Reform: Looking at the Glass Half-Full, Part 2
November 12, 2009
Reform: Looking at the Glass Half-Full Part 2
by Maggie Mahar, Health Beat Blog
Reform: Looking at the Glass Half-Full, Part 2
The Truth about the Public Option
For reasons I don’t understand, progressive pundits have been swallowing Congressional Budget Office Director Douglas Elmendorf’s dispiriting speculation about the public plan, hook, line and sinker.
Elmendorf claims that in 2019 (six years after reform begins), less than 10 percent of the population will be shopping in the Insurance Exchange where they can choose between private insurance and the public plan. Elmendorf asserts few will choose the public plan and many of those who do will be in poor health. The government plan will be puny—giving it little market power when negotiating with providers. Thus, he declares, the public plan will be more expensive than private insurance. (This may be why Senator Joe Lieberman has claimed that the public option will somehow add to the deficit)
What is remarkable is that if you read Elmendorf’s commentary you will find that he has no hard evidence to back up his claims. His assessment is based on “probably’s.”
By contrast, what we actually know about who will be eligible for the Exchange, and what reform legislation says about the goals of the public plan, suggests that the public option will be much stronger, more attractive, and less expensive than the CBO director suggests.
Pundits who buy into the notion that the public plan will do little to reduce health care costs also have ignored the spending cuts that Medicare has proposed for 2010. These are not pilot projects; these are targeted changes in the fee schedule. Medicare would pay cardiologists less—while paying primary care doctors and nurse practitioners more Medicare Eases Next Year’s Cuts for Heart, Cancer Specialists, Bloomberg — In addition Medicare would slash fees for certain tests that many physicians say have led to an “epidemic of diagnosis.” Too often asymptomatic patients are diagnosed with “pre-disease,” and then are subjected to treatments that they don’t really need—products and procedures that expose them to the risks of side effects, with little or no benefit What’s Making Us Sick is an Epidemic of Diagnoses, NYT Here, Medicare is paving the way for a public plan that will offer better, safer care at a lower cost.
Elmendorf Reads Minds
Elmendorf laid out his assessment of the Public Option in an October 29 letter to Rep. Charles Rangel Elmenforf’s Letter to Rep Charles Rangel offering his opinion that “in 2019, only 30 million Americans” will “be enrolled in the Insurance Exchange” where they can choose between the public option and private insurance plans. And only about “one-fifth of the people purchasing coverage through the Exchanges” would enroll in the public plan resulting in a total enrollment in the Public Option of “roughly 6 million.” In the same letter, the CBO director also speculates that the public plan would “attract a less healthy pool of enrollees” than would private insurers.
How does Elmendorf know that only 20 percent of those shopping the Exchange for insurance will pick the public plan?
He doesn’t. No one knows what people looking for insurance will be thinking in 2013. None of us know what the public plan will look like, how it will be priced, or how it will compare to the competition. As I noted in part 1 of this post, Elmendorf is simply pretending that he can read the minds of millions of Americans and divine what they will choose.
Consider the reasons Elmendorf gives to back up his claim:
“That estimate of enrollment reflects CBO’s assessment that a public plan paying negotiated rates would attract a broad network of providers but would typically have premiums that are somewhat higher than the average premiums for the private plans in the exchanges. The rates the public plan pays to providers would, on average, probably be comparable to the rates paid by private insurers participating in the exchanges. The public plan would have lower administrative costs than those private plans but would probably engage in less management of utilization by its enrollees and [probably] attract a less healthy pool of enrollees. (The effects of that “adverse selection” on the public plan’s premiums would be only partially offset by the ‘risk adjustment’ procedures that would apply to all plans operating in the exchanges.”)
Elmendorf’s assessment is studded with “probably’s.” He offers no argument, no evidence, just one man’s guess as to how the public plan will operate. To assume such outcomes and reasoning based upon Public Option being a government plan and therefore it will make little effort to control costs and contain utilization, simply ignores Medicare’s efforts to rein in spending today. (Over the past 10 years, Medicare has held health care inflation down to under 6 percent a year—doing much better than private insurers who allowed reimbursements to soar by roughly 8 percent, each and every year for the past decade. (See chart on page 2 of my report on “Getting More Value from Medicare.
