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In his weekly address, President Obama urges Congress to reform America’s health care system. Meanwhile,. . .
Senator Kennedy’s office Friday released a first draft of a health care reform bill, the American Health Choices Act, which will be considered this month in Kennedy’s Health, Education, Labor and Pensions (HELP) Committee. The NYT summarizes the bill’s features, which appear to track closely with earlier reports of where HELP Committee Staff are heading, and provides additional details.
Key features include and overlay those supported by President Obama in his letter (covered here) to Sens. Kennedy and Baucus, whose Finance Committee is developing an alternative approach. And the features are mostly consistent with those supported by the Congressional Progressive Caucus, which I listed here. The major components are:
1. An individual mandate to acquire health insurance. Like the Obama and CPC proposals, there would be subsidies and/or waivers for low- to moderate-income families. But Kennedy also addresses the problem of enforcement, proposing a system of "penalties" for those who fail to obtain insurance. It’s clear we haven’t sorted this one out. Per the Times:
Under the Kennedy bill, individuals would be subject to financial penalties if they did not have health insurance. The Treasury secretary would set the amount of the penalties, at “the minimum practicable amount that can accomplish the goal” of expanding coverage. The penalties would be added to a person’s tax bill and collected by the Internal Revenue Service.
People would be exempt from the penalties if “affordable health care coverage is not available” or if the premium payments would cause “an exceptional financial hardship.” President Obama recommended such a “hardship waiver” this week.
The vague standard for setting the penalty seems a problem. Putting aside the hardship waiver issue, a rational penalty should be designed to induce compliance, which means it must be related to the cost of compliance. Somehow this concept has become confused with what it will take to ensure universal coverage.
And notice the willingness to impose taxes on those who are penalized. Yes, if you impose penalties, you have to have a way to collect the money. But equating penalties with taxes is questionable framing and simply begs the question: if we can pursue the goal of expanding coverage via taxes (in lieu of rising premiums and co-payments), and the goal is universal coverage, then why aren’t we talking openly about using the tax system for univeral coverage and get rid of the unnecessary "mandates," "penalties" and the costly administrative trappings that go with them? The simpler approach is called "single payer."
2. A government-sponsored public plan option, open to everyone. Consumers could keep what they have or be free to choose the public plan. Consumers could shop among the competing public and private plans in informational "exchanges," operated by the states, with some interesting functions:
Those entities, known as health benefit gateways, would disseminate information about premiums and benefits and would help people enroll.
The new entities would also act as financial intermediaries, receiving subsidy payments from the government and sending the money to insurance companies. The insurance exchanges would also redistribute money among health insurance plans, from those with a large share of healthy subscribers to those with large numbers of sick people.
3. A requirement that all plans, public and private, meet minimum standards for quality and non-discriminatory coverage. According to the Times, “’essential benefits’ include doctors’ services, hospital care, maternity and newborn care, prescription drugs and mental health and substance abuse services." I’m checking to see whether dental is covered. A non-discrimination feature is essential; it would force private insurance plans to end discrimination against those with prior conditions. The Roll Call (h/t KHN) describes the provision:
Insurance companies would be prohibited from denying coverage based on a pre-existing medical condition.
Rates charged would be allowed to vary according to ‘family structure, community rating area, the actuarial value of the benefit and age.’
However, rates cannot vary based on ‘health-status related factors, gender, class of business, claims experience, or any other factor not described in the previous [sentence]‘"
4. A federal oversight/regulator to oversee health care compliance. Kennedy’s Medical Advisory Council concept looks similar to the MedPAC oversight entity endorsed in Obama’s letter. However, Kennedy would have Congress define provider payments for the public plan as what Medicare provides, plus 10 percent. If, however, MedPAC reforms the payment structure and incentives for Medicare, as Obama (see letter and video above) and some experts recommend, then there would be no reason for Congress to impose an arbitrary 10 percent payment adder for payments under the public plan.
5. An expansion of [Medicaid] and SCHIP. Kennedy would allow those up to 150 percent of poverty level ($16,245 for an individual and $33,075 for a family of four) to enroll in [Medicaid], while expanding SCHIP eligibility to dependents through age 26. I’m glad to see this, because it forces the debate to explain why a straight foward, unlimited Medicare expansion isn’t the obvious model for the public plan. [My original post said Medicare would be expanded, but it's Medicaid]
6. A new disabilities program. Per the Times, this would "provide home- and community-based care for 10 million people with severe disabilities."
I’ll add interesting reactions as I/you find them.
Kaiser Health News, "Draft of a draft" of Kennedy bill emerges
The Roll Call, Details of Kennedy Health Plan Beginning to Emerge
Volsky/WonkRoom, Kennedy Staff Circulating "draft of a draft . . ."
Robert Reich at TPM, How Pharma and Insurance Intend to Kill the Public Option . . .
41 Comments
I keep reading that the public option is going to be killed by big pharma and big insurance one way or another. Robert Reich has a piece on it at HuffPo. We need to work to make sure that does not happen.
“The vague standard for setting the penalty seems a problem.” ; you got that right.
“The new entities would also act as financial intermediaries, receiving subsidy payments from the government and sending the money to insurance companies. The insurance exchanges would also redistribute money among health insurance plans, from those with a large share of healthy subscribers to those with large numbers of sick people.” —–more bureacracy to reduce costs? There already is organizational/institutional mechanisms for payments inherent in Medicare ! And how will the ‘redistribution’ formula be calculated? This whole idea is one big mess.
“An expansion of Medicare and SCHIP”; ——I,too, am glad to see this as I would qualify now instead of 3 years from now for Medicare.
“A new disabilities program. Per the Times, this would “provide home- and community-based care for 10 million people with severe disabilities.” —–ok, but where are the caregivers going to come from? Especially with Obama’s HHS going along with the Schwarz in allowing a pay reduction from $12 an hour to $10 an hour(neither of which is a ‘living wage’ in CA).
From the TPM/Robert Reich link:
“All this will be decided within days or weeks. And once those who want to kill the public option without their fingerprints on the murder weapon begin to agree on a proposal — Snowe’s “trigger” or any other — the public option will be very hard to revive. The White House must now insist on a genuine public option. And you, dear reader, must insist as well.
This is it, folks. The concrete is being mixed and about to be poured. And after it’s poured and hardens, universal health care will be with us for years to come in whatever form it now takes. (THAT is EXACTLY why single payer MUST be pushed NOW)
“Let your representative and senators know you want a public option without conditions or triggers — one that gives the public insurer bargaining leverage over drug companies, and pushes insurers to do what they’ve promised to do. Don’t wait until the concrete hardens and we’ve lost this battle.”
Recommended and thanks Scarecrow.
I think I understand the logic behind the redistribution scheme. If you thought it was possible to require all insurance options to offer the same coverage without discrimination, and to pay claims without discrimination, then you wouldn’t worry about this. But the assumption is that private firms will continue to find ways to discriminate and to discourage customers who are high cost and encourage/keep those who are low costs. So some firms will be more profitable than others, based on this discrmination.
What Kennedy seems to be doing is to say, “if we see that happening, we’ll take payments from you and allocate the dollars to those who are not discriminating, and who are offering care to the higher-cost consumers. That seems to be the logic. Another one of those problems you have to solve if you assume that you can have a fair private system in competition with an open public plan.
“So some firms will be more profitable than others, based on this discrmination.”—and -besides how such a determination would be done-is why it won’t fly, it’s anti-American for there to be ‘equality’ in business. *G*
“Another one of those problems you have to solve if you assume that you can have a fair private system in competition with an open public plan.” —-first, a ‘fair private system’ doesn’t exist;just reference the ‘discrimination’ issue. And private insurers do NOT want competition period.
Question given what Reich stated: What to do if a ‘public option’ is created that ,in effect, minimzes any competition with private plans? “universal health care will be with us for years to come in whatever form it now takes.”
I agree with Reich that the key battle now is over the public health option. If it’s deleted, delayed or hobbled, it will be a huge loss. I discussed the the “trigger” deception idea here.
I signed Obama’s request for support of his Health Care initiative email but added ”AS the insurance companies had their chance to provide good plans for all it was time for a Single Payer system. So that all Americans had good quality health care.” It should be a right… Period.
