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The Free Choice Amendment Moves Forward

The Congressional Budget Office has scored Ron Wyden's Free Choice amendment:

Relative to the Chairman’s mark, the amendment as modeled would reduce the net impact on federal deficits by about $1 billion over 10 years. There would not be substantial effects on the total number of people with insurance coverage or the sources of that coverage, relative to the Chairman’s mark.

In other words, it saves a bit of money and doesn't blow up the insurance system. It just provides choice for people who want choice. CBO estimates that most people won't take advantage of it, presumably because most people get better insurance from their employer than they could purchase even with an employer subsidy. That may well be true. But this gives them the option, and they should have that option.

Coincidentally, while I was writing this post, Wyden was pushing Free Choice in the Finance Committee mark-up. Baucus responds, "I especially appreciate your comments about choice and competition if you don't want to be stuck with what your employer gives you. We're going to get into some ideas for how to do that." Encouraging!

By Ezra Klein  |  September 22, 2009; 11:28 AM ET
 
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Comments

Whether people could get a good value on their own in an exchange depends on whether they could choose to join some adequately large group like a co-op or other large consumer group.

The best quality of Wyden's proposal is that given the rules of the exchange it will actually be possible to compare some policies, and shop. If the "bronze," "silver," etc. benefit packages are established.

Then, with risk pool sharing, insurers would be motivated to offer better value.

Posted by: HalHorvath | September 22, 2009 11:35 AM | Report abuse

The Lewin Group just contributed some numbers here in the revised amendment:
(1) Reduces national health spending by $360 billion over 10 years
(2) Reduces revenue forgone through the tax exclusion, $129.8 billion over 10 years

(Link to amendment) http://wyden.senate.gov/newsroom/091709free_choice_amendment.pdf

Posted by: amorsenh | September 22, 2009 11:57 AM | Report abuse

HalHorvath,

I agree whole heartedly with the Wyden Free Choice ammendment but you assume that the average healthcare consumer understands the healthcare system. Sorry but they do not.

What happens when they "shop" and save money but then use more coverage and it ends up costing them more out of their pocket? Then who will they blame for their plan that works "worse" for them?

The problem is inherent in the healthcare consumer. If everything isn't paid for 100% then its not good enough. If it is paid at 100% then they won't bother to tell you that.

Just once I'd love for a healthcare consumer who has paid thousands of dollars into the system yet taken out millions of dollars into the system to say:

"Hey, the system worked good for me."

Posted by: visionbrkr | September 22, 2009 12:07 PM | Report abuse

visionbrkr, it's proposed to establish benefit packages -- "bronze," "silver,", etc.

This would establish apple-vs-apple comparisons for benefits (the same policy, the same benefits), leaving the insurers to compete on price, service, innovations (such as delivery systems!) and networks.

To evaluate networks will require people to use the modern (some will use the old) version of word-of-mouth: to look on comparison web sites such as those the already offer user-reviews of doctors, etc.

"Then who will they blame for their plan that works "worse" for them?"

If you buy a car for yourself you later think wasn't the best choice, you learn and choose better next time.

For health insurance 'next time' is usually once/year.

Posted by: HalHorvath | September 22, 2009 12:19 PM | Report abuse

visionbrkr speaks as the cynical one who has been in the industry (as have I).....tons of complaints unless everything is paid for at 100%. I can appreciate that line of thinking. Although, anyone I have every heard that has paid in thousands and got millions in benefits has been eternally grateful.

But halhorvath is also correct. Corporations have had choice in their plans for years---flexible benefits has been around since the 1980s and the number of choices has increased in some plan sponsors in recent years with certain strategies. Given the right written and electronic media to work with (presumably the exchange does this as it does with FEHBP now) and people can make choices, be satisfied with them and be accountable for them. And change them next year if they want.

Posted by: scott1959 | September 22, 2009 12:40 PM | Report abuse

This is important, politically. So much time and effort has been poured into the healthcare debate, come next fall, voters are going to ask themselves "what did *I* get out of it?" and there needs to be something tangible for them to interact with, some way in which the system is different for them (if they choose to engage in it).

Posted by: adamiani | September 22, 2009 12:48 PM | Report abuse

HalHorvath,

I agree and realize too that its once per year. Sometimes (ie pregnancy) you can determine when your costs are going to be higher and "go for the better plan" but most times you can't, (ie emergencies). My point was complaints will still come when people look to save costs and choose the bronze plan but end up with claims that they would have been better off on the gold or silver plans. I'm just trying to temper expectations of reform that its not going to be the utopia that some people expect even if they were to somehow get a public option or even single payer. Even those models have issues as evidenced by problems in other countries that are simply different than ours.


scott,

I do see many that are grateful but I hear from many that are not. Not everyone is cynical on the system today (no matter what you read on sites like this). But as i've said before life insurance for example is much simpler than health insurance. You die once, it pays and the person receiving the benefit gets money. Everybody's happy (except the deceased who can't complain anyway). Healthcare has a much greater utilization level and in turn much more chance and occurence of problems.

Posted by: visionbrkr | September 22, 2009 1:08 PM | Report abuse

VERY POSITIVE because this shows that Wyden's Free Choice amendment will NOT blow up the employer system (which is a fear that it would be too radical) and yet it will be a GREAT TALKING POINT for this bill because it gives people choice and people LOVE choice.

Glad to hear Baucus' encouragement.

Posted by: maritza1 | September 22, 2009 1:44 PM | Report abuse

It doesn't improve coverage, that's why it doesn't "blow up" the insurance system.

"There would NOT BE SUBSTANTIAL EFFECTS on the total number of people with insurance coverage or the sources of that coverage, relative to the Chairman’s mark."

In other words, it doesn't do anything. It's useless. But you're okay with it because CBO likes it.

Posted by: cab91 | September 22, 2009 1:55 PM | Report abuse

one of the win/wins of the exchange that I'd like to forsee is that as maritza puts it, "it keeps employer systems intact" so that employers can still gain the benefit of keeping and retaining key employees but employees within their employers plans can have freedom of choice of many different options. That way employees don't have to lose their doctor when employers change from one insurer to another.

Posted by: visionbrkr | September 22, 2009 2:01 PM | Report abuse

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