Six percent annual increases in the cost of care is still far too high, but the difference between Medicare, the proposed Public Option, and the Private Plans does demonstrate the interest government plans have in controlling costs. Unlike private insurers, they can’t simply pass spiraling premiums along in the form of higher premiums. And, under this administration, both President Obama and White House Budget Chief Peter Orszag have made it very clear that Medicare must do more to contain spending.
Moreover, as HealthBeat reader Dr. Fred Moolten observed when commenting on Part 1 of this post, Elmendorf completely ignores what the legislation says about the public plan:
“I find the CBO assumption that the Public Option would make no attempt to increase efficiency somewhat puzzling,” Moolten observed, “given that increased efficiency of care was one of its expressed purposes. In section 324 of the House version [of the bill], this intent is stated as follows:
’The Secretary may utilize innovative payment mechanisms and policies to determine payments for items and services under the public health insurance option. The payment mechanisms and policies under this section may include patient-centered medical home and other care management payments, accountable care organizations, value based purchasing, bundling of services, differential payment rates, performance or utilization based payments, partial capitation, and direct contracting with providers.’”
In other words, the Secretary is expected to use financial carrots and sticks to insist upon more efficient collaborative care, rewarding providers who offer better outcomes at a lower price. Dr. Moolten concludes:
“Why the CBO wants to dismiss these intentions is something they haven’t chosen to explain.”
Here, I would point out that this is not the first time that Elmendorf has cast a cold eye on health care reform. As I noted In an earlier post: Who is Douglas Elemendorf and Why is he Throwing Cold Water on Reform . . . back in 1993 Elmendorf was part of a CBO team that nixed the Clinton Health Care Package on the grounds that it was too expensive and would involve too great an expansion of government. (Imagine how much cheaper universal coverage would have been back then.)
Elmendorf’s Guesses Are Accepted
Despite the holes in his logic, Elmendorf is, after all, the Congressional Budget Director, and, as a result, most who read his assessment of enrollment in the public plan assumed that there must be facts and figures behind his so-called “analysis.”
Thus, his words have had a powerful influence both in the mainstream media and in the blogosphere. Virtually no one has questioned his assumptions. At the end of October even the Washington Post’s estimable Ezra Klein quoted Elmendorf Will The Public Plan Have Higher Premiums? concluding that the public plan will be expensive.
It will pay prices equivalent to those of private insurers and may save a bit of money on administrative efficiencies. But because the public option is, well, public, it won’t want to do the unpopular things that insurers do to save money, like manage care or aggressively review treatments. It also, presumably, won’t try to drive out the sick or the unhealthy. That means the public option will spend more, and could, over time, develop a reputation as a good home for bad health risks, which would mean its average premium will increase because its average member will cost more. The public option will be a good deal for these relatively sick people, but the presence of sick people will make it look like a bad deal to everyone else, which could in turn make it a bad deal for everyone else. . . .
‘This, in sum, is why I’m pessimistic on the chances for the public option to substantially affect the insurance market.
Klein wrote:
“That isn’t to say that the public option can’t still do some real good, as I argue here: Expansion Team”. But there’s also a chance for it to become a real disaster.”
Who Will Be In the Exchange?
The Real Numbers Elmendorf’s assessment of the public option begins by assuming that six years after the reform begins only 30 million Americans, or one-tenth of the population, will be shopping in the Insurance Exchange. This assumption flies in the face of everything we know about who will be eligible for the Exchange.
Reform legislation makes it clear that, from the very first year, the Exchange will be open to three groups: the self-employed and others who now buy their own insurance in the private market for individuals; the uninsured; and the owners and employees of small businesses.
Today, 7 percent of all Americans, Addressing Health Care Market Reform Through an
Insurance Exchange”, (or 21 million people) paid for individual insurance out-of-pocket. (Elmendorf confirms this number in his letter to Rangel.)
