Monday, July 29, 2019

New colors in the spectrum of Democratic healthcare reform plans

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For some time, Democratic next-gen healthcare reform proposals have fallen on a spectrum  that I've thought as anchored by three main proposal types. Here they are, in ascending order of cost and degree of system change:
  • ACA 2.0 - Improve the ACA mainly by a) bulking up the subsidies and extending them farther up the income scale, and/or b) introducing a national public option within the ACA marketplace framework. Chief exemplars: Elizabeth Warren's ACA 2.0 bill; Senators Bennet and Kaine's Medicare-X

  • Medicare for all who want it: Introduce a strong public option that anyone can buy into on an income-adjusted basis, even if they have access to other affordable insurance, e.g., insurance offered by an employer. Chief current exemplars: The Center for American Progress's Medicare Extra, which is the basis of Reps. DeLauro and Schakowsky's Medicare for America bill.

  • Medicare for All (that covers everything for everyone at no cost to anyone except via taxes). Private insurance essentially ends. Chief exemplars: - Bernie Sander's Medicare for All bill, and Rep. Jayapal's House variant.
When Joe Biden released a healthcare plan outline a couple of weeks ago, I dubbed it a cross between ACA 2.0 and Medicare for America. Biden's plan sweetens the ACA premium subsidies, removes the cap on the income level at which subsidies are available,  introduces a strong public option that anyone can buy into, and takes a step toward folding Medicaid into the new public option (as Medicare for America does completely) by offering the plan to those who have been shut out of the ACA's Medicaid expansion by their states' refusal to participate in that expansion. It appears, though key details are missing*, that people who have access to employer-sponsored plans would also be eligible to buy into the new public plan on a subsidized basis. And that's really the rubicon for Medicare buy-in plans: is the new public plan (usually dubbed "Medicare") affordably available to everyone, including the 150 million people insured through employers?

Now here cometh Kamala Harris with her own Medicare-for-eventually-all (kinda) plan, which Charles Gaba in turn dubs a cross between Medicare for America (Medicare buy-in) and Bernie-style Medicare for all. Harris would not only make a strong new public option available to all; she would phase out employer-sponsored insurance as we know it (after ten years), or at least rebrand it as a species Medicare Advantage (i.e., a privately sponsored Medicare plan). Employers that do not offer a plan will contribute to the cost of the public plan.

What chiefly distinguishes Harris's plan from Sanders/Jayapal-style Medicare for All, other than a slower transition (10 years rather than 2 or 4) is the preservation of commercial Medicare Advantage plans, which would have to make do with payments "below what the public Medicare plan will cost to operate" -- and can be sponsored by employers as well as by insurers. Such plans would have to comply with new coverage rules, as Medicare Advantage plans currently conform to parameters set by CMS (and as ACA marketplace plans conform to different parameters). All plans would offer comprehensive coverage with no deductibles and low caps on out-of-pocket costs, and all would cover dental, vision and hearing services. Long-term care coverage would be phased in as well.

Like most candidates' plan outlines, Harris's raises a lot of questions. Chief among them, to my mind, is whether allowing employers to offer "Medicare Advantage" plans differs more than semantically from allowing them to offer coverage, period. Employers will be subject to new coverage rules, sure. That was true under the ACA. They'll have to cover services currently not offered, eschew deductibles, and keep out-of-pocket costs low. They'll have to compete with a generous public plan via a plan reimbursed at below public plan cost. 

That last point raises a question: If an employer chooses to offer an MA plan, how exactly do they pay? If an insurer sells that plan and assumes the risk, the federal government would pay the insurer and the employer would also pay the insurer, presumably in lieu of paying into the public plan via a payroll tax. As of now, though, most large employers self-fund their plans. Would they be able to continue to do so? Harold Pollack has raised this possibility. I don't know how that would work.

With all Medicare buy-in proposals that open the buy-in to everyone, a core question is whether they're designed to phase out private insurance or maintain it in competition/equilibrium with the public program. Authors and analysts of such plans have forecast both outcomes. In Harris's case, the political context may matter. She has famously flailed about when asked whether private insurance should be phased out. The plan may be designed to straddle her apparently contradictory statements on this front. Jump ball! Which actually isn't a bad answer. Who knows how a robust public plan available to all would play out over time?

To return to the spectrum of Democratic proposals sketched out above, Biden and Harris have placed  two intermediate points among the original 3:
  • ACA 2.0
  • Biden Medicare buy-in of uncertain reach
  • Medicare for America
  • Harris Medicare/Medicare Advantage for all
  • Bernie's Big Rock Candy Mountain Medicare for All
Since early this year, I've suspected that the finalist four or five Democratic candidates would converge on some variant of a strong Medicare buy-in, something like Medicare for America but perhaps without biting off absorption of Medicaid and transformation of existing Medicare for seniors. When first Harris and then Warren tipped toward Medicare for All, that assumption was looking off base. With Harris's new entry, it's looking more on target. The big question mark is Warren. As of March, she was talking up a full menu of Medicare/Medicaid buy-in proposals as possible paths to universal coverage. More recently, she tilted most of the way toward Bernie's single payer. With Harris having a planted a hedge along that path, I suspect Warren will follow suit, and also present a plan that could branch toward single payer or all-payer.

As to what a Democratic president with an at best bare Senate majority and a mountain of Trump-created wreckage might actually find bandwidth and power to do in 2021: that's an entirely different question. I suspect that some ACA patches, possibly including a strong public option with phased employer buy-ins, might be the extent of what's possible. But we'll see what the candidates commit themselves to.

Medicare for all (who want or need it): A path for presidential candidates?

* Originally I wrote that it was unclear whether those whose employers offer insurance deemed affordable are eligible for subsidies in the marketplace in Biden's plan. The plan does state, "If a family is covered by their employer but can get a better deal with the [marketplace's] 8.5% premium cap, they can switch to a plan on the individual marketplace, too." But Biden's cost estimate - $750 billion over ten years -- is not consistent with universal subsidy eligibility.

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