Stories

Begich, Dorgan, Feinstein and Warner Want a Public Option...Only For Part D

Jonathan Walker — Sun, 26 Jul 2009 13:02:16 -0700

A group of 22 Democratic senators (including senators Begich, Dorgan Feinstien and Warner) recently sent a letter to Baucus strongly asking him to find greater savings from the Medicare Part D. One of their three ideas to find greater savings from Medicare Part D is to set up a Part D public option:

Create a Medicare-administered Part D plan that would compete against existing Part D plans. A model with a workable formulary is outlined in S.330, the Medicare Prescription Drug Savings and Choice Act of 2009. Such a plan could also serve as a national default plan for low-income beneficiaries.

I'm glad to see that Begich, Dorgan, Feinstien, and Warner support a strong public option for Medicare Part D. They clearly understand that HHS can do a better job of providing health insurance at a lower price than private insurance companies. They know that including a public option as part of an insurance exchange will dramatically reduce the cost for both consumers and the government.

The letter does raise one very important question: If Begich, Dorgan, Feinstein, and Warner support a public option for Medicare Part D, why are they not publicly supporting the idea as part of the new health insurance exchange? (According to DFA) They have already stated in the letter that they support the underlying logic of a public option. If a public plan is a good idea for Medicare Part D, it should be a good idea for the new health care exchange.

Crossposted on The Walker Report

AP Continues To “Report” Made Up Numbers

Jonathan Walker — Thu, 23 Jul 2009 15:48:38 -0700

The AP again falsely claims that the House health care reform legislation would cost $1.5 trillion.

Waxman's committee is the last of three House panels trying to finish the $1.5 trillion, 10-year legislation.

This is a completely made up number with no basis in reality. If you simply look at the CBO report on the projected cost of the bill, you will see that this a lie.

This is not the first time (and probably not the last time) AP “reported” fantasy and not reality about the price of health care reform.

Crossposted on The Walker Report

Washington Post Lies About Public Plan and Medicare, Again

Jonathan Walker — Wed, 22 Jul 2009 05:07:57 -0700

The Washington Post has again lied about a potential public option and about Medicare. David Hilzenrath wrote,

The issue of whether a public plan would be more successful at bringing costs under control is harder to evaluate. As a prototype for government-run health care, Medicare has failed to control costs and makes little effort to restrict care.

This a complete and total lie. Medicare has done a much better job controlling cost than private insurance. The Congressional Budget Office determined that Medicare Advantage, which is insurance for the elderly run by private insurance companies, almost always cost the government more than traditional Medicare. The cost of Medicare has increased at a much slower rate than the private market. A study by health policy expert Jacob Hacker shows that from 1997-2006 the private health insurance annual growth rate was 7.3% per enrollee, while for the same time period the Medicare growth rate was only 4.6%.

Almost all experts agree that a Medicare like public plan would be cheaper than private insurance. The Lewin Group, The Urban Institute, The Commonweath Fund, and the Congressional Budget Office all agree that a public plan structured like the one in the House bill would be cheaper than private insurance.

The reason the health insurance industry is so viciously fighting a public option is because they know it will be able to offer insurance at a lower price. Supporters and opponents of the public plan all agree that a public option would be cheaper than private insurance. To claim it is hard to evaluate if a public plan would control cost is untrue.

Crossposted on The Walker Report

Public Plan Reduces Costs For Small Businesses

Jonathan Walker — Wed, 15 Jul 2009 14:21:43 -0700

The House's America's Affordable Health Choice Act includes an “employer responsibility” provision. It is also know as an employer mandate or pay-or-play provision. The bill is written so that including the pubic option will reduce the burden of the employer mandate and costs for small businesses. This is very complicate but please stay with me.

An employer must provide “qualified” health insurance coverage for its employees or pay a penalty. The minimum amount that an employer most contribute to an employee's health insurance is no “less than 72.5 percent of the applicable premium...of the lowest cost plan offered by the employer that is a qualified health benefits plan.”

An employer may directly purchase health insurance for its employees or provide funds to the Health Exchange to enable their employees to select their own plans. For employers that provide their employees coverage through the Health Exchange the “applicable premium of the lowest cost plan” is equal to the “reference premium amount” in the area.