In the individual market, they pay sky-high rates. If they enter the Insurance Exchange, they automatically become eligible for group rates. According to MIT economist Jonathan Gruber, under the Senate Finance Committee’s reform plan, those who move from the individual market to the Exchange’s group market will enjoy savings ranging from several hundred dollars (for the youngest in the individual market, who get the best deal from private insurers) “The Senate Committee Propose Lower Non-Group Premiums” to over $8500 for families. It’s hard to imagine why any of these 21 million people wouldn’t join the Exchange in 2013. To sum the numbers up:
– 7% of all Americans (21 million) paid for Healthcare Insurance out-of-pocket.
– Add the uninsured– some 25 million Americans, according to Elmendorf’s own numbers, minus 8 million who will wind up in Medicaid when it expands in 2013,
– Finally, the Exchange will open its doors to the owners and employees of small businesses (In the 2013, according to the House bill, this will include companies with up to 25 employees; in 2014, firms with less than 50 employees will be eligible, and in 2015, the tens of millions of Americans who work for companies with up to 100 employees will be able to join the Exchange Washington Business Journal, How Small Companies Fare Under House Healthcare Bill”)
Moreover, “in subsequent years,” the House bill suggests, the Exchange will continue to expand. If all goes well, ultimately all Americans—including those who now have employer-based insurance through a larger employer—will be able to join the Exchange, and, if they wish, choose the public option.
Of course, the fact someone is eligible to go into Exchange doesn’t mean that she will. Some will elect to pay the penalty rather than buy insurance. But when I look at the numbers, I cannot imagine how Elmendorf arrives at his prediction that only 30 million Americans will be in the Exchange six years after it opens.
Moreover, he is wrong when he suggests that this will be a sickly pool of relatively poor Americans. The 21 million who now buy individual insurance must be quite healthy; if they weren’t, carriers in most states would refuse to cover them. And, if they can afford the sky-high premiums that carriers charge for individual insurance, they must be quite wealthy.
Meanwhile, the poorest of the uninsured will be siphoned off by Medicaid. Here, it’s worth noting that not all of the uninsured live in low-income households. More than 14% of those Americans who choose to “go naked” earn $75,000 or more, Sources of Healthcare Insurance and the Characteristics of the Uninsured”. Many don’t buy insurance because they don’t consider it a good value. They just don’t trust private insurers to deliver on what they promise. Many might well choose a public plan. And finally, the many Americans who work for companies with up to 100 employees will represent a cross-section of the population.
I wouldn’t even try to predict how many will chose public plan. But it seems safe to assume that it will be a large, diverse group. Both hospitals and most doctors will want access to these customers. Make no mistake, when the public plan negotiates rates with providers, it will have muscle.
In Part 3 of this post, I will expand on how Medicare is already paving the way for a public plan that will lift the quality of care while reining in costs—and why cost-containment doesn’t have to be spelled out in the reform legislation. .
how can elmendorf predict the future that right wing religous nut!!! only you can it seems
letme:
I didn’t observe any comments on religion and it appears that Maggie has a pretty good perception on what is taking place without crystal-balling it. Did you have a comment of substance???
you mean this whole discussion hasn’t been based on “probably’s???!?!” damn, where did i miss this?
CBO and Elmendorf seem to be operating on their normal methodology. That is all their projections are by mandate based on current law which in turn assumes that all the players will play fair.
If private insurers agree to play by the rules and compete on price and service they should be able to gain the extra market share assumed by CBO. Because even with all the protections built into the bill there are reasons why the PO’s risk pool will be such as to erase their advantages in administrative cost savings. But nothing in the history of the private health insurance industry supports the idea that their investors are interested in operating on the narrow margins needed to deliver the results that CBO projects. It is my belief (based on nothing more solid than gut feeling. And history) is that private insurers will abandon markets where they can’t obtain fat margins and in so doing will boost both the POs overall market share and improve its risk pool. Which is after all the same thing we saw with the HMO market, managed care only works with some degree of market density.
Can a private insurer compete on the basis of price and service with a government provider? Sure. Will they attempt to do so in under served markets? We’ll see. The raw numbers of people enrolled in the PO may not tell the whole story, rural and inner city clinics will have a whole new business model open to them by catering to people newly covered by the expanded Medicaid and the PO as charity care gets replaced by government reimbursement checks.
