Hillary Clinton has now updated her health care proposal. In addition to the usual promises to improve quality and cut costs and prices blah, blah, blah that all the politicians are making, there are two possibly substantive proposals. The first is that people might be allowed to go on Medicare from age 55. The second is a mysterious thing called the “public option”.
The lowering of the eligibility age for Medicare (ironic in a climate of raising the Social Security eligibility age) seems pretty straightforward in that she didn’t specify that this new age group would get anything other than standard Medicare. But the “public option” could change the rules of the healthcare game, depending on what it really is. And she left some clues. Let’s take a closer look.
I am writing this piece in reference to my earlier article called Death Wish: The Politics of American Healthcare in response to a question posed by Irene Baldwin about whether Clinton’s proposal would change anything that I laid out in my article; presumably whether it would lead do the cutting of any “knots”.
At the time that Obamacare was passed, and it had already become evident that it was not going to be a single payer plan, there were some who wanted the insertion of a “public option” that would allow people to purchase Medicare as an insurance choice along with the commercial insurance options. This was not adopted. If this were adopted, it would be an interesting twist that could start to untie the knots. For Medicare (fee for service Medicare, that is) is accepted by almost all providers in the United States. Medicare benefits are consistent in all of the states. The price and cost history of Medicare is well documented. This would of course change if it were commercially available, because of the inflow of younger healthier people than are able to use it now. But that would be a good thing, since it would also bring with it lower utilization and lower costs.
What people are not quite aware of is that Medicare is rather expensive per person. It now tops $11,000 per year per person. So a family of four would be looking at a premium payment of $44,000 as it is now (again, eventually adjusted by the change in demographics as younger people bought into it).
So Medicare as a quasi-commercial option would have its plusses and minuses. However, Clinton, is not proposing that Medicare be used as the public option.
Here is what she says:
Continue to support a “public option”—and work to build on the Affordable Care Act to make it possible. As she did in her 2008 campaign health plan, and consistently since then, Hillary supports a “public option” to reduce costs and broaden the choices of insurance coverage for every American. To make immediate progress toward that goal, Hillary will work with interested governors, using current flexibility under the Affordable Care Act, to empower states to establish a public option choice.
Her phrase “work with interested governors” is telling here. What she is saying is that the “public option” would be a state, not a Federal public option. And there is no state Medicare option. There is, however, a state option called Medicaid. So what she seems to be proposing (unless she’s talking about creating a different “public option” entirely from scratch) is a plan to offer Medicaid as a “public option”.
Medicaid is a different kettle of fish. For one thing, it is not reimbursed like Medicare. Its reimbursement rate is lower. Also, there are not consistent benefits across the states. The Republicans like to call this inconsistency “flexibility” as though the constituents of some states are worried about the possibility of having too many benefits. But it is odd seeing her use it, since Obamacare has always been about consistency.
And regarding my knots, the insertion of a “public option” into the marketplace as Medicaid for all would probably drive up the price of commercial insurance, which is now subsidizing Medicaid as it is. And this could lead to two things (at least) if inserted into our current system. First, driving up the price of commercial insurance will drive up the co-pays and co-insurance and out of pocket minimums, since business is not likely to talk up the slack. But regarding these, Clinton claims:
Lower out-of-pocket costs like copays and deductibles. The average deductible for employer-sponsored health plans rose from $1,240 in 2002 to about $2,500 in 2013. American families are being squeezed by rising out-of-pocket health care costs. Hillary believes that workers should share in slower growth of national health care spending through lower costs.
But she won’t be able to have it both ways.
The second thing that can happen is that commercial insurance could become too expensive for many people, which would drive them to the public option of Medicaid. And not only would they see their benefits reduced to that of Medicaid, but it could create a vicious circle in pricing (as described above) and create a chasm between those who can still get decent benefits and those who can’t. Her "public option", unless it is actual Medicare, only will make things worse.
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