Apr 20, 2021
NAHU CEO Janet Trautwein, CEO was featured in a recent webinar by Insurance News Net where she described which public health care proposals are getting the most traction in Congress. Proposals include everything from a full-blown single-payer system to incremental additions to our current government programs. Congress has introduced bills related to these options:
- Medicare for all
- A public option
- A buy into Medicare
- Lowering of the Medicare eligibility age
All these options would likely use government-set prices in competition with commercial products that would have to operate without this advantage. All public program proposals would pay providers Medicare rates. Under our current system, commercial insurers’ provider rates can be about 80% to 90% higher than Medicare rates. We also see differential as high as 800% to 900% higher than Medicare for some services, she explained.
Whether a provider could withstand that level of payment reduction without reducing services is questionable, she said. Significantly reducing provider payments, would likely result in longer waiting times and closed facilities in some cases.
Medicare for All
Medicare for All is unlikely to pass. Significant political pushback would be expected from many different interest groups. Medicare For All is also unlikely due to concern about the viability of the Medicare trust fund, which is estimated to be exhausted in 2024.
Recent single-payer efforts have been launched in New York, Rhode Island, Massachusetts, Connecticut, California, Vermont, and others. Single-payer is difficult for states to pass, due to balanced budget requirements.
Lowering the Medicare age to 62 or 60 is more likely, but it could be impacted by issues related to Medicare solvency. The Administration could advance public option plans at the state level through 1332 waivers.
A Public Option
A public option could be in play, but it’s hard to see how it could overcome a 60-vote requirement and Senate opposition.
Federal public option proposals differ when it comes to private payers. Some proposals envision a public option run entirely by CMS. Others envision programs run by other claims-paying entities, such as carriers that already participate in the Medicare program. Some proposals would start the public option only in the individual market first.
The most prevalent proposal is the Medicare X Choice Act of 2021. It would start as a public option in the individual market in some rating areas and expand over 4 years in all rating areas in the individual and small group markets. Providers would be paid a Medicare rate but they may have some flexibility to pay more in rural areas. The legislation would require providers to participate in the public option in order to get reimbursement for their Medicare patients. So most providers would be compelled to participate.
The legislation would fix the family glitch issue. The family glitch is when people cannot get a tax credit because their spouse has a valid employer offer of coverage that is affordable even though there is no employer contribution. NAHU is in favor of fixing the family glitch, but not this way. There is separate legislation to fix it.
State Public Option Proposals
Several states are initiating their own public option proposals. In states where these proposals are moving forward, NAHU works to lessen the market damage. One passed in Washington State. Colorado is pursuing a public option very aggressively. Other state efforts include Connecticut, Illinois, Nevada, Oregon, California, and New Mexico. Some state proposals require all carriers to have a public plan if they want to participate in the market.
Provider payment rates will be a key issue. Reduced provider payments have caused speculation about the ability of some providers to remain open. Another issue is that a private option could lead to a death spiral over time in which private plans drop off one by one because they can’t compete and nothing is left but the public option.
Mid-term elections may change the political balance of these issues, she said.
Addressing Cost Issues in the Private Sector
She noted that the industry has been working to reduce health care costs. That includes value-based programs, special maternity care programs, domestic or foreign medical tourism, and price transparency. At the federal level, there are proposals to bring down prescription drug costs, which is the biggest and growing part of the premium dollar.