Whoever is saying, in the above:
“He doesn’t. No one knows what people looking for insurance will be thinking in 2013. None of us know what the public plan will look like, how it will be priced, or how it will compare to the competition. As I noted in part 1 of this post, Elmendorf is simply pretending that he can read the minds of millions of Americans and divine what they will choose.”
The only thing I have to ask is:
If no one knows……then what is the point of pursuing legislation? Critizing Elmendorf for lack of hard data with a lack of hard data opinion sounds hypocritical.
Also……I can see……..here we are back at “the best of intentions” statements. Haven’t the American people been duped enough on what the intentions were of legislative and political agendas over the years? Can someone point out some legislation that actually did what it was supposed to do, within it’s budget, and not have devastating unintended consquences.
Also, this comment seems wierd:
“More than 14% of those Americans who choose to “go naked” earn $75,000 or more, Sources of Healthcare Insurance and the Characteristics of the Uninsured”. Many don’t buy insurance because they don’t consider it a good value. They just don’t trust private insurers to deliver on what they promise. Many might well choose a public plan.”
So the arguement being made here is that people who can afford private insurance should be fined, and those same people will choose the public option over a private plan because they are going to believe that the government plan will deliver what it promises? WOW-SERS! I wonder what the polling is on that?
Jimi:
As someone who uses the CBO, Brookings, CBPP, The Tax Policy Center, and the Urban Institute consistently; the CBO Director is more prone to innuendo than the other CBO Directors. He is partisan the same as he was during the Clinton Administration. Furthermore, the CBO is not supposed to be partisan and because of the lack of it in the past, the CBO’s words have been taken as independent of politics which Elmendorf has failed to demonstrate. His “opinion” carrys more weight as a result when it should be viewed as opinion rather than “fact.”
Yes we were duped over the last 8 years on the war in Irag, on FISA, on tax breaks benefiting the Middle Class, on Unemployment, etc. SS has done what it was supposd to do as well as Medicare and continue to do so with minor tweaks along the way.
I believe I answered the why pursue healthcare reform in Maggie’s previous post. The cost of not doing so supercedes the cost of doing so. Feel free to look it up on the earlier post. There is nothing strange about forcing people to become insured for healthcare. You are not invincible and neither am I. Shit happens dude and the PO would be cheaper than the private open.
Jimi,
Bruce confuses me when he posts under Rdan’s credentials. I guess he’s upset that Elmendorf not as much of a team player as he would like.
Also, I consider the full part of the glass the part that does not impose this god awful bill on our country. But then i’m an optimist and the foxes are in the henhouse. Reminds me of 1993.
Cantab,
The post is Maggie Mahar. You read way too selectively. I don’t think Bruce agrees with the post. Don’t let your fantasy get ahead of your reading.
Ok, Sorry, I see now. I got confused when I saw posted by rdan right under the blog’s title line. The link to Maggie Mahar looked to me like a reference. My mistake.
run75441 – “SS has done what it was supposd to do as well as Medicare and continue to do so with minor tweaks along the way.”
I trust that you’re referring to Social Security and not Medicare. If you’re including Medicare, the corrections will involve much more than tweaks over the next few decades.
run75441 – “There is nothing strange about forcing people to become insured for healthcare.”
I suppose if the Government decides that its citizens should all drive Yugos and little Fiats, that’s going to be OK, too? Or will we just pay another fine if we don’t own one? I would be sending mine to the crusher even it was provided free…
Cantab:
I do believe Maggie sees what many of us have come to realize, the CBO has left its independent status and has taken on more of a partisan role in the healthcare debate. Because most people recognize the CBO from its prior independent analysis of various bills, acts, and budgets; Elmendorf’s words especially dangerous as they are taken as being od the same ilk when in reality they reflect the partisanship of his beliefs. As Maggie has pointed out, Elmendorf was a part of the team that rejected Clinton’s bill which would have been far cheaper than today’s which will be less costly than doing nothing.
MG:
Good morning . . .
I believe Bruce and Coberly have previously demonstrated Medicare can be funded with a small increase in withholding, hence my remarks on a fix. Over the next couple of years and as reported on in Maggie’s posts; there are some actions in place which will reduce some of the cost with Medicare prior healthcare reform. The advantage plans certainly favor industry as opposed to consumers.
