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The team of 10 reaches a deal on the public option

PH2009120102908.jpg

But, err, they won't tell anyone what it is. At least not until they hear back from the Congressional Budget Office. The most telling tidbit so far has come from Sen. Jay Rockefeller, who said, "I've got a smile on my face. I don't smile naturally."

Rockefeller has been pushing to open Medicare to people between 55 and 64 years old. If he's got a smile on his face, that probably means he managed to shove hard enough. More tomorrow, when this thing begins to leak.

Update: The specifics are beginning to leak. The deal looks pretty much like it's looked for the past few days: The Office of Personnel Management will shepherd national, non-profit plans into existence. Medicare will open to folks between 55 and 64 who are eligible for the exchange. If the national non-profit plans don't materialize, then there appears to be a trigger that will call a public plan into the market, but that seems pretty unlikely. All of this, of course, is contingent on CBO giving it a good score.

The details will be important here. What are the conditions for the non-profit plans? How many plans do there need to be? What does the regulation look like? When does the Medicare buy-in start? But assuming those pieces don't come in much worse than expected, the combination of national non-profits and a Medicare buy-in seems like a pretty good deal. Better by far than what Democrats looked likely to get a week ago. And more likely, by far, to seed health-care reform with scalable experiments.

A public option partnered with Medicare might have been better than these policies, but national non-profits and direct competition between Medicare and insurers is more promising than the compromised public plans that succeeded the initial policy idea. In fact, it's like we split the strong public option into two parts.

The national non-profits are not exactly like, but not that far from, the compromised public plan in the House version of the bill. They won't be publicly run, but with the OPM regulating them tightly and carefully choosing which offerings are accepted into the market, the impact might not be that different in practice. They have the advantages of offering a single product nationally and being freed from the profit motive, both of which were key to the theory of the weaker public option. Indeed, they're like publicly-regulated utilities more than private plans. These look a lot like the semi-private insurers that function well in Germany, Sweden and the Netherlands, among others.

Meanwhile, the Medicare buy-in lets people in the broader insurance market see what national bargaining power can do for individual premiums. Right now, Medicare's rates are largely hidden, as no one pays the full premiums, and so no one can really compare it to private offerings. But if the premiums become visible, and Medicare's superior bargaining power is capable of offering rates 20 to 30 percent lower than its private competitors can muster, we'll see how long it is before representatives begin getting calls from 50-year-olds who'd like the opportunity to exchange money in return for insurance as good as what 55-year-olds can get.

Now, will the deal hold when Joe Lieberman and Olympia Snowe get a look at it? Stay tuned for more on that...

Photo credit: AP Photo/Pablo Martinez Monsivais.

By Ezra Klein  |  December 9, 2009; 12:16 AM ET
 
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Next: Industry gears up to oppose Medicare buy-in

Comments

Maybe someone who knows about insurance can answer this, but I read that private insurers really aren't interested in the over 55 individual market and only offer outrageously expensive policies, if they offer them at all. If this is true, it explains why insurers haven't raised more fuss about this idea. Anyway, it's a good thing.

It sounds like MLR requirements are in, but probably not 90% as in the Franken amendment. Awaiting details...

OPM plans: worthless
Trigger: worthless

It's not a bad compromise for the watered-down public option. It doesn't mean reform will work but I think Medicare is now in the driver's seat to negotiate more forcefully with providers. Private insurers will be mainly insuring healthy people and should diminish in importance for cost control.

What is needed now is a harder line with pharma. Obama unleashing FDA at the last minute to try to kill reimportation is sold-out lame.

Posted by: bmull | December 8, 2009 11:29 PM | Report abuse

Pls evaluate how all of that will work when Jeb Bush is President. I don't think that we can count on good will to carry us through.

Posted by: technoir | December 8, 2009 11:31 PM | Report abuse

TPM is reporting that Medicare buy-in is restricted only to the uninsured. Does that mean the pool is just tiny? Or are they gonna open it up to everyone older than 55?

