Tuesday, December 8, 2009

Medicare nation

In discussing the possibility of allowing people between the ages of 55 and 65 to buy into Medicare, The Nation is horribly confused. Most of their article makes it sound like Americans will be able to start collecting Medicare benefits at age 55 rather than having to wait until age 65. They quote John Kenneth Galbraith:

I would also argue for lowering the age of eligibility for Medicare to (say) fifty-five, to permit workers to retire earlier and to free firms from the burden of managing health plans for older workers.

They claim that in the Senate health reform struggles “the idea of dropping the Medicare eligibility age from 65 to 55 has resurfaced as a prospect.” They refer to the need for determining exact “funding mechanisms”. They report:

Several progressive members of the House and Senate have confirmed to this reporter that lowering the Medicare eligibility age would have serious appeal in their caucuses. But there is some disagreement about how serious the prospect may be, especially considering the determination of some conservative and moderate members of the Democratic caucus in the Senate to control entitlement costs.

In other words, about 99% of their article talks about this proposal as if it’s a straight expansion of the Medicare entitlement: start collecting your Medicare benefits early. Only in one small sentence do they mention the true nature of the proposal (emphasis mine):

Under the proposal, which is being weighed by Senator Jay Rockefeller, D-West Virginia, and several other senators who are in the thick of the latest negotiations, Americans as young as 55 who lack affordable coverage could buy plans under Medicare.

Got that? Buy. This is not lowering the age of eligibility for Medicare; this is not enlarging an entitlement. This is letting people under 65 purchase insurance “policies” from Medicare just like they now purchase them from Aetna or Blue Cross Blue Shield.

Will there be government subsidies? Maybe. I think that depends on whether the final bill raises the ceiling for Medicaid coverage; it may be that anyone who would have been subsidized to buy into Medicare will simply be eligible for Medicaid instead. Which is, of course, just another kind of subsidy. But since apparently Medicaid reimbursement rates are lower even than Medicare reimbursement rates, it should cost less to subsidize people in Medicaid than in Medicare.

Which brings me to another point. If we’re going down this road it seems to me it makes more sense to let people buy into Medicaid rather than Medicare. Given Medicaid’s lower reimbursement rate, people should be able to buy into Medicaid more cheaply than into Medicare. Medicaid also appears to allow some variation from State to State so issues like abortion coverage could be taken care of at the State level.

Allowing some people to buy into Medicare is just one of the options on the table. Another?

Senate Democrats in search of a health reform compromise Sunday zeroed in on a new alternative to a government-run insurance plan — signaling that the chances a final bill will include a pure public option are diminishing.

The new idea — for the government to create a national health insurance plan similar to the Federal Employee Health Benefits Plan — seemed to gather momentum as the weekend went on, and the differences between liberals and moderates on the public option became even clearer.

That sounds familiar in a half-witted sort of way. Guys, there is no reason to re-invent the wheel. The Federal Employees Health Benefits Plan already exists. Just piggyback on it. Yes, you’ll need a separate risk pool so Federal employees don’t see their premiums rise to subsidize “outsiders” but all the legwork is done. We know which treatments are covered and which aren’t; we don’t need a bill or a separate government agency to figure all that out. Whatever Federal employees get - and that includes Congress - outsiders who buy in get. That should take care of fears that Congress will end up rationing care. Reimbursement rates are set; the insurance companies are already in. Just use what’s already there. Figure out some formula for subsidies based on the cheapest rate available in each State and let ‘er rip. Really poor people get subsidized decent coverage. People with more money can buy higher end policies.

This approach would also obviate the need for “the Exchange” so beloved by the various Democratic health reform bills. The Exchange, like this new “national health insurance plan”, simply replicates FEHBP. This is not necessary. We’re all supposed to be green now, remember? So refill, reuse, recycle. FEHBP already exists. Don’t waste all that energy building it anew.


Figment and Reality said...

I will just play the devil's advocate for a moment. If we let people "buy" into Medicare or Medicaid, how is that different from offering government run health care for all/most?

I have nothing against it if it is efficient and cost effective, but "do you want government controlled care" will be the resounding cry from conservatives.

In a cursory fashion, the economics of it don't appear sound unless the premiums are exorbitant. People over 55 are the most expensive ones to cover and unless government can contain their reimbursements (ration??), the cost would be high. The real beneficiaries will be insurance companies that have an "out" to press their most expensive clients out of their current group policies. It puts the group insurance companies policy cost containment solution right in their hands by giving them a way to cherry pick younger clients. They already do it in many group policies that state you must apply for Medicare as part of your coninuing coverage under your group policy, with your group policy in 2nd position behind Medicare.

However, if they are going to do this, your suggestion to utilize the existing FEHBP is sound. Why reinvent the wheel, unless the wheel generates CO2, right?

I don't see this as a cheap plan (or entitlement, depending upon your symantics) if you end up with a group that mainly consists of 55+ year olds. Someone has to pay those costs when part of the group can't pay their share. That means higher fees to the remaining people in the pool or more spending by the government for subsidizing the plan.

Elise said...

Letting people buy into Medicaxx isn't any different from offering government run health care for all or most. But I think the Medicare buy-in for people over 55 could be perceived - or sold - differently. After all, those people will be in Medicare soon enough; maybe their premiums will help stabilize Medicare; why not get insurance coverage for older, more expensive workers off companies' books; and so on. Based on the pushback I'm reading about on this plan, I don't think that approach will work but we'll see.

I do think your point about how expensive the over 55 group is is an excellent one. But in a way, this addresses a Republican complaint: why should a young, healthy 25-year-old have to pay more for health insurance to essentially subsidize the 55-year-olds in his group plan? If this approach siphons off the most expensive segment of the working - and therefore mostly group-covered - population, the younger ones left won't see such high premiums.

Now, if we could just find someplace to stash those pesky women with their birth control and maternity costs, young healthy men could buy health insurance for practically nothing.