The “reference premium amount” is defined as “the average premium for the 3 basic plans in the area for the plan year with the lowest premium levels.”

Now, the CBO concluded that the public plan in the House bill would be on average “about 10 percent cheaper than a typical private plan offered in the exchanges.”

Since the public plan would be one of the three cheapest plans offered, it would reduce the size of the “reference premium amount” and also the size of the applicable premium.

Therefore including the strong public plan lowers the minimum amount an employer, who provide coverage through the Exchange, must pay to insure an employee.

At the start only small businesses will have the option of providing insurance through the exchange. Using some rough calculations the public plan should save small businesses, which have their employees selection a plan on the exchange, roughly $450 an employee a year. The public plan will potential save around $3 billion a year for the small businesses that are allowed to use the exchange. The amount of savings to business would dramatically scale upwards if more companies are permitted to using the exchange to provide coverage.

Crossposted on The Walker Report

House's Public Option: Good News and Bad News

Jonathan Walker — Wed, 15 Jul 2009 03:48:58 -0700

The House released its America's Affordable Health Choice Act today along with a preliminary CBO scoring. It will include a robust public option. There is some good and bad news about the public health insurance option:

The Good News

-The public option will be available nationwide and from “day one” on the new national health insurance exchange.

-The public plan will be run by the Department of Health and Human Services.

-The public option will pay doctors the same rates as Medicare plus 5% for the first three years.

-The public option will have the power to directly negotiate drugs prices.

-Roughly a third of all people buying health insurance through the exchange are projected to select the public plan (around 11 to 12 million). This is not a high enough percentage that the public plan will “dominate” the exchange. Incredibly important!

-The public option's premiums will be 10% cheaper than a typical private insurance plans.

-The public plan will drive down the cost of overall reform. The size of subsidies will be based on the cost of the three cheapest plans. By offering a cheaper public plan, the size of subsidies are reduced.

-The public plan will self-sufficient and not increase the federal debt.

The Bad News

-The public plan will not be available until 2013. The Health Insurance Exchange will not start until 2013, so no one can purchase the public plan until then.

-The public option will only pay Medicare rates for the first three years. After that it will need to negotiate its own.

-Medicare providers are not required to accept the public plan. (On the positive side: providers that are part of Medicare's network will be part of the public plan's network unless they opt-out.)

-Large businesses will not be allowed to choose the public plan. It is only available to individuals and small businesses getting coverage through the exchange.

-Only 30 million Americans will be able to select the public plan because of the above restriction. (On the positive side: starting in 2016, the Commissioner might allow some larger employers to give their employees insurance through the exchange)

-The public plan's power to negotiate drug/service prices will weaken because of restrictions which strongly limit the number of Americans who can choose to sign up for it.

Overall, I'm fairly happy with the structure of the public option but unhappy with the restrictions on who can sign up for it. Expanding access to the pubic option should be an easier political fight than changing its structure. If I had to choose, I would select a well structured public plan restricted to a few, over a poorly designed public option open to all.

Most importantly, the CBO has determined that the public plan would save individuals, businesses, and the federal government money. The CBO has also concluded that a public plan will not hurt the private insurance market. In effect, the CBO has destroyed the two main arguments against the public option.

Crossposted on The Walker Report

CBO: Strong Public Plan Saves $150 Billion

Jonathan Walker — Fri, 10 Jul 2009 13:52:59 -0700

This is some great news from Jonathan Cohn at The New Republic:

According to a pair of Capitol Hill sources, preliminary estimates from the Congressional Budget Office suggest that a strong public option--the kind that the House of Representatives is putting in its reform bill--should net somewhere in the neighborhood of $150 billion in savings over ten years.

I've written previously about how both the Senate HELP Committee bill and the House bill wrote the rules determining the amount of subsidies given to individuals to help them afford insurance was structured so that the Congressional Budget Office would score a strong public plan as saving large amounts of money.

I'm very pleased with these preliminary results from the CBO and they are right in line with my estimates. Last month, I calculated that a strong Medicare buy-in public option would make the HELP bill score between $200-$250 billion cheaper. The House bill has slight less generous subsidies than the previous version of the HELP bill I used to come up with my estimates. I'm also under the impression that the strong public plan scored by the CBO was not paying Medicare rates but Medicare rates plus 5-10%. These two factors should account for most of the difference between my estimate and the preliminary estimate from the CBO.