If you owned a Fiat as opposed to a Yugo and these were the only cars you could own, you wouldn’t send either to the crusher because unfortunately the country lacks public transportation to move us around effectively and efficiently. You would be hard pressed to do much as a result and the 10 mile trip to the store in the country or some cities would become a day’s journey muchless getting to work. The car point is not compatible with the healthcare argument as your choice of having a car or not does not impact the rest of us or if it does, it does so in a minimal manner. Then too, you could take the stance of much of Congress that since we are Americans we are “all” independently wealthy and we can afford feedoms of choice with no impact on society or others. Unfortunately, the cost of freedom of choice has increased greatly over the last few decades and many of us now find ourselves able to afford smaller portions of it in today’s economy.
Your free will decison on having healthcare insurance or universal healthcare or not does have a cost and an impact which conveniently is under reported and is not taken into consideration at all during this healthcare debate. Your lacking universal healthcare or healthcare insurance does impact us as the cost of it is borne by the rest of us as demonstrated when people go to the emergency room for care and a higher cost is passed to the rest of the healthcare users of that hospital or the nation as a whole. The choice of having healthcare or not will dimish greatly over the upcoming years as costs outstrip income for much of the population.
What is the cost of choice and at what point does the cost of it bcome too costly for most of the US? Dr. Elizabeth Warren in her “The Coming Collapse of the Middle Class” captured the rising costs of living in America and demonstrated how a “two income” family does not have the same purchasing power in the 21st century as a similar family in the 1970s with one income. Amongst the four costs impacting the middle class to the greatest extent, the bulk of the population, was healthcare cost. Spencer has shown graphs detailing the decline of profits going to Labor as opposed to Capital since the eighties. 40% of all profits occurred in the Financial and Banking industry which for all intents and purposes is predisposed to asset appreciation rather than value created from the input of Labor. During all of this time, we have seen the cost of healthcare and the healthcare industry increase at a faster rate than inflation and perhaps only superceded by W$ profits from speculation and bonuses from taxpayer pockets. Given the present state of affairs, the cost of doing nothing as opposed to the cost of mandating healthcare insurance certainly appears to be the lesser of two evils as we are being held captive by the healthcare industry and healthcare insurance as to the costs of having their care or coverage with “no choice” what-so-ever or a limited choice.
continued
Since 1993, the same as waiting for the tsunami of job creation that was supposed to overwhelm, healthcare insurance and the healthcare industry has not corrected the situation after having dodged the bullet with the help of Elmendorf and the hypothetical middle class Harry and Louise. Harry and Louise never had a clue how close to the precipice they really were in the nineties as today they are in freefall. The healthcare insurance and health care industry has done virtually nothing and has chosen business as normal. Since then we have seen a rising percentage of the population without healthcare, muchless healthcare insurance. The traditonal employer healthcare insurance was always speculative based upon its cost to the company and competition domestically and internationally shrinking the profit margins after costs have been deducted. With a greater frequency, the present cost and increased costs are being and have been passed on to the employees and in some cases taking up a greater percentage of paid wages as wages have not kept up with the cost of it or inflation (Household Median Income).
Hundreds of millions of dollars in lobbying efforts from the healthcare industry and healthcare insurance are flooding Washington the same as what W$ has been doing and is doing today to avoid regulation. Hell, I would slap a 20% tax on Lobbying costs to fund Healthcare. With healthcare insurance and the healthcare industry, we are held captive and have no freedom of choice unless we are rich in income with constitutes <1% of the taxpayers. The rest of us "go-fish."
continued
Since 1993, the same as waiting for the tsunami of job creation that was supposed to overwhelm, healthcare insurance and the healthcare industry has not corrected the situation after having dodged the bullet with the help of Elmendorf and the hypothetical middle class Harry and Louise. Harry and Louise never had a clue how close to the precipice they really were in the nineties as today they are in freefall. The healthcare insurance and health care industry has done virtually nothing and has chosen business as normal. Since then we have seen a rising percentage of the population without healthcare, muchless healthcare insurance. The traditonal employer healthcare insurance was always speculative based upon its cost to the company and competition domestically and internationally shrinking the profit margins after costs have been deducted. With a greater frequency, the present cost and increased costs are being and have been passed on to the employees and in some cases taking up a greater percentage of paid wages as wages have not kept up with the cost of it or inflation (Household Median Income).
