Thoughts On Public Option In The Senate HELP Bill

by slinkerwink

Here are the major points of the public option in the Senate HELP Bill:

• HHS-based plan: The Community Health Insurance Option would be run by the Department of Health and Human Services. The government would pay for the first three months of claims as a way to capitalize it; this would be a loan to be repaid over time. For the first two years and longer if necessary, this strong public option would also qualify for “risk corridor protections” which offset or reclaim excessive losses and gains which could result during the start-up period (identical to those in Medicare Part D). Subsequently, its premiums would be set to make it self-sufficient. This would make the public health insurance option quickly available in all areas of the country.

• Plays by the same rules: The public option would be one of the Gateway choices. It would follow the same rules as private plans for defining benefits, protecting consumers, and setting premiums that are fair and based on local costs.

• Provider payments and participation:

• Pooled purchasing power: This public option can pool the purchasing power of its enrollees nationwide to leverage lower prices to compete with private plans. Similar negotiation power has been used by states to get drug rebates in Medicaid beyond the statutory minimum. It has been used by large businesses to drive delivery system change. This negotiation would be backed by a ceiling of paying no more than average local rates.

• Flexibility and incentives to innovate: Unlike administered pricing, the negotiation for payment rates gives the Secretary the ability to quickly and aggressively promote payment policies that promote quality and best practices. In addition, the State Advisory Councils would tailor delivery system reform for the public option, with a financial bonus for success.

• Lower administrative overhead: The public option would not need to raise premiums to support shareholder profits, extensive marketing, and extra risk reserves required by require to protect enrollees from plan insolvency or mismanagement of funds.

Here are the major drawbacks to the public option in the Senate HELP draft:

1. It's not open to all Americans, only to the uninsured and to those with small businesses with 50 and below employees. For example, you wouldn't be allowed to choose the public option if you were currently in group employer health insurance. You'd have to go without a job or convince your employer to eat the $750 fee to drop your coverage in order to choose the public option.

2. The national insurance exchange is weaker in the HELP draft than it is in the Tri-Committee House draft.

3. It doesn't use Medicare bargaining rates and the Medicare provider network. Basically, doctors and medical providers aren't required to participate in the public option so hospitals and doctors could refuse to take you on if you're on the public option.

4. States would be allowed to require extra health benefits and to bear the costs for that on top of the basic health benefits currently required in the HELP legislation. So that means if you live in a red state, you wouldn't get the extra coverage afforded by those in blue states.

5. Employers are required to pay 60% of the premium costs.

I just submitted this as a question to Ezra Klein over at his live chat today and he says the public option in the Senate HELP bill is weaker than in the House Tri-Committee version:

Ezra Klein: No, it's a lot weaker. The Tri-Committee draft uses Medicare bargaining rate and the Medicare provider network and is open to everyone through a robust national health insurance exchange. The HELP plan can't partner with Medicare and is in a much weaker health insurance exchange -- CBO predicts that only 27 million people will have access to it by 2019.

Right now, we're in a better position today due to having two bills, one from the House Tri-Committees, and one from the Senate HELP Committee, with a good public option. If the Senate HELP Committee makes it through the Senate intact with its public option, and is the one supported over Max Baucus's Finance Bill, then it'll have to be reconciled with the House Tri-Committee version. So theoretically the public option in that could be made stronger in the conference process.

Here's Christy Hardin Smith from Firedoglake who just got off a conference call with the Senate HELP committee:

For consumers to buy into the public plan, there is a firewall built-in if you are already part of an employer-based health plan. If your plan costs more than 12 1/2% of your annual salary, then you can contemplate switching to the public option. If not, then you are stuck with your employer-based plan, whether or not you are satisfied with it. It's a cost containment decision, with the hope that competition from the public plan will, over time, shift the operations of private insurers.

Sen. Brown emphasized that this plan is designed to reward "best practices" for insurers -- and that each state will have an advisory council to monitor local competition in an effort to keep insurers more competitive and, hence, he says, more honest. He used the stuent loan industry as an example. I'm not certain that was the best example, frankly, given the profit-grubbing nature of any number of lenders in that industry, but there you are.

It's why we have to support the progressives in the House and to KEEP on cracking the whip on them for the public option!

Read it all at Daily Kos