Rates charged would be allowed to vary according to ‘family structure, community rating area, the actuarial value of the benefit and age.’
this is going to be a problem for a lot of people. the insurance companies aren’t going to be able to set premiums based on health status, so they’re going to do so based on age instead, which is largely what they already do, since age is fairly well correlated with health problems: 50-somethings cannot buy insurance anywhere nearly as cheaply as can 20-somethings simply because the older you get, the more likely you are to start falling apart.
the latest i’ve seen is that they’re proposing to allow insurance companies to charge their oldest customers 7.5 times what they charge their youngest [single adult coverage; not sure what the numbers are for families] for the same policy.
The insurance exchanges would also redistribute money among health insurance plans, from those with a large share of healthy subscribers to those with large numbers of sick people.
this is how germany handles their social insurance — if one risk pool ends up with a disproportionate number of expensive sick people, that means that the other risk pools benefited too much and will have to give back [to the govt, to the insurance exchange, to whatever entity is in charge of equalizing the risk pools] some of the money they took in.
5. An expansion of Medicare and SCHIP.
the nyt article says medicaid, not medicare. expanding medicare to cover poor people would be a good start, because medicaid sucks in a lot of states, but nobody’s got the guts to propose letting any of us into medicare.
hmmm… looking further into the draft bill, it looks like kennedy would have the variation in premiums be no more than 2:1, which will be easier on the old folks [maybe] but tough for the youngsters just starting out and probably not making a lot of money.
this is one of the many many problems that single payer would avoid altogether — by paying taxes instead, low income people would automatically pay low ‘premiums’ [taxes], high income people would automatically pay high ‘premiums’ [taxes]. no need for constantly re-figuring people’s eligibility for subsidies.
I think you’re right about the Medicare/Medicaid distinction; I’ll fix. Thanks.
I haven’t read through this entire piece but does it supply single payer health care for those who are indigent?
instead they need to base premiums on coverage, minimum coverage can not be denied, for instance there is an asigned risk group in the auto industry, same thing needs to hold true for the health care industry except the rates can not represent the comenserate differance in costs, those need to be deferred against members and profit margin
Seems to me the entire issue is essentially one of policy deficit – you have a bunch of politicians tapdancing with neither the will nor creativity to spell out what they envision because they are too beholden to corporate funding to dare to have any vision. If your powers that be had any leadership skills, they would engage in a an open debate as to what is required and and how it could be be achieved. You do not have to reinvent the wheel – there are many paradigms you can borrow from but the problem is you are debating the means without knowing what you want.
sorta related, from paul rosenberg at openleft:
I’m unemployed. Do I get a hardship waiver or do I get the penalty added on to taxes-which at 378 a week in unemployment-I probably won’t have to pay many taxes.
I’m not liking this “mandate” to get insurance. I have no income and what little I do have I pay rent with so as not to be homeless.
SO with millions and millions of us unemployed with no insurance at all, what happens to us?
If you were laid off between Sept 08 and Dec 09 as part of the stimulus package you are eligible for only paying only 35% of the COBRA premium. That means that mine goes from $440 to $141 for 9 months.
My pampered parasite, a Big Insurer which begins with the first letter of the alphabet, raised my insurance rate to $20,140/year beginning in April. No mention of alternatives, but after several calls I found I could get a lower rate, with higher deductibles (I will not be getting the physical therapy I need until I make it to Medicare age, and heaven help me if I have to be hospitalized), of $12,500/year.
I realized my insurance was going out of sight and had decided to find a different carrier, but before I could do I was diagnosed with what is referred to as one of “good cancers.” Now, I’m not only stuck with this insurance parasite, but I can’t move out my state since my cancer management (another dangerous parasite, I guess) won’t be covered. Due to the state requiring any individual be offered equal coverage, rates are high for everyone purchasing as an individual, whether 19 or 59.
Rates tend to increase slightly less every 5th year, which is the only time the state insurance commission looks at what the Big Insurers charge. That year sees lower percentage increases, which the companies make up for the following years.
The increase this year would have been nearly 17% had I not gone for higher deductibles….
This is an HMO plan, choice of doctors is limited, I pay 50% of all prescription costs, so this is not one of those “gold plated” or “Cadillac” plans.
My doctor was stunned by the amount I am charged and said his practice certainly sees very little of that amount.
We must do better–my retirement savings are going to this pampered parasite, and I’m getting very scared we will not see real change from the Hope and Change president. Actually, I’m becoming terrified….