Hundreds of millions of dollars in lobbying efforts from the healthcare industry and healthcare insurance are flooding Washington the same as what W$ has been doing and is doing today to avoid regulation. Hell, I would slap a 20% tax on Lobbying costs to fund Healthcare. With healthcare insurance and the healthcare industry, we are held captive and have no freedom of choice unless we are rich in income with constitutes <1% of the taxpayers. The rest of us "go-fish."
Run,
But if everybody is refuting Elmendorf with “opinion” , “guesses”, and “trust me’s” then it is the quality of the legislation that is being exposed.
This process needs to slow way down and every detail needs to be exposed and criticized. The Democrats need to quite playing games on how much this disaster costs, and actually prove the theory behind controlling costs, move away from insisting that only the government can solve these problems. Until then, it’s a dead duck!
Jimi:
You are conflating the issue here.
The CBO and Elmendorf as its director is the trusted all knowing source who is supposed to be the data expert and he isn’t approaching the issue in such a manner and rides on the trust established by previous directors. Furthernore, Maggie has refuted his stance using his very own assumptions and approximations. Additonally, there was never any intention to itemize every part of the Healthcare Bill showing every point of coverage with the passage of it, hence the 2012 enactment date to work those details out. Finally, the disaster is do nothing (which I detailed earlier in Maggie’s other post and I will not do so again here) which has costs which surpass any of the Senate or the House bills so far put forth.
I believe it will pass regardless of the Repubs and the misinformation.
Run,
The man is entitled to his opinion. Didn’t this all come from a letter he wrote to Rangle?
Where is the Ideological Bias in the job he is doing? It looks to me he is attempting to point out that the numbers aren’t making sense. Maggie didn’t refute anything, her entire arguement is based on opinion and trust me’s.
Oh, I see…..We gotta have Idelogical Purity? I thought this was all supposed to be bi-partisian?
So anybody who is a “speed bump” is evil and has no idea what they are talking about?
Just because the American people actually want a quality piece of legislation, understand all the details, keep the government out of it, and want results that actually benefit the masses then that means they don’t want to do anything?
I don’t know anybody that doesn’t want to do anything! Look at the polls nobody wants this approach, we are just being told by people like you, whats best for us!
Run,
“Succeeding new Office of Management and Budget Director Peter Orszag, Elmendorf joined the Congressional Budget Office (CBO) as the struggling economy commanded much of Congress’ time. Like Orszag, he comes from the liberal think-tank the Brookings Institution, and was the former director of the Hamilton Project, which focuses on economic policy at Brookings.”
“Elmendorf continued what Orszag began as CBO head, including contributing to the CBO “Director’s Blog” and evaluating health-care reform’s impact on the national budget. Speaker of the House Nancy Pelosi (D-Calif.) and the President Pro Tempore of the Senate Robert C. Byrd (D-WestVa.) selected Elmendorf after getting recommendations from the House and Senate Budget Committees. The House and Senate switch who takes charge in selecting a new CBO director; Pelosi took the lead in selecting Elmendorf.“Pelosi and Spratt Statement on New Director of the Congressional Budget Office” Press Release, Dec. 30, 2008(1)’Pelosi and Spratt Statement on New Director of the Congressional Budget Office'”
Press Release, Dec. 30, 2008
“In March 2009, the CBO released a revised budget outlook, which increased its forecast of the 2008 deficit from $1.2 trillion to $1.8 trillion. It also valued the 10-year deficit at $9.3 trillion — $2.3 trillion more than what the White House projected in February 2009”
Run,
You’re wrong about the car. I would crush it.
run75441,
I am going to repost what I stated on the previous Maggie thread.
It is my opinion that three separate healthcare bills should have been proposed and passed in the following order – (1) Medicare, (2) Medicaid/CHIP, and (3) other healthcare issues.