Posted by: NicholasBeaudrot | December 8, 2009 11:37 PM | Report abuse

If Rockefeller has a big smile, then I will too, till details come in. As long as there are decent cost controlling elements, then it sounds good.

Posted by: arnold104 | December 8, 2009 11:40 PM | Report abuse

So all it took was digging through a box for Bill Richardson's health care plan?

Posted by: rolotomasi2001 | December 9, 2009 12:10 AM | Report abuse

Klein seems to forget the House of Representatives may try to have a say in shaping a final bill. Maybe that is.

Posted by: Aprogressiveindependent | December 9, 2009 12:23 AM | Report abuse

Ezra, I don't think you've thought through what it will look like for Medicare to compete with private plans for those 55 to 65.

If this is traditional Medicare, don't forget that the cost sharing is pretty high. Would people also be buying Medicare Supplemental?

A private insurer offering a plan with traditional Medicare-level deductibles and coinsurance but with added care management might be quite competitive. Particularly if it is offered by a private insurer with a market share of somewhere north of 25% of the local market, where it has some negotiating power (unless there is a local provider system monopoly).

In every major market, there will be at least one private plan that can go head to head with Medicare even without further consolidation. And once Medicare is a player competing with private insurers for those under 65, that makes further consolidation more desirable from the insurer's perspective, and more justifiable from an anti-trust standpoint.

If you make it hard for smaller plans to survive, they won't. The strong will get stronger and the weak will be absorbed. We're not yet in a Highlander scenario where there can be only one, but this brings us closer to a scenario where there can be only 4 or 5.

Posted by: jdhalv | December 9, 2009 12:33 AM | Report abuse

It's amazing that we consider a 'win' to be the end of denying a small sliver of the population the ability to buy into a gov program at cost -- while continuing to deny everyone else the same right.

A previous commenter is right, we are allowed this 'win' because the insurance companies signed off on it. We get the scraps, they get the meat. As always.

Nelson, Lie-berman, the one from LA, and the other corporate dems make me sick. Absolutely sick.

Our process is broken, alright. But, then again, hasn't it always been -- except for a few years when labor was strong and we had set the country on a great trajectory.

Posted by: rat-raceparent | December 9, 2009 12:34 AM | Report abuse

"It's amazing that we consider a 'win' to be the end of denying a small sliver of the population the ability to buy into a gov program at cost -- while continuing to deny everyone else the same right."

The point of this wasn't getting people into government health insurance; it was to get everyone affordable insurance while cutting costs. If Harry Reid traded the possibility of a public option (of which there was very little) for "strengthened insurance regulations" (as TPM reported, but still unclear), Medicare expansion (opening up the possibility of future expansions, changing the public's conception of Medicare from "old people health care" to "government run health care," and, unlike a PO, at "Medicare" rates!), and a national non-profit similar to what the Swiss/Germany got, this is a bajillion times better than what could have been thought possible in the last couple weeks.

If the details tomorrow support those broad points that have leaked, I'll be pretty happy. (I'm really hoping the Medicare Commission was strengthened....)

Posted by: Chris_ | December 9, 2009 12:52 AM | Report abuse

After hundreds of hours of following and writing on reform, and thousands of articles....

This is *excellent* compromise. It improves reform as it stands now.

This is far better than any thing I hoped for.

http://findingourdream.blogspot.com/2009/12/excellent-health-reform-compromises.html

Posted by: HalHorvath | December 9, 2009 12:57 AM | Report abuse

The national non-profits could be a really exciting alternative that would breathe new life into a bill I was getting really sour about, SO LONG as they're tightly regulated and define clear standards for ensuring patients' rights -- national non-profits do no good if they just devolve into something like BCBS (or the many, many "nonprofit" hospitals around the country that are virtually indistinguishable from for-profit ones). But as long as there's a government gatekeeper that's insulated from capture and feels confident in its legal authority, I would much rather take this than a castrated public option in name only.

But don't tell Joe Lieberman about that or he'll "fix" it.

