would go up? I think it would be remarkable if they didn’t.

When I look at the Senate bill and the President’s suggestions, almost every paragraph, there is a poison pill for someone. I think sometimes they’re unintended. Let me give you one example. They allow for insurance companies to charge three times as much for older people as for younger people.

So from the point of view of the insurance industry, this is a god-send because either way, they win. Either the 55-year-olds cough up three times the premiums, and that’s good. Or else they can’t, and that’s probably the more likely situation. They can’t, and then they’re fined. And the insurance companies don’t have to take care of people who might actually get sick. They’re left with all of the thirty-year-olds, who are less likely to get sick, but who are required to buy their products.

So this sets up a situation which probably all plans, for 55-year-olds, are high priced. So they can’t afford to buy it, or if they do buy it, they have to pay an excise tax on it. This is a real poison pill for these older people. It’s a gift for the insurance industry.

BILL MOYERS: But the President is pushing ahead; he wants Congress to act in the next month. What would you have us do?

MARCIA ANGELL: I think the problem is this, Bill. If this plan is passed, and I think there’s real doubt as to whether it will be, and there’s even more doubt as to whether it would ever be fully implemented, but let’s say that it’s passed. It will begin to unravel almost immediately. And then what will people do? Well, they’ll say, “We tried health reform, and it didn’t work. Better not try that anymore.”

It’ll be like what happened after the Clinton plan failed. There’ll be another 16 years before anybody comes up with the courage to try that again. People say, “Too expensive. Just can’t have universal care. Tried that, did that, didn’t work, good-bye.” Whereas if the bill dies now, people can say, “This bill died because it was a bad bill.” And the problem is still on the front burner. And then one can hope that we get some version of Medicare for all. And that we don’t have to wait 16 years.

BILL MOYERS: What makes you think it would come back in 16 years or more? What makes you think it will ever be back on the table?

MARCIA ANGELL: Oh, I think it has to be. I mean, I think that this system is unraveling so fast, doing nothing or doing the Obama plan, so fast, that something will have to be done. Unless we want to, you know, explicitly be a third world country. So I don’t think it’s going to wait. But if we pass this plan, it’s going to delay.

BILL MOYERS: Are there any, you know, three or four things that could be changed in the next month that would make you change your mind and vote for this if you were in the Senate?

MARCIA ANGELL: No, I don’t think so.

BILL MOYERS: Not one?

MARCIA ANGELL: That could be–

BILL MOYERS: If they took out the mandate–

MARCIA ANGELL: –that realistically–

BILL MOYERS: Yeah, realistic.

MARCIA ANGELL: No, no. If you take out the mandate, then the private insurance industry says, “No, we’re out of here.” This Congress will do what the private insurance industry wants it to do. If you look at the money that has flowed into Congress over the last year, and particular to people who were crafting this bill, you can see that the pay masters get what they want.

BILL MOYERS: Marcia Angell, thank you very much for returning to the Journal.

MARCIA ANGELL: Well thank you.

Grayson's "Public Option Act" or "Medicare You Can Buy Into Act"

Grayson Introduces Public Option Act

Congressman Alan Grayson
Press Release
March 9, 2010
Congressman Alan Grayson, D-Fla., today introduced a bill (H.R. 4789) which would give the option to buy into Medicare to every citizen of the United States.  The “Public Option Act,” also known as the “Medicare You Can Buy Into Act,” would open up the Medicare network to anyone who can pay for it.
Congressman Grayson said, “Obviously, America wants and needs more competition in health coverage, and a public option offers that.  But it’s just as important that we offer people not just another choice, but another kind of choice.   A lot of people don’t want to be at the mercy of greedy insurance companies that will make money by denying them the care that they need to stay healthy, or to stay alive.  We deserve to have a real alternative.”
The bill would require the Secretary of Health and Human Services to establish enrollment periods, coverage guidelines, and premiums for the program.  Because premiums would be equal to cost, the program would pay for itself.
“The government spent billions of dollars creating a Medicare network of providers that is only open to one-eighth of the population.  That’s like saying, ‘Only people 65 and over can use federal highways.’  It is a waste of a very valuable resource and it is not fair.  This idea is simple, it makes sense, and it deserves an up-or-down vote,” Congressman Grayson said.
http://grayson.house.gov/News/DocumentSingle.aspx?DocumentID=175363
H.R. 4789 – “Public Option Act” or “Medicare You Can Buy Into Act”:
http://thomas.loc.gov/ Click Bill Number. Enter H.R. 4789. Click Search. From there you can access the text of the legislation (very short bill), cosponsors, and other information.
Video of Grayson’s introduction of H.R. 4789 to House (5 minutes):
http://www.huffingtonpost.com/2010/03/10/grayson-offers-medicare-b_n_492831.html
Article XVIII, Sec. 1818
http://www.ssa.gov/OP_Home/ssact/title18/1818.htm
Article XVIII, Sec. 1818A
http://www.ssa.gov/OP_Home/ssact/title18/1818A.htm
Medicare premiums for 2010
http://questions.medicare.gov/cgi-bin/medicare.cfg/php/enduser/std_adp.php?p_faqid=2260

Throughout the reform process members of Congress have been fighting over whether or not the reform legislation should include the option of purchasing a government-sponsored plan through the proposed insurance exchanges – the so-called “public option.” Since Congressman Alan Grayson introduced the “Public Option Act” or “Medicare You Can Buy Into Act” three days ago, a wave of enthusiastic support has been generated based on the perception that this is the perfect solution. Today’s comment briefly discusses this legislation, and it will sound really great at first blush, but do not draw any firm conclusions until you read through to the end.
Okay. What does this bill do? It simply allows any legal resident of the United States under age 65 to buy into Medicare. The program will be paid for by the premiums to be collected from the individuals purchasing the coverage. Six age brackets are established for purposes of pooling funds. This reduces the financial burden on younger, healthier individuals by requiring older individuals to pay the higher premiums that would be required to fully fund their less healthy risk pool.
Many are not aware of this, but Medicare already has a buy-in program. Under Title XVIII, Sec. 1818, individuals over 65 who have fewer than 40 quarters of Medicare-covered employment who would otherwise not be eligible for Medicare can still participate by paying a full premium for Part A coverage (hospital) or a reduced premium if they have 30 to 39 quarters of Medicare-covered employment. Likewise, under Sec. 1818A, disabled individuals whose entitlement ends due to having earnings that exceed the qualification level can also purchase Medicare Part A. Grayson’s bill adds a new Sec. 1818B to Title XVIII to expand the buy-in option to anyone under 65.
For 2010, the premium under Sec. 1818 and Sec. 1818A to buy into Medicare Part A is $461 per month. The premium for Part B (supplemental medical) is the same as for qualified retirees – $110.50 and up, based on income (ignoring the hold harmless exception). Thus the buy-in is about $571 per month, or more for those with higher incomes.
Although Medicare beneficiaries have a high rate of chronic disease plus the costs of end-of-life care, the risk pool is diluted with a very large number of healthy seniors, thus the premiums are not as high as one might think. On the other hand, it is likely that the risk pools for the older but still under 65 age groups in the Grayson proposal would be subject to adverse selection. Since the premiums must pay all costs, they may be higher, perhaps much higher, than the diluted post 65 risk pool. Grayson has not included any risk adjustment mechanism to compensate for this.
At any rate, the Grayson proposal seems to be the true public option, run by the government, that progressives have been fighting for. So what could be wrong with it?
The greatest concern of all is that it still does not fix our outrageously expensive, administratively wasteful, highly inequitable, fragmented method of financing health care. It merely provides another expensive option in our very sick system of paying for health care. Providing yet one more option that people can’t afford really hasn’t moved the process.
Although Medicare is a very popular program, it is highly flawed. It has an oppressive central bureaucracy. It fails to use more efficient financing systems such as global budgeting for hospitals and negotiation to obtain greater value in health care purchasing. There are serious questions about whether Medicare funds are being distributed equitably and in a manner to promote greater efficiency. Its benefit package is relatively poor, covering only about half of health care costs for our seniors. Most Medicare beneficiaries feel that they essentially are forced either to purchase Medigap plans, which provide the worst value of all private health plans, or to enroll in Medicare Advantage plans, which waste too many tax and premium dollars. It would be both much less expensive for all of us and better for Medicare beneficiaries if the extra benefits of these private plans were rolled into the traditional Medicare program. Part D should be stripped of its private market administrative and profit excesses and also be rolled into the traditional program. Medicare also has failed to introduce beneficial innovative programs such as the British NICE system, which would improve both quality and value in our health care.
When we advocate for an improved Medicare for all, we really aren’t advocating for Medicare with a few tweaks. We are advocating for replacing Medicare with a single payer national health program that covers everyone, which we can still call Medicare, just as the Canadians do. Adding another buy-in program to the two buy-in programs that already exist in our highly dysfunctional system will do virtually nothing to fix these flaws we now have. It does nothing to slow the growth in our national health expenditures, and the high premiums for a package of mediocre benefits will do little to reduce the numbers of uninsured.
For those who say that a Medicare buy-in is an incremental step towards health care utopia, explain precisely how that is going to work. Explain each problem that it solves. Explain how it is going to morph into a universal or near universal system in which each individual is paying the full actuarial value of the coverage. It won’t happen.
Playing with a Medicare buy-in is an unnecessary diversion at a time that we need to get serious about reform. We need to fix Medicare and expand it to cover everyone.  Nothing less will do.