The only unfortunate piece of news is that my estimate was based on the assumption that the CBO would be unable/unwilling to calculate what effect competition from public option would have on reducing the cost of insurance from private insurance companies. It unfortunately appears that my assumption may have been correct. This mean the CBO is in fact understating the potential savings from a robust public option.

Overall this is all very good news and should greatly increase the chance that health care reform includes a strong public option. It is possible that Peter Orzag and Barack Obama were expecting these results from the CBO this whole time. Their focus on savings may have been part of a trap to trip up the opponents of a robust public plan. Of course, we also need to hope that the CBO doesn't conclude that a strong public plan would end up “dominating” the exchange.

Crossposted on The Walker Report

The Truth About Reconciliation That Time (Magazine) Forgot

Jonathan Walker — Fri, 10 Jul 2009 06:07:44 -0700

As the possibility of bipartisan health care reform breaks down there will be more reporting about possibly using "reconciliation" to pass reform. Karen Tumulty at Time recently wrote a piece talking about reconciliation. Unfortunately, like almost all the reporting about reconciliation she failed to mention one of the most critical components of the Byrd Rule.

In her article she states, "Opponents would have the power under Senate rules to strike every provision of the bill that cannot be shown to reduce the federal deficit. "

It is true that any Senator may ask a provision of the bill be stricken if it is found to be “extraneous”. But she failed to mention that a provisions will not be removed if the determination that it is extraneous is waived “by the affirmative vote of three-fifths of the Members duly chosen and sworn (i.e., 60 Senators, if no seats are vacant)”. This is incredibly important. Many of the provisions that can technically be removed, because they are extraneous, are incredibly popular.

These include regulations outlawing: excluding pre-exisiting conditions, charging women more than men for health insurance, dramatically raising someones insurance premiums after getting sick.

These regulations are not just very popular with the American people but also with the Senators. For these regulations to be removed Senators would need to publicly vote to eliminate them.

I can see the ad now. Senator (blank) supports discrimination against woman by voting to give insurance companies the right to charge women more than men. Senator (blank) voted to give your insurance company the power to refuse to pay your medical bills. Senator (blank) voted to give insurance companies the power to raise your premiums when you get sick.

Publicly voting against many of these popular regulations would be political suicide. No one wants to be labeled a defender of the insurance industry's most repulsive practices. While many important provisions can technically be stricken during reconciliation, the number that are will probably be much smaller.

(I'm also putting together a list of ways to possibly protect the essence of the insurance regulations so that they couldn't be stricken under reconciliation. To any of the Senate/House aides reading this, I would be happy to share.)

Crossposted on The Walker Report

Obama Refuses to Take His Own Health Care Pledge

Jonathan Walker — Tue, 07 Jul 2009 14:42:32 -0700

Organize for America is President Obama's political organization. He has asked his supporters to take the OFA pledge to “stand with the president” on his push for health care reform. The pledge states that health care reform must:

•Reduce costs — Rising health care costs are crushing the budgets of governments, businesses, individuals, and families, and they must be brought under control
•Guarantee choice — Every American must have the freedom to choose their plan and doctor – including the choice of a public insurance option*
•Ensure quality care for all — All Americans must have quality and affordable health care

The problem is that Obama refuses to stand by his own pledge. He and his advisors have repeatedly said that they support a public insurance option, but not that it must be part of health care reform. They will not draw a line in the sand and even say there are willing to forfeit the public option completely or accept private, non-profit co-ops instead.

Why should anyone pledge to “stand with the president” on his core principles of health care reform if he is unwilling to? It doesn't matter that I demand a public insurance option be part of reform if the president doesn't make the same demand. Barack Obama can get a public insurance option passed if he is willing to use reconciliation; instead, his advisors say he is willing to give up on the “core principle” to get the vote of a few Republicans.

Mr. President, if you are willing to forfeit the public option for political expediency it is not a “core principle”. It is a sign you have no principles.

