The main purpose of the public option was to dive down the cost of insurance in the individual market by making it available through a plan that would pay Medicare rates to providers, rather than the much higher rates usually paid in the commercial market.
There are other ways to do that. In the Medicare Advantage program, insurers pay providers rates that are by all accounts very close to those paid by traditional Medicare. At healthinsurance.org, I delve into a proposal to accomplish that goal by indirection, via a relatively simple rule change. The proposal comes from Jon Kingsdale, a health insurance industry veteran who was the founding executive director of the Massachusetts Connector, the insurance exchange established under Romneycare, prototype of the ACA marketplace. Here's the upshot:
Here again is the piece, with Jon Kingsdale laying out the idea, and Timothy Jost, Sabrina Corlette and Jack Hoadley weighing it.
A broader question, to my mind, is why the ACA marketplace wasn't more closely modeled on Medicare Advantage. I'll be addressing a variant of that question in a bit.
There are other ways to do that. In the Medicare Advantage program, insurers pay providers rates that are by all accounts very close to those paid by traditional Medicare. At healthinsurance.org, I delve into a proposal to accomplish that goal by indirection, via a relatively simple rule change. The proposal comes from Jon Kingsdale, a health insurance industry veteran who was the founding executive director of the Massachusetts Connector, the insurance exchange established under Romneycare, prototype of the ACA marketplace. Here's the upshot:
Kingsdale proposes to adapt to the ACA marketplace a provision that was enacted in 2003 to shore up Medicare Advantage plans, the private-market alternative to “traditional” Medicare. The new rule or law would require healthcare providers who accept Medicare rates for Medicare patients – i.e., almost all providers – to do the same for marketplace enrollees who obtain care outside their insurer’s provider network...The catch, of course, is that the measure would be almost as hard to pass as a robust public option itself. Almost, but not quite. It would transform the private market, but it would be less disruptive than a public competitor. It would gore healthcare providers' ox, but not insurers'. It might emerge as a fallback if a Democratic Congress got to the point of seriously reconsidering a public option.
In addition to providing strong balance billing protection, Kingsdale told me, “the rule would create a BATNA – a Best Alternative to a Negotiated Agreement – for everybody. That is, the Medicare rate. That’s the best a provider can do by refusing to sign up with an insurer, and the best the health plan can do by refusing to sign providers up – which means that the agreements are going to be negotiated based on something like those rates.”
Here again is the piece, with Jon Kingsdale laying out the idea, and Timothy Jost, Sabrina Corlette and Jack Hoadley weighing it.
A broader question, to my mind, is why the ACA marketplace wasn't more closely modeled on Medicare Advantage. I'll be addressing a variant of that question in a bit.
I really like the solution to balance billing -- i.e. the beginnings of a national fee schedule.
ReplyDeleteHowever you imply that if all insurers paid lower rates to docs and hospitals, that would make health insurance affordable again. It is not that automatic I fear. My own reading suggests that when an insurer pays lower fees, that causes premiums to go down by 7 or 8 per cent. It is not a total sea change.
Plus,it is becoming more important what an insurer pays for specialty drugs. That can wipe out any savings from lower fees to docs and hospitals.