Grayson’s “Public Option Act” or “Medicare You Can Buy Into Act”

Grayson Introduces Public Option Act

Congressman Alan Grayson
Press Release
March 9, 2010

Congressman Alan Grayson, D-Fla., today introduced a bill (H.R. 4789) which would give the option to buy into Medicare to every citizen of the United States.  The “Public Option Act,” also known as the “Medicare You Can Buy Into Act,” would open up the Medicare network to anyone who can pay for it.

Congressman Grayson said, “Obviously, America wants and needs more competition in health coverage, and a public option offers that.  But it’s just as important that we offer people not just another choice, but another kind of choice.   A lot of people don’t want to be at the mercy of greedy insurance companies that will make money by denying them the care that they need to stay healthy, or to stay alive.  We deserve to have a real alternative.”

The bill would require the Secretary of Health and Human Services to establish enrollment periods, coverage guidelines, and premiums for the program.  Because premiums would be equal to cost, the program would pay for itself.

“The government spent billions of dollars creating a Medicare network of providers that is only open to one-eighth of the population.  That’s like saying, ‘Only people 65 and over can use federal highways.’  It is a waste of a very valuable resource and it is not fair.  This idea is simple, it makes sense, and it deserves an up-or-down vote,” Congressman Grayson said.

http://grayson.house.gov/News/DocumentSingle.aspx?DocumentID=175363

H.R. 4789 – “Public Option Act” or “Medicare You Can Buy Into Act”:
http://thomas.loc.gov/ Click Bill Number. Enter H.R. 4789. Click Search. From there you can access the text of the legislation (very short bill), cosponsors, and other information.

Video of Grayson’s introduction of H.R. 4789 to House (5 minutes):
http://www.huffingtonpost.com/2010/03/10/grayson-offers-medicare-b_n_492831.html

Article XVIII, Sec. 1818
http://www.ssa.gov/OP_Home/ssact/title18/1818.htm

Article XVIII, Sec. 1818A
http://www.ssa.gov/OP_Home/ssact/title18/1818A.htm

Medicare premiums for 2010
http://questions.medicare.gov/cgi-bin/medicare.cfg/php/enduser/std_adp.php?p_faqid=2260

Throughout the reform process members of Congress have been fighting over whether or not the reform legislation should include the option of purchasing a government-sponsored plan through the proposed insurance exchanges – the so-called “public option.” Since Congressman Alan Grayson introduced the “Public Option Act” or “Medicare You Can Buy Into Act” three days ago, a wave of enthusiastic support has been generated based on the perception that this is the perfect solution. Today’s comment briefly discusses this legislation, and it will sound really great at first blush, but do not draw any firm conclusions until you read through to the end.