Chris Dodd is asking for suggestions
woo hoo – votus’s comment is #1:
NOW is the time to change the system where a person qualifies for social security disability they CAN enroll in Medicare immediately….
The SSD disability process is pretty through….. WHY make disabled persons wait 24 months before they can apply for Medicare?
Disabled persons need more health care not trying to fill a 24 month gap with COBRA or without…..
OT to scarecrow. just wanted to say thank you for a previous response you made in another thread. i left a quick reply, but i think comments on that thread are about to close.
I don’t see anything here about taxing health care benefits. The proposals floated so far would subject health insurance benefits to payroll taxes, adding $1,835 (employer/employee tax at 15.3%) to the average $12,000 per year family plan BEFORE income tax is added. This would be very regressive, as workers below the “cap” would be subject to the full payroll tax; higher income workers just the medicare tax; investors would pay no payroll tax at all.
This is not progress – MANDATING we all give money to the insurance industry and TAXING us on that amount to boot! If it is so essential that we all carry health insurance, why should the government impose a tax on what we pay to obtain that insurance? And what’s next – mandated payments for food and shelter?
Pampered Parasites Must Be Fed!
It’s the DC way.
Once upon a time employers used to get a tax deduction for providing health care benefits….. it seem to me that went out in the Reagan or Bush era…. that is when many of us started paying a portion for our health care, larger copays and out of pocket expenses……
A company is taxed on its profits, which is revenues net of expenses, including paying wages/benefits, etc.
What’s really interesting is that if you look a graphs of employee compensation over time, and remove the increasing amounts employers had to pay in health plan premiums, you see the net wages remaining stable and even falling in recent years, while the “compensation” devoted to health premiums has steadily increased.
What this tell us is that all of the gains employees supposedly made over the last decade or so went entirely to the insurance companies in increased premiums. I think I saw graph over at Ezra Klein’s place a week ago.
I’m going to go on record right now as stating that I will violate the individual mandate. There is no way in hell I’m going to pay into a government induced insurance racket. By where I’m forced to pay for private insurance; or else.
That is an extreme perversion of anything one could sensibly call reform.
You can already predict what will happen. Companies will cancel their health care options, so that they can cut administrative overhead. This will force people to the government program. The government program will be severely underfunded and costs severely underestimated.
Easy to predict. Don’t even need a working crystal ball!
What you just described is a scenario that leaves you with, in effect, single payer, because the alternatives cannot survive and meet a “must serve” obligation.
If this is Kennedy’s “legacy,” all I can say is that it is one that Rube Goldberg would be proud of.
Any healthcare plan that you have to force people into has got to have major problems. Then you have this farce of plans competing with each other but if, you know, they actually do compete with each other then they can have their profits redistributed. How do you in practical terms distinguish between competition and gaming the system? And what incentive do plans have to innovate and improve what they do if such changes cause them to lose profits in a “redistribution”?
As for the public option, I’m guessing it will be structured to provide the minimums in care which will force many in the middle class, especially those with families, into more expensive private plans.
If Kennedy had wanted a real legacy, he could have championed single payer, instead he has decided to go out with a whimper and a big wet kiss to the insurance industry.
Thanks Hugh, as always. You cut though the bullshit and right to corn in the manure.( an Iowa metaphor if ever I saw one). *g*
“force people into” = we do that every day. We have taxes you have to pay; we require people to purchase auto insurance, to register their cars, to pay property taxes, etc. This issue isn’t whether or not there will be a mandate. There are mandates today. The questions we need to ask are: how do you structure the mandate? How is it applied? What are the exceptions? And once you make exceptions, how do move money around to cover costs for those exempted.
We don’t escape any of these question in any system including single payer; its just that some of the question go behind the scenes, but they still have to be adddressed.
wrt to the Kennedy reallocation approach, once again, it’s a generic question; he’s got one solution to scenario in which discrimination occurs. If you don’t do that, you have to regulate more closely to reduce the opportunities for discrimination. The more regulation, the less discrimination, and vice versa. Kennedy is saying: this is where I draw that balance. It can be drawn at other points along the continuum.