Medicare reform should have been addressed separately as the program as we know it today is not sustainable. The cost projections provided by the trustees have indicated that Medicare has to be reined in. Handle that first and let the public deal with the reality of the cost issues.
Medicaid/CHIP deserved the second level of consideration. Obviously, expanding enrollment for these two programs costs bucks. Identify the sources of such funding. Let the public deal with the reality of that issue.
Other healthcare issues are similarly important, but not as important as protecting the viability of (1) Medicare, and (2) Medicaid/CHIP. So, tackle the remaining issues in a separate bill following passage of the first two healthcare bills. If the public deems it necessary to provide financial subsidies for healthcare insurance and expand coverage to the public by other means (public option, co-ops, and whatever else), then let the debate be focused on those issues alone without dragging in consideration any changes to Medicare and Medicaid/CHIP.
Threat the issues separately and stop pretending that changes in existing public healthcare programs will help fund the new initiatives. Neither Medicare nor Medicaid/CHIP are on solid ground going forward. In my judgment, three separate bills would have forced more serious decisions by members of the Congress.
That’s what I would have done.
MG:
Not to ignore you or Jimi; but, I am trying to get out of town. Catch up with you Sunday. Don’t reply and I will delete this then.
Run,
the CBO has left its independent status and has taken on more of a partisan role in the healthcare debate.
So what side have they come down on. Why are you so sure that the democrat healthcare bills is not a budge busting disaster that will fail in all its stated objectives.
I remember a review of the Yugo when it first came to the United States. The review said the car held the promise of a new car at the price of a used one. But atfter testing the car they would reccomend buying a used one. That way you at least stood a chance of getting a good car.
Sorry for going off subject. In my defense I didn’t start it.
Everyone–
A couple of facts. Someone suggested that private insurers will abandon the market if they
don’t ‘have fat profit margins.
The don’t have fat margins today–just 3%.. That makes them #87 on a list of American industries; 86 industries are more profitable.
They have had slim margins for a long time. This is why these sotcks have not been popular on Wall Street. Now, some hope that if they have a larger market, they can make more money.Much depends on how strict government regulations are.
On Medicare reform: it is being addressed separately. A large portion of hte House bill was devoted to Medicare reform. That reform is beginning NOW. Medicare has already announced that it plans to slash reimbursements for CTscans anda MRIs by as much as 38% next year. (We’re over-paying and doing too many of them.) It also has proposed cutting cardiologists’ fees by 6% as of Jan 1 and raising primacy care fees by 4%. (Congress has until Jan 1 to object–otherwise this automatically goes into effect.) Medicare has announced that it will
no longer pay for an excessive number of avoidable hospital readmissions.
Other pilot programs are going forward. REforms that work will be incorporated in the public plan in 2013. (This is all in t he legislation)
On Medicaid: IN addition to expanding Medicaid, the legislation calls for paying primary care docs who care for Medicaid patients as much as we pay primary care docs who care for Medicare patients (and those Medicare rates for primary care are going up.) I expect to see a series of hikes and cuts in reimbursements over the next 3 years–more money going ot primary care and preventive care, less to some very lucrative specialists’ services.
The 14% of Americans who earn over $75,0000 and don’t buy insurance today might choose the public plan because it will closely resemble Medicare (incorporating Medicare reforms).
Most Americans distrust for-profit insurerss.
Most Ameircans trust Medicare. Thus, many of these folks “might” choose the public plan.
Unlike Elmendorf, when I say “MIght” I don’t try to attach a number ot it (1/2, 3/4 ,, 1/3 or whatever.) By contrast, he says probably and then tells us 20% will choose the public plan.
Such a specific number suggests that he has evidence to back it up. He doesn’t.
We don’t know what the public plan will look like because this is something that can be spelled out in legislationl Hedalht care reform is a process, not an event. Every element of reform will have to be amdned, tweaked and changed as we find out how it works in practice.
The subsidies may be too low. The penalties may be too low. The amount we ask a family earning $75,000 to pay twoad their premiums may be too high.
Look at how Massachusetts has conatntly revised its prgram.