Posted by: NS12345 | December 9, 2009 1:21 AM | Report abuse

This is not bad at all. It's a HUGE progress, that will make a HUGE difference. We should be happy.

Posted by: impikk | December 9, 2009 2:31 AM | Report abuse

Here are some questions about the "New Medicare" (NewMed) proposal:

1) Will physicians be able to opt out of NewMed?

2) Will NewMed be offered in the exchange and participate in the risk sharing premium allocation? (Avoids adverse selection).

3) Can exchange subsidies be used to purchase NewMed policies?

4) The exchange requires all plans to have Out of Pocket maximums and no Lifetime Limits how will this be accomplished with NewMed? Will this eliminate the need for Medigap policies!!! WOW!!!

Posted by: cautious | December 9, 2009 3:26 AM | Report abuse

the government oversees medicare and for disabled people to have to wait 2 years to go on medicare is just flat out wrong while they are fixing things lets fix that and then there is meeting the deductible threshold lets remove that that is why i am against this bill as written and if the democrats allow abortion on demand using federal money . i will vote to get senator baucus removed from office if this is such good legislation then why have they exempted themselves from having to BY LAW AND THIS PRESIDENT TO BE COVERED BY THIS LEGISLATION THINK ABOUT THAT ONE.if it is good enough to force the american people to buy this garbage or go to jail then they as a matter of course the congress should be good enough to have to follow the same laws they write. what makes them any better than us?

Posted by: bittingtomcat2001 | December 9, 2009 7:37 AM | Report abuse

How many of the "Team of 10" have ever taken a stand against public option crop insurance, or socialized agriculture in general?

Just askin'.

Posted by: Garak | December 9, 2009 7:47 AM | Report abuse

Don't be fooled...this is just a gimmick to get it passed.

Harry Reid needs 60 votes....he can likely get 60 with this new plan.

Then it goes to conference with the House, where the public plan is negotiated back into the reform....then they only need 51 votes in the Senate...which means who cares what the Team of 10 wants....

Posted by: boosterprez | December 9, 2009 8:04 AM | Report abuse

How can they expand Medicare when it will run a deficit starting in 2017?

How much will it require the States to raise in new taxes to pay for the expansion of Medicaid?

This health care program appears to saddle my children and grandchildren with an bleak future!

Posted by: mwhoke | December 9, 2009 8:14 AM | Report abuse

The logistics of Medicare buy-in are not straightforward. I would expect that there'd be a provision for HHS/GAO to ensure that premiums for 55-64 cover the costs of 55-64. Otherwise, there would be fair charges of government subsidizing coverage.

Posted by: wisewon | December 9, 2009 9:14 AM | Report abuse

Ezra, There is a lot of info missing at this point, so I really think you're jumping the gun here. Medicare cost sharing is quite high, I think the actuarial value of regular Medicare is 73%, which would put it on par with the "Bronze" plans on the exchanges. I'm not convinced that it would be cheaper for individiuals than buying a subsidized private plan (if buyer is eligible for subsidies).

Another huge question is whether this "pool" will be part of the exhcange and participate in the risk-adjustment (reinsurance) mechanisms on the exhcnage. If it does not, there will be huge adverse selection issues.

A lot of questions at this point, and no real answers.

Posted by: truth5 | December 9, 2009 9:29 AM | Report abuse

"These look a lot like the semi-private insurers that function well in Germany, Sweden and the Netherlands, among others."

I don't know what Ezra means here. Insurers in the Netherlands are private and may be either for or non-profit. The sickness funds in Germany are also private.

I don't think its at all helpful to try to characterize anything that is being proposed in these bills as comparable to actual *universal* care systems.

As far as the Medicare buy-in is concerned, we need details. While we are waiting for them, I encourage everyone to read the report that AARP published about the option last summer -- it's not really as attractive as people assume. Without massive subsidies, most 55-60 year olds won't be able to afford it.