Okay. What does this bill do? It simply allows any legal resident of the United States under age 65 to buy into Medicare. The program will be paid for by the premiums to be collected from the individuals purchasing the coverage. Six age brackets are established for purposes of pooling funds. This reduces the financial burden on younger, healthier individuals by requiring older individuals to pay the higher premiums that would be required to fully fund their less healthy risk pool.

Many are not aware of this, but Medicare already has a buy-in program. Under Title XVIII, Sec. 1818, individuals over 65 who have fewer than 40 quarters of Medicare-covered employment who would otherwise not be eligible for Medicare can still participate by paying a full premium for Part A coverage (hospital) or a reduced premium if they have 30 to 39 quarters of Medicare-covered employment. Likewise, under Sec. 1818A, disabled individuals whose entitlement ends due to having earnings that exceed the qualification level can also purchase Medicare Part A. Grayson’s bill adds a new Sec. 1818B to Title XVIII to expand the buy-in option to anyone under 65.

For 2010, the premium under Sec. 1818 and Sec. 1818A to buy into Medicare Part A is $461 per month. The premium for Part B (supplemental medical) is the same as for qualified retirees – $110.50 and up, based on income (ignoring the hold harmless exception). Thus the buy-in is about $571 per month, or more for those with higher incomes.

Although Medicare beneficiaries have a high rate of chronic disease plus the costs of end-of-life care, the risk pool is diluted with a very large number of healthy seniors, thus the premiums are not as high as one might think. On the other hand, it is likely that the risk pools for the older but still under 65 age groups in the Grayson proposal would be subject to adverse selection. Since the premiums must pay all costs, they may be higher, perhaps much higher, than the diluted post 65 risk pool. Grayson has not included any risk adjustment mechanism to compensate for this.

At any rate, the Grayson proposal seems to be the true public option, run by the government, that progressives have been fighting for. So what could be wrong with it?

The greatest concern of all is that it still does not fix our outrageously expensive, administratively wasteful, highly inequitable, fragmented method of financing health care. It merely provides another expensive option in our very sick system of paying for health care. Providing yet one more option that people can’t afford really hasn’t moved the process.

Although Medicare is a very popular program, it is highly flawed. It has an oppressive central bureaucracy. It fails to use more efficient financing systems such as global budgeting for hospitals and negotiation to obtain greater value in health care purchasing. There are serious questions about whether Medicare funds are being distributed equitably and in a manner to promote greater efficiency. Its benefit package is relatively poor, covering only about half of health care costs for our seniors. Most Medicare beneficiaries feel that they essentially are forced either to purchase Medigap plans, which provide the worst value of all private health plans, or to enroll in Medicare Advantage plans, which waste too many tax and premium dollars. It would be both much less expensive for all of us and better for Medicare beneficiaries if the extra benefits of these private plans were rolled into the traditional Medicare program. Part D should be stripped of its private market administrative and profit excesses and also be rolled into the traditional program. Medicare also has failed to introduce beneficial innovative programs such as the British NICE system, which would improve both quality and value in our health care.

When we advocate for an improved Medicare for all, we really aren’t advocating for Medicare with a few tweaks. We are advocating for replacing Medicare with a single payer national health program that covers everyone, which we can still call Medicare, just as the Canadians do. Adding another buy-in program to the two buy-in programs that already exist in our highly dysfunctional system will do virtually nothing to fix these flaws we now have. It does nothing to slow the growth in our national health expenditures, and the high premiums for a package of mediocre benefits will do little to reduce the numbers of uninsured.

For those who say that a Medicare buy-in is an incremental step towards health care utopia, explain precisely how that is going to work. Explain each problem that it solves. Explain how it is going to morph into a universal or near universal system in which each individual is paying the full actuarial value of the coverage. It won’t happen.

Playing with a Medicare buy-in is an unnecessary diversion at a time that we need to get serious about reform. We need to fix Medicare and expand it to cover everyone.  Nothing less will do.