This is not something that can be worked out on paper This is something that will have to be worked out –it will be a learninng process as we figure out how to make it affordable for taxpayers, and for patients, while paying providers enough to cover their costs plus a decent profit margin.
Right now, many of the numbers are unknown. The House bill says that Medicare should negotiate for discoutns on drugs. Drug makers enjoy 16 % profit margins and consumer 16% of the $2.6 trillion that we spen we spend on healthcare.
How much could Medicare save if it bargained for discounts? We won’t know until we try it.
How much can we save by offering bonuses to docs who join accountable care organizations where they work collaboratively on salary (rather than charging fee for service).
We won’t know until we try it. (Even trying to estimate ssavings means tryin to read the minds’ of many doctors.)
I could go on, but you get the point. There are so […]
Maggie Mahar answers:
There are quite a few unawswered questions and unfilled blanks which will probably be answered and filled in over the next couple of years. Much of this was covered in your preceding posts and I am assuming, as you alluded, Part 3 will cover more of the Medicare revision that you have pointed out already. In my opinion, the biggest issue is doing nothing leaves us at mercy to the free market which has done little to control costs.
anonymous:
Why should healthcare reform fail and why should it be a budget buster and what happens if we “again” do nothing as I explained earlier in Part 1 of Maggie’s posts? I have yet to see anything cogent in reply to my earlier remarks.
Elmendorf comes down on the right having trained under Martin Feldstein, his mentor, who has been referred to as the Dean of the Conservative Economists, http://articles.latimes.com/2009/jan/17/business/fi-stimulus-analysis17. His analysis of the Clinton Healthcare bill in the nineties doomed it even though the costs of it would have been far less than today’s healthcare bill proposed by either the Senate or the House. After one year and assisting in the demise of the Clinton Heathcare Bill, Elmendorf moved on to work for Greenspin at the Fed and later joined Larry Summers, who has expressed great sympathy for the Labor market and the unemployed, at the Treasury. Both Greenspin and Summers had critical roles in determining the market knows best and will self regulate and should not be interferred with by regulatory action. Both Greenspin and Summers were wrong and there premises deeply flawed.
Once Clinton left office, Elmendorf moved back to the Fed as the head of the macro-economic analysis team forecasting labor and inflation rates. Guess they missed the demise of labor over the last 8 years? He was on the bandwagon for increased taxcuts and let alone economics which has led to today’s disasters on W$ and in banking. Elmendorf is a blue-dog and has swayed from the independence normally seen at the CBO. Enough so, Orzag made remarks referring to such over aggressive remarks by Elmendorf and the CBO.
anonymous:
Why should healthcare reform fail and why should it be a budget buster and what happens if we “again” do nothing as I explained earlier in Part 1 of Maggie’s posts? I have yet to see anything cogent in reply to my earlier remarks.
Elmendorf comes down on the right having trained under Martin Feldstein, his mentor, who has been referred to as the Dean of the Conservative Economists, http://articles.latimes.com/2009/jan/17/business/fi-stimulus-analysis17. His analysis of the Clinton Healthcare bill in the nineties doomed it even though the costs of it would have been far less than today’s healthcare bill proposed by either the Senate or the House. After one year and assisting in the demise of the Clinton Heathcare Bill, Elmendorf moved on to work for Greenspin at the Fed and later joined Larry Summers, who has expressed great sympathy for the Labor market and the unemployed, at the Treasury. Both Greenspin and Summers had critical roles in determining the market knows best and will self regulate and should not be interferred with by regulatory action. Both Greenspin and Summers were wrong and there premises deeply flawed.
Once Clinton left office, Elmendorf moved back to the Fed as the head of the macro-economic analysis team forecasting labor and inflation rates. Guess they missed the demise of labor over the last 8 years? He was on the bandwagon for increased taxcuts and let alone economics which has led to today’s disasters on W$ and in banking. Elmendorf is a blue-dog and has swayed from the independence normally seen at the CBO. Enough so, Orzag made remarks referring to such over aggressive remarks by Elmendorf and the CBO.
Jimi:
Elmendorf mentor was Martin Feldstein a well known conservative economists and considered the Dean of conservative economists. The middle