One proposal I read said that only people without insurance would be eligible. In other words, it would be primarily a national high-risk program for pre-seniors and increase overall Medicare costs considerably.

http://www.aarp.org/research/ppi/health-care/medicare/articles/i29_buyin.html

Posted by: Athena_news | December 9, 2009 9:41 AM | Report abuse

I'm a little confused as to why, as someone under 55, I should think this is better than before. Would I still be forced to buy insurance from a private aka greedy company? What makes them lower costs?

Posted by: JayGR | December 9, 2009 10:02 AM | Report abuse

In fact, if everyone under 55 is forced to buy insurance from the greedy unethical insurance companies I'm not sure why we all wouldn't seek to punish the Dems for this bill. Did they even think before they agreed to this?

Posted by: JayGR | December 9, 2009 10:04 AM | Report abuse

You people will not be happy,
until the government tells you
when to change your dirty diapers.

What has happened to the american
individual?

Lenin is smiling, in his grave,
"we will destroy capitalism, and
they will sell us the rope we use
to hang them"

the eight scariest words in the
english language?
"I'm from the government,
and I'm here to help."

Solent Green?

Orwell?

I say we move Washington DC
to Detroit, MI,
maybe then these idiots will
understand what the real issues
in america are.

Posted by: simonsays1 | December 9, 2009 10:46 AM | Report abuse

" These look a lot like the semi-private insurers that function well in Germany, Sweden and the Netherlands, among others."

Except that the Dutch, German and Swedish insurers know that they have a tightly-regulated sandpit in which to play, and work within those restrictions.

You really think that BCBS and UnitedHealth and Cigna are going to play nice? Keep telling yourself that you will kick the football this time, Ezra Brown...

Posted by: pseudonymousinnc | December 9, 2009 10:53 AM | Report abuse

JayGR,

Even when there was a public option, 162+ Americans, in order for President Obama to keep his campaign promise that everyone can keep their current coverage, were "forced to accept those greedy private insurers." These people seem quite happy with those "greedy private insurers," so it doesn't seem like it's that big a deal to most people.

Posted by: moronjim | December 9, 2009 11:22 AM | Report abuse

I'm not 55. Well, It looks like we have a lot of trash to take out in 2010. This is a spit in the face to the American people and makes a sham out of the so-called Democratic process allowing 4 undercover republicans to call the shots on heath care. At least we can vote for some fresh faces and lets make sure they support Legalizing Marijuana as well.

Posted by: drtodd1977 | December 9, 2009 1:04 PM | Report abuse

The Medicare Buy-In Compromise
A Senate working group is considering a Medicare buy-in option as an alternative to the hotly contested public option, which would provide an alternative insurance exchange in competition with the private insurers. Although full details aren’t available yet, it appears that it would allow people aged 55 and over to buy-in to Medicare at reasonable cost.

That sounds good at first, until you consider how many people might actually be able to use the new benefit and why the public option was needed. It looks suspiciously like a “feel-good” provision that will be largely useless at fixing the problems with the current system. Remember that half of the population is covered by private plans, a third by government run plans, and one sixth (around 44 million) have no health [...]http://silverbuzzcafe.com/?p=5887

Posted by: verna2 | December 9, 2009 3:25 PM | Report abuse

pseudonymousinnc, you think corruption will win the day?

Surely it does most days. But is this day (this 30 days) just anyday?

Posted by: HalHorvath | December 9, 2009 4:26 PM | Report abuse

"It's amazing that we consider a 'win' to be the end of denying a small sliver of the population the ability to buy into a gov program at cost -- while continuing to deny everyone else the same right."

If this works, we will get what we wanted. We'll just have to be patient.

Posted by: adamiani | December 9, 2009 7:00 PM | Report abuse

"the eight scariest words in the
english language?
"I'm from the government,
and I'm here to help.""

Yes. Those words are terrifying, in their historical context-- with quotation marks around them. They epitomize a destructive philosophy of lies-- the great Reaganite delusion that governance, one of the great tools for the progress of mankind, should be seen as the enemy and turned into a crippled caricature of itself.

Posted by: adamiani | December 9, 2009 7:07 PM | Report abuse

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