Secretary Clinton is proposing a Medicare buy-in for people between 55 and 64 and a public health insurance option in the state health insurance exchanges. The public health insurance option was introduced during debates around the Affordable Care Act as a way to give people greater choice, drive competition and rein in costs in the health insurance exchanges. And, the Medicare buy-in has been considered by Congress for decades as a way to increase access to affordable care for people nearing Medicare eligibility.
Last month, 33 Senators supported a resolution to give everyone in the U.S. the choice of a Medicare-like public health insurance option. A new Harvard-Politico poll shows that a majority of Americans support this public health insurance option. Overall, 54 percent of Americans support the public option in the state health insurance exchanges. If you break down views by party affiliation, three out of four Democrats favor a public option and 52 percent of Independents. Six out of ten Republicans oppose the public option, but 26 percent support it.
A new report by Linda Blumberg and John Holahan of the Urban Institute looks at how best to design a Medicare buy-in and a public health insurance option. The advantage of a Medicare buy-in and/or public option is that it should drive down insurance premiums. The government has the ability to secure lower doctor and hospital rates than insurers and also has lower administrative costs. If everyone 55-64 took advantage of a Medicare buy-in, it also likely would lower costs for younger people in the commercial marketplace since older people tend to have higher health care needs, which drives up premiums.
Commercial insurers have far less market power to rein in provider rates than the federal government. Doctor rates under Medicare tend to be 20 percent less than what private insurers pay. And, private insurers now pay about 75 percent more for hospital inpatient stays than Medicare.
As a result, many people in and out of the state health exchanges still struggle to afford health insurance. The state exchanges offer help paying premiums to people under 400 percent of the federal poverty level, but costs can still be high for some people. Both people with incomes above 400 percent of the federal poverty level and people not in the exchanges do not get premium assistance. And 55-64 year old adults in the exchanges can be charged premiums up to three times more than younger adults.
Questions to be considered with a Medicare buy-in:
- Would people 55-64 have the option of traditional Medicare, a Medicare Advantage plan or a marketplace plan? If they had to enroll in Medicare Parts A and B, it would most help to reduce premiums for people under 55; but, it could increase their costs depending upon savings achieved through Medicare’s provider rates. And, if they had to enroll in Medicare, it could split up their family coverage, if they still had children eligible for a family plan.
- If they had the choice of traditional Medicare, would they be guaranteed the right to buy a Medicare supplemental insurance plan to protect them against catastrophic costs? And could they buy a Medicare Part D drug plan?
- How would the government calculate premiums for people buying into Medicare? And, would financial assistance be available to people based on income as it is for everyone else in the state exchanges.
- Would people have to pay a late enrollment penalty if they did not enroll in Medicare or if they only enrolled in Part A and not in Part B during the initial enrollment period?
- Would commercial insurers continue to offer plans in the state exchanges if these plans were only for people under 55?
Questions to be considered with a public health insurance option:
- How would the government decide what to pay doctors and hospitals in the public health insurance plan?
- How would the government be assured an adequate network of doctors and hospitals? The federal government could require all Medicare providers to treat people in the public option plan. But, if authority rested with the states, would they have any leverage?
- Where would the public option plans be available? President Obama proposed that they be available only where there is weak competition. But, should they also be available where premiums are high?
- Would it be able to offer lower premiums and address affordability issues in the state exchanges? In some areas, it likely would not.
- How would the public health insurance option affect participation of commercial insurers in the state exchanges?
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