Medicare-X 2.0 deserves a second look

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As originally introduced by Senators Bennet and Kaine in October 2017, the Medicare-X Choice Act (summary here) placed a big fish --  a strong public option -- in a small pond, the ACA marketplace.

The "Medicare-X" public option would first be introduced into low-competition areas in the ACA marketplace, and then into all rating areas. The public plan would pay Medicare rates to providers, and providers who accept Medicare would be required to accept it. But in the first iteration, eligibility for subsidies adhered to ACA criteria, and the subsidies themselves were not improved. While it might improve affordability for the unsubsidized, its appeal to subsidized enrollees might be more limited, though the full Medicare provider network might be a powerful draw. As to premium, however,  I noted recently

By conforming to current ACA subsidy structure, Medicare-X runs afoul of the ACA paradox: measures that reduce unsubsidized premiums do not improve affordability for the two thirds of current individual market enrollees who receive subsidies. In fact, premium reductions often reduce discounts by compressing price spread between benchmark plans, against which subsidies are set, and cheaper plans, to which the subsidy can be applied.

The bill did phase in a small business buy-in, and that might be attractive, as the unsubsidized price might be a relative bargain for small businesses, and the provider network would be unbeatable. It might thus expand the small group market,  which enrolled an estimated 13.6 million people in 2016.

The update introduced this month (bill here, summary here) widens the pool of potential beneficiaries, combining measures that expand subsidy eligibility and reduce unsubsidized premiums -- potentially offsetting the cost of subsidizing more enrollees. It's a limited and cost-conscious expansion of benefits that might make the ACA work more as designed.

Expanding the footprint of Medicare payment rates is hard: Washington State edition

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It's ironic that the path for healthcare reform preferred by allied U.S. healthcare industries is embodied in a bill introduced by Elizabeth Warren.

The Partnership For America's Health Care Future, a coalition of major hospital, health insurance, physician and pharma trade groups formed to preemptively nuke any expansion of pubic insurance, would like government to spend more to insure more people and lower their out-of-pocket costs. But they want government to do this while paying commercial rates to providers. Robert Pear summarizes:

The coalition, like President Trump, attacks any proposals that smack of socialized medicine. But it also has a positive agenda. It wants to expand Medicaid under the Affordable Care Act in Texas, Florida and other states that have yet to do so. It wants to expand federal subsidies under the health law so insurance will be affordable to more people. And it wants to stabilize premiums by persuading states to set up reinsurance programs, using a combination of federal and state funds to help pay the largest claims.

While preserving the core ACA structure, Warren's bill removes the ACA's income cap on eligibility for premium subsidies and gives a major boost to ACA premium and cost sharing subsidies at all income levels. While it would tighten insurers' margins a bit, and impose stricter standards on their provider networks, it would boost enrollment and the federal government's share of premiums paid. Insurers should be happy with it,  notwithstanding the rhetorical broadside against insurers with which Warren introduced the bill. It should also be attractive to providers, since it does not impose caps on provider payment rates. .

Should Democrats gain control of the presidency and both houses of Congress, boosting ACA marketplace subsidies -- and, to a certain extent -- eligibility -- should be relatively easy. What won't be easy: expanding the footprint of public insurance that pays Medicare rates (or less) to providers (an exception is Medicaid expansion, for which the target population generally lacks access to commercial insurance).

Would a public option mean fewer claims denials?

Here I'm going to pose a question for which I don't yet have good answers.

One strong appeal of the public option in various Medicare expansion bills -- e.g.,  Medicare X, Choose Medicare, Medicare at 50, Medicare for America -- is access to an all-but-unlimited provider network (effectively eliminating balance billing as well as limited choice of provider). My question To what extent does a national public option also promise to strongly reduce the agony inflicted on patients by coverage denials? And secondarily, to what extent would minimizing denials weaken legitimate cost control?

Pieces of the puzzle are provided by studies of denial rates in various markets and public programs. These studies are based on partial or not-so-partial data sets and may be measuring different things. One question that's often unclear to me when reading them is how many or what kinds of denials directly affect patients, and which are eaten by providers or represent (or trigger) a de facto negotiation between provider and payer. Not to mention how many are justified...

With that caveat, a few data points:

Will red states stonewalling the ACA pay for self-inflicted punishment?

The long-term effects of the Affordable Care Act that everyone should ardently wish for are 1) access for all Americans to affordable, adequate health insurance and 2) reduced or reversed health care inflation.

Republican governors and/or state legislatures determined to sabotage the law are causing needless suffering, by denying millions the access to Medicaid the law was designed to provide, and by refusing to run the private insurance marketplaces, forcing the federal government to operate them in 34 states, with so-far disastrous results. State-level stonewalling goes beyond refusal to build a website: it also means abjuring the responsibility both to entice insurers into the exchanges and to impose discipline on those that participate, via state adaptation of the federal coverage guidelines, and by working to prevent adverse selection in the exchanges through state regulation of the individual market outside them.

No real good can come of deliberate misgovernance. But its consequences may trigger self-correction over time. States that try to make the law work may emerge as better places to live than states that don't -- offering Medicaid to the lowest-income adults, and a competitive, well-regulated and subsidized market to those with modest incomes. That creates a range of economic freedoms -- to leave a full-time job to start a business or go to school, to go from full- to part-time to do either, or undertake the kind of de facto apprenticeships that a career change often requires, or care for a sick parent.

On the most basic level, Donald Taylor points out that the states refusing Medicaid expansion are effecting a wealth transfer to states that embrace it:

A public option that isn't? What's the tradeoff?

(12/9 update at bottom)

The Times is reporting tonight that the "Gang of 10" Democratic senators designated to come up with a health care reform bill that can pass has agreed to put the public option on ice. It's not entirely clear what liberals got in return yet but here's the outline as picked up by Robert Pear and David Herszenhorn: