Medicare for all, or Obamacare for seniors? Or both?

Many have noted that the Medicare reform plan included in Paul Ryan's 2012 budget, though sketchy in detail, looked a lot like Obamacare for seniors plus a public option -- the public option being traditional Medicare, which would compete with private plans on an ACA-like exchange.  Throughout the presidential campaign, Ryan emphasized that his plan would not affect current seniors, only kicking in for those under 55 when the plan was enacted.

This year, to meet the GOP target of balancing the federal budget within ten years, Ryan is reportedly planning to move the migration age up.

That possibility has led Avik Roy, the most vocal spox for conservative health reform ideas, to stop worrying, love the ACA, and envision its fusion with Ryancare:

There has been an important development since last year’s House budget: the reelection of President Obama. Obama’s victory means that Obamacare will be implemented, warts and all, making it politically impossible to repeal, even if Republicans are fortunate enough to retake Washington in 2017.

How does that affect entitlement reform? By making it much easier to raise Medicare’s retirement age. If Medicare’s eligibility age increases, younger seniors will have another option for gaining subsidized coverage: Obamacare’s insurance exchanges.

The exchanges use a premium-support system that is nearly identical to the one that Paul Ryan proposes for Medicare. There are two key differences. First, Ryan’s most recent proposal included a government-run “public option”; Obamacare’s exchanges do not. Second, Obamacare’s exchanges contain significant means-testing provisions; if the entire Medicare population were eventually to migrate over to these exchanges, the wealthiest quartile of retirees would move off the government-health-care rolls altogether. By contrast, the Ryan plan provides subsidized coverage to all seniors, even the very wealthiest.

Imagining this marriage, Roy introduces a rather ironic migration of an ACA feature into Medicare to advance one of his cherished goals: weaning wealthy seniors off of any government support for health insurance:

In other words, raising Medicare’s retirement age — say, by three months a year, every year, for the foreseeable future — would be a simple way to introduce premium support to younger seniors while making no changes to the program for current retirees and older future ones. In addition, because such a measure would move the wealthiest seniors off of government assistance altogether, it would likely reduce spending more quickly than the old Ryan plan did. And lower-income seniors who want to retire at 65 could still do so, because they would remain eligible for subsidized coverage in the Obamacare exchanges.

Roy has long objected to those elements of the Affordable Care Act that from a progressive perspective are the only ways to make coverage both affordable and adequate: rules defining adequate coverage and community rating that lessens the price differential between young and old participants.  His suspension of those objections in this imagined fusion suggests a path to compromise that has also been envisioned by progressive health care experts, including Donald Taylor and Aaron Carroll. Here's how Carroll sketched it out last summer:

A bipartisan plan could come from Republicans accepting the Affordable Care Act as it stands for all those younger than 65, without further talk of repeal, in exchange for implementing the Ryan-Wyden plan for those 65 and older. After all, that proposal isn't really much different than the way the exchanges will work in the Affordable Care Act, with the exception that there is a public option (which should be opened to everyone under 65 as well). Everyone gets something they want, with all the tools available being brought to bear on containing future costs.

(N.B. Carroll specifies the Ryan-Wyden plan floated in late 2011, which includes protections left out of Ryan's 2012 budget.) 

Roy puts the compromise challenge to Democrats this way:

After all, if Obamacare’s exchanges are good enough for 64-year-olds, aren’t they good enough for 65-year-olds too?

Answer: maybe, though probably more expensive (like most Democrats, I would have preferred a single payer system to Obamacare). Let's wait and see if they work -- and hold out the probability that they'll function tolerably, as Massachusetts' exchange does -- as an incentive to Republicans hoping to reform Medicare along the same lines. Don Taylor recently laid out a multi-step compromise:

• Any state that sets up an ACA exchange, in that state, we will demonstrate competitive bidding in Medicare advantage 2 or 3 years later, using the experience of the state exchanges to inform (Austin [Frackt]’s FAQ on comp bidding is great).
• Two or three years after that, we move to allow a “Medicare buy in” for persons younger than 65, say to 62 (or 60 or whatever). This will be ~ 5 years after state based exchanges have been up and going and will give time to see if there are parts of states in which private plans don’t seem to be working out (most likely rural areas with few people, and more difficult to set up networks, etc.). There are endless permutations (only private options in early Medicare years, different benefits, depends on how many plans available in a county, etc.)
• If we were going crazy with this, then after that, allow states to start buying in low income portions of Medicaid (not duals and long term disabled) into private insurance sold in exchanges, after they were up and going and the risk pool is getting larger and larger.
• Then we might start letting more and more people the choice of buying in the exchange and over time, slowly move away from health insurance as a benefit of employment.

Is there any reason to believe that managed competition among private insurers brings down costs? The evidence is mixed and murky. The main motive for progressives to engage in a compromise like this is to win Republican acceptance and buy-in to the ACA.

The missing link in these scenarios, in my view,  is uniform pricing, imposed by the government. That is what every other wealthy country has, regardless of whether they strain healthcare delivery through some form of private insurance (usually nonprofit in the basic coverage market at least) or not. As Ezra Klein recently noted, the lack thereof is the main reason behind the grotesque price-gouging that Steven Brill recently exposed as rife in U.S. healthcare.

Including a strong public option in the ACA, using Medicare pricing, would have increased government pricing clout and so moved us toward this healthcare monopsony. That's another motive for Democrats to move toward something like Wyden-Ryancare: as the ACA and Medicare converge, the grandfathered Medicare "public option" could be migrated down the age chain.

Of course, the catch in all this pleasant scenario-spinning is that Avik Roy is not an office-holding Republican -- and unlike almost all GOP office-holders, he is actually invested in making adequate health insurance (adequate by his lights) available to all Americans.