*'including the choice of a public insurance option' was highlighted for emphasis

Crossposted On The Walker Report

61 Most Important Words In The HELP Health Care Bill

Jonathan Walker — Mon, 06 Jul 2009 05:19:46 -0700

The goal of many reformers is for the majority of Americans to get health insurance from something similar to the Federal Employee Health Benefit Program. It is an exchange where federal employees choose between several good insurance plans which meet a strict set of minimum criteria.

While this may be a good idea, it is politically impossible because it would cause the CBO to conclude that "millions of Americans would lose their current health insurance". (Even though the vast majority would get a better insurance plan of their own choosing, that is one of the many finer points that will be lost in the political attacks against reform.)

As a result, the HELP committee wanted to write a bill that would allow most Americans to get their health insurance via an exchange without the Congressional Budget Office (CBO) saying as such. They wrote the bill so that only individuals without insurance and employees of "qualified employers" can buy health insurance in the exchange. In the bill the "default" definition of a "qualified employer" is a business with 10 employees or fewer.

Using this default definition, the CBO determined that ten years from now only 27 million Americans will get their insurance through the exchange. But there is an very important clause dealing with the definition of a “qualified employer”: It gives states and the Secretary of Health and Human Services the power to change how few employees a “qualified employer” must have.

According to the HELP Bill, “the term 'qualified employer' means an employer that … meets criteria (including criteria regarding the size of a qualified employer) established by such State; or” by the Secretary of HHS defined as

NUMBER OF EMPLOYEES.— (i) ESTABLISHMENT.—The Secretary may by regulation establish the number of employees described in subparagraph (A)(ii)(II)(aa).
(ii) DEFAULT.—If the Secretary does not establish the number described in subparagraph (A)(ii)(II)(aa), such numbers shall be deemed to be 10.

I have no doubt that once the exchanges are up and running successfully that number will dramatically be scaled upward by individual states and/or the Secretary of HHS. While the CBO claims only 27 million Americans will get health insurance through the exchange 10 years from now, if things go as planned that number will probably be closer to 127 million. This is a fairly brilliant piece of CBO slight of hand.

Crossposted on The Walker Report

Did CBO Determine the HELP Public Plan?

Jonathan Walker — Tue, 30 Jun 2009 19:55:15 -0700

Today, draft language of the Senate HELP Committee's public plan was leaked to Politico. Overall, the HELP public plan is very similar to the “weak but workable” or “level playing field” public plan promoted by Senator Chuck Schumer. I suspect the “strong” Medicare-based public plan may have been dropped primarily for political and not economic reasons. But it is possible that the Congressional Budget Office (CBO) had a large role in deciding the structure of the HELP Committee's public option for two important reasons.

The first reason is optics. Back on May 27, the CBO released a briefing outlining how they would define possible changes to our health care system. They stated what proposals would and would not reflect on the federal budget.

In CBO’s view, the budgetary treatment of a public plan would depend critically on who bore the financial risk. If the federal government stood behind the plan financially, then its expenditures should be considered federal outlays, and the payments collected for premiums should be considered as either federal revenues or as offsets to outlays.

And,

Specifically, if a public plan dominated an exchange-based market, then that component of the health insurance system would, in practice, be largely governmental. In that case, all of the transactions of the exchange should properly be considered part of the budget.

It is very possible the CBO would predict that a strong public plan would “dominate” the exchange and therefore decide to classify the entire exchange as part of the budget. While this would not effect the cost of the bill, it would dramatically change the optics. It could led to the CBO declaring health care reform a massive tens of trillions of dollars expansion of the federal budget.

The other possible reason is about cost reduction. If the CBO is unwilling/unable to quantify how the competition of the public plan would drive down the price of private insurance, a “strong” public plan would make reform legislation dramatically cheaper than a “weak” plan. If the CBO concludes that any national public option would do an equally good job of bringing down the cost of private insurance, the savings difference will be much less. (Federal subsidies will be based on the average of the three cheapest plans offered. Reducing the price of all plans could be more important to overall savings than just offering one cheaper plan.)

In the end, I think the CBO scoring will be the biggest single event in the whole reform debate. If the CBO says a specific public plan will reduce the cost of reform by hundreds of billions, I think it becomes politically unstoppable. If a public option is declared a massive expansion of government or found to do little to control cost, it will be in serious jeopardy. The CBO scoring could result in the debate over the public option shifting from an ideological battle to a fiscal one.

Crossposted On The Walker Report