1. Would funds from the younger people on Medicare mix with the funds from the traditional, over-65 population? This is a critical design question that will impact everything from the premiums people pay to the long-term finances of the Medicare Trust Fund. Previous proposals have tended to segregate the two pools, so that the Medicare Trust Fund would not be affected. And that may well be politically necessary now: Already, Joe Lieberman has released a statement saying he'll consider this idea if, and only if, it doesn't adversely affect Medicare finances. Of course, if the government let all 55 year olds opt into the program, their premiums could actually help the Medicare Trust Fund, since they'd be--on average--healthier and younger than typical Medicare beneficiaries. But you can safely assume the same senators skeptical of expanding government programs will raise eyebrows about that.
2. Which older workers get to buy Medicare--and when? Starting in 2014, people over 55 buying insurance through the newly created exchanges--that is, people without access to group coverage or eligible for an existing government plan--could choose Medicare. But what happens before then? The plan is to make Medicare available to workers older than 55 starting in 2011--which is great, since this is an initiative the government can, and should, get up and running as fast as possible. But it's not clear yet whether, during those early years, only people that qualify as "high risk" because of pre-existing medical conditions would have the option available to them. If it's just a program for high-risk people--and if, as I expect, the new Medicare funds are treated separately--that'd turn the new program into a dumping ground for sick patients. In other words, it'd be an actuarial disaster.(More after the jump...)
3. Would the Medicare buy-in have some sort of risk adjustment? Even if the program is open to all people over 55 without access to group of government insurance, it could still attract disproportionately unhealthy people, driving up the program’s premiums--which, again, could make the program unaffordable and ultimately unsustainable. This is a common problem of systems with competing insurance plans, one the new exchanges would solve via “risk adjustment”--that is, taking money from plans attracting unusually healthy people, then giving it to plans attracting unusually sick ones. But will Medicare for older workers be part of this scheme? Or will it be excluded somehow?
And as you can see, there are really a couple dozen questions under the ten. It's a lot to think about, and this is a good guide as to what the Senate debate is going to be about. Hopefully over the next couple of days we'll start to see these questions answered.
4. Will there be subsidies or some other form of financial assistance before 2014? Once Medicare operates through the new insurance exchanges, people buying into it will be eligible for subsidies. But what happens before then? The premiums will likely be higher than many people can afford. The government could provide financial assistance in any number of ways--tax credits, charging higher premiums in subsequent years. Either way, though, it means asking somebody to pay a little more money, at some point.
5. Would the Medicare buy-in include supplemental benefits--or an option to buy them? The basic Medicare package (Parts A and B) covers most physician and hospital services. But it comes with reasonably high cost-sharing. Most senior citizens end up buying supplemental coverage to cover the cost-sharing, partially or fully. They also buy drug coverage through the new Medicare Part D. Would young workers on Medicare be able to purchase supplemental policies as well? If not, would there be some other enhancements of the Medicare benefit for them?
6. Would the Medicare buy-in pay Medicare rates? Yes, this is the exact same argument we had over the public option before. Don't think for a second we couldn't have it again. (The hospital lobby is already attacking the idea.) Senators could decide, instead, to have it negotiate rates with providers. And if it's negotiating rates, it will have to charge higher premiums.
7. Has somebody thought through the expansion and retooling of the Office of Personnel Management? OPM does a great job of managing policies for federal employees, but it’s a relatively small staff--and not necessarily equipped to manage a whole new series of plans, each with its own networks of doctors, hospitals, etc. If they’re going to take charge of this new national non-profit option, they’re going to need more bodies--and, perhaps, wider authority. (Update: Ed O'Keefe of the Washington Post, who actually covers OPM as part of his beat, raises some good questions along these lines.)
8. If there is a trigger mechanism, what conditions pull it? Level of premiums? Growth in premiums? The number of insurance options in a given area?
9. If there is a trigger mechanism, what kind of plan appears if the trigger gets pulled? Is it a real public plan? Or are we back to the watered down compromise versions?
10. How do you enforce the 90 percent rule? The idea here, which Rockefeller has been pushing for a while, is to require that all insurers show a "medical-loss ratio" of at least 90 percent--that is, to make sure they spend at least 90 cents of every dollar in premiums on actual patient care. The good plans do this already--the not-so-good ones, not so much. But the regulation is meaningless if you can't enforce it. And, lord knows, insurance companies know how to get around regulations.
Personally, I'm interested in the OPM plans, as I'm in my 30's. I get myinsurance through work now, but that's just not going to last. More and more employers will drop health coverage, period. It's important to know what's going on.
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