On the heels of the failure by Republicans to repeal Obamacare, a discussion has emerged about whether or not Democrats should advance their own plans to improve the system. The latest edition of the Washington Monthly featured three ideas Democrats could incorporate, David Atkins noted that Bernie Sanders has revived his call for single payer, and Steven Waldman suggests a grand health care bargain.
One way to evaluate all the ideas that are being generated is to break them down into two broad categories. In most cases these proposals have to do with either (1) changing the way we get health insurance or (2) trying to reduce the costs of actual health care. The reason this is important is because the difference is often determined by where we see the biggest problem.
To be clear, most people that are advocating for a change in the way insurance is provided (i.e., single payer and public option) are doing so because they believe that it will not only increase access, but that it will reduce costs. That usually rests on the assumption that the main driver of why health care is so expensive in this country is because of private insurers. The corollary is that either a public option or single payer will make health insurance less expensive, along with more accessible.
Those who advocate ways to reduce the costs of actual care assume that the main driver of our health care costs is already baked into the system prior to a discussion about insurance. It is to be found in how/what we pay providers and how that care is delivered. Of course, that can overlap with the issue of insurers based on what it is they pay for.
So while there are big areas of overlap, a short way of saying all this is that your solutions are mostly driven by how it is you describe the problem and who is the identified villain. To oversimplify things, is it the insurers or the providers?
While Obamacare certainly wasn’t single payer and ultimately didn’t include a public option, most of it tackled the issue of how health insurance is provided. The expansion of Medicaid is a great example. And while many of the ideas being articulated now are important for Democrats to consider, it is also significant to remember that there are still 19 states that have refused to do so. Millions of Americans would have access to insurance and health care if that was tackled.
Beyond that, Obamacare attempted to solve the problem of how people access insurance in the individual market and it created reforms like ending denials for pre-existing conditions, the list of essential health benefits, and the requirement that preventative services be provided without any out-of-pocket expense for patients.
One huge change Obamacare implemented when it comes to insurance companies is the medical loss ratio (MLR) in which their overhead and profit are limited to 15% (20% in the individual market) of what they charge in premiums. But when it comes to the exchanges, that hasn’t even come into play because the insurance companies still aren’t making a profit there. So it’s hard to make them into the villains of this story.
I think David is right when he says that any movement on single payer is likely to come from the states in the near future. We know that Vermont tried and failed to make it work. It will be interesting to see whether or not a larger state like California can figure it out.
When it comes to the public option, it is important to remember that, among Democrats, there were three different factions on that issue when Obamacare was being negotiated. We heard mostly from conservative Senators who were completely against the idea of including one. I remember the day I knew that a public option was dead. It was when Blanche Lincoln took to the Senate floor to announce that she would not vote for a bill that included a public option. Of course there were others who joined her, but one vote was all it would take to fall short of the 60 needed for passage. A statement on the Senate floor was definitive. It wasn’t going to happen.
But that battle obscured the one that happened over the public option in the House. There the disagreement was over what kind of public option would be included. This is where the issues of insurance and cost of care overlapped. Progressive Democrats tended to support what came to be known as a “robust” public option. It would tie payment to providers to the Medicare payment system. Conservative Democrats favored a public option that allowed HHS to negotiate payments with providers. In the end, Conservative Democrats won and it was their plan which was included in the House bill and later removed via reconciliation with the Senate. Interestingly enough, CBO said that premiums for that public option would be slightly higher than the private plans offered in the exchange.
A later CBO report found that a “robust” public option would produce premiums that are 7-8% lower than private plans. Here is why that is important: Medicare doesn’t negotiate rates, it sets them. And overall, Medicare tends to pay 80% of what private insurers pay. That sounds like a good way to tackle the cost control problem, right?
But there is a potential problem with that. Providers tend to accept Medicare because the volume of treating elderly patients makes it worth doing so for fewer dollars per procedure. When it comes to younger more healthy people, will that hold? If Medicaid is any indicator, it might not. Since Medicaid is mostly administered by states, the comparison is difficult, but overall there are big problems in some states with finding providers who accept it. When we advocate for a public option, this is something to keep in mind.
On the cost control issue, Obamacare took a more experimental approach. The two most important inclusions were Comprehensive Primary Care (which reimburses providers for outcomes rather than the number of services provided) and the Medicare Payment Advisory Commission (which looks for innovation in cost controls with Medicare). Both of these initiatives are still in the early stages, but encapsulate some of the best thinking on how to rein in health care costs.
As Democrats consider proposals to continue improvement on health care access and costs, this information points to some key issues to pursue:
- Keep pushing for Medicaid expansion
- Let states experiment with single payer
- Refine efforts to design a payment structure for a public option
- Track the success of cost control mechanisms already underway via Obamacare and develop plans to take them up to scale
Obviously Donald Trump just learned that health care is complicated. Democrats should be well aware of that by now and avoid jumping on a bandwagon that simply sounds good.