I keep hearing arguments for single payer that assume none of these issues arises, but they do. We’re used to viewing this from the standpoint of the consumer. You get a health card, you walk in, you get care. There’s little or not co-payment and not further forms to fill out. Very simple. But behind the scenes, all of the issues these bills are dealing with arise and have to be solved. My guess is that a unified system is easier, and somewhat less costly in theory, but not always in fact.
From my background, I see the parallels with utility cost-of-service regulation. Customers sign up for electricity service; they use electricity; they get a bill. (The mandate is, you have to pay your bill.) But behind the scenes is a very complex set of regulations and rules that decide what costs are, what rates of return should be, how rates are designed, how invoices display costs, how to give utilities the right incentives for quality, reliability, techology preferences, low income subsidies, etc. Everyone one of complexities has an analogue in health care and shows up in single payer, or “public plan” or otherwise. Until we recognize this, we can’t have a usueful dialogue about what the real choices are.
the more i think about this, the more i think i disagree. for example, if money is very tight for a few months, i can modify my behavior to control electricity costs. even to the point of turning off the power (unless extreme temps preclude that option) and it’s unlikely i will die as a result. that’s not possible with a monthly health insurance premium.
also, it’s very unlikely that my electricity bill is anything like my health insurance bill — a small mandate is not so objectionable as a very large mandate.
just some random thoughts….
This is missing the point. We have a conception of electricity service that is a simple model. For the consumer it is. The complexity is behind the scenes. Single payer also has this attractive quality; from the consumer’s point of view, it is quite simple. But like utility regulation, there is a lot more going on behind the scenes, between health provider and the entity that makes the payments and how those payments are structure to create the right incentives.
We often here talk of health care as a “right” and not a privilege. That’s an important distinction, because once you move from “privilege” to “right” then several complicating aspects follow:
you have to figure out how to ensure this right for everyone (universality);
you have to figure out how to sustain the correct supply and the right quality; which means a “regulator” has to understand cost of service and long-run marginal costs, to ensure the necessary investments;
you have to figure out how to encourage innovation, but not waste money on solutions that don’t work, which means you need an oversight entity making good judgment not affected by private interests/corruption;
and you have to figure out how to pay for it, through some taxing mechanism, like income, payroll, etc; or non-tax payment (premium plus co-pays) or some combination.
The point I keep hammering, and I’m sorry by this is critical to this debate, is that everyone one of those questions needs an answer, even in the system that we normally think of as the simplest. When you work through the mechanisms to answer each question, you will find a counterpart in the Obama list of features, in the Progressive Caucus list, and in the Kennedy proposal. My point is not that any of these is better or worse than single payer; but rather that once you see these common problems, then it’s alot easier to think about each alternative.
I have yet to see a credible argument that any of the features in single payer does not have a counterpart in other proposals, and vice versa. It’s not a judgment about which is the best package; it’s a statement that all package can be looked at as having the same generic issues to confront.
Why does this matter? Because Congress is making choices right now, and we have to know whether we support single payer, and only single payer, and if not single payer, then nothing . . . or . . . we can support something short of that because we see that it lays the foundation for single payer.
I’m suggesting there are common elements between, eg. an open public plan (anyone eligible) plus regulatory oversight has many of the same elements as “single payer”. If it’s all or nothing, then this is irrelevant; but my focus is on getting the key elements defined correctly. It that happens it will function sorta like single payers, walk like it, quack like it, but be called something else.
In the electricity field, 15 years ago there was a huge, practically “religious” debate between advocates of a “poolco” model and a “bilateral” model. Advocates lined up on both sides and fought it out. But they later learned that the most workable model didn’t have a name, and it combined certain key features that were essential to either a choice of bilateral contracts (think private insurance) and buy/sell through a least-cost pool (think public plan). That public pool vs bilateral/private debate is happening again. Been there; done that. It misses the point.
i agree that many of the issues to be worked out are the same or similar. although one of the benefits i see to having one plan everyone is in (some kind of single payer) is that incentives are somewhat aligned across class to make it a decent plan (not grossly underfunded etc) in the long run. so i do see some differences too.
if there is another way to to have everyone in, no one out and to do that without increasing total costs, i don’t care if it’s a million payer. i don’t care what it’s called, i don’t even care if it’s single payer.
but right now, from what i’ve seen, the only system that can deliver that is some kind of single payer.
http://www.commonwealthfund.or…..erage.aspx
are you saying that there isn’t a multi hundred billion dollar difference? is that the point i’m missing?
The “point” missed at the time was that the rhetorical battle labels, “poolco” vs “bilateral contract” models both required that to do either, you had to do several common things. You had to charge people (what price?); you had to pay people(what price?); you had to deal with deviations from what people said compared to what they did, etc. You had to keep track of inputs and outputs and keep them balanced; and you had to make sure prices covered costs, including costs of construction/replacement. Just debating the competing models didn’t tell you how you did any of the things that actually made the system work.
The advocates were so adamant about their labels and debates, they weren’t thinking about “how does this actually work?” The few people who knew what they were doing kept asking, “how does that work” until they forced people to think about these issues. That’s when it all fell into place. The shared model, btw, is now accepted and now manages the electricity grid in 2/3 of the country, because all these regions (except the South and parts of West) all came to the same conclusion that no matter what, you had to answer those questions. This debate took ten years or so.
have you read BargainCountertenor diary (and thread)?
http://oxdown.firedoglake.com/diary/4557
I did today. Very helpful. And BCT is apparently from my hometown.
thanks for reading that. i was wondering because of your claim about how we weren’t thinking about “how this works.”
i object to the characterization of “rhetorical battles.” from my pov, $400 billlion dollars a year and 20.000 thousand dead a year are not just words. they are central to any “useful dialogue” on health care reform.
as i wrote @36, if there is another way to to have everyone in, no one out and to do that without increasing total costs, i don’t care if it’s a million payer. i don’t care what it’s called, i don’t even care if it’s single payer.
but unless there is a proven (i’d actually be ok with far less than “proven” some good research or detailed argument for example) alternative to single payer that can achieve those savings in dollars and lives, that’s what single payer represents — a way to save massive amounts of money and thousands of lives. there’s a ton of research, etc to back this up.
that’s a “real choice” too.
years ago it was managed care, fast forward to last year and it was mandates. there always seems to be a market solution that is going to contain costs so we can afford to make sure everyone has healthcare. the public / private plan seems to me to be to be this year’s. if there is any reason to think i’m wrong, i’d love to be directed to the research, etc.
Thank you. Kennedy would be spoken of in the same tones and with the same reverence as FDR–IF Sen. Kennedy would work for single payer, could make Obama see the light on this plan.
FDR was reviled as a “traitor to his class,” but he created social programs which are still helping all the people. Why are Dems so whimpy nowadays? Can’t they stand up to BHIP (Big Health Industry Players) and work for all of us?
We can’t afford to not have single payer. For health, for business, for entrpreneurs, for everyone of every age.
YES. we do!!! (at least i think so — please correct me if i’m being extra stupid here).
ImperialFlow said:
that is exactly what we can escape with single payer. because with single payer, NO ONE is mandated to contribute to the something like $400 billion per year that the insurance companies, etc skim off the top without contributing any social good.
with just the money we are paying RIGHT NOW, we could provide health care to everyone without co-pays, deductables, etc:
that would be an improvement for everyone without having to pay more (there are transition costs, i’m not including them, but i’m not overlooking them either). ten years from now, we may not be able to do that (if cost projections hold)
why should any of us, or the public at large, support a mandate to funnel hundreds of billions dollars a year to insurance companies? if we’re going to talk about mandates, let’s talk about mandates that don’t subsidize useless overhead.
Is there some law that says we have to do this from scratch? Why can’t we look at other successful countries’ models and just copy them? Or am I just being naive?
I sit on the board with Utah association of Health underwriters and http://www.BenefitsManager.net for health insurance reform. Several interesting changes took place with H.B. 188 passage earlier this year. The spirit of the bill allows private market place remedies. It essentially guarantees insurance providers a “no loss” or “no gain” over competing carriers in the insurance exchange portal which is http://www.UtahInsuranceExchange.info. On the surface it seems not to be attractive to participating carriers (voluntary at this point). But you have to understand the carriers goal is to cover their administration fees. That can be accomplished now. The other half of the equation is providers and their billing practices that needs to be reformed. That is on the agenda. Keep an eye on Utah because the national health care debate seems much the same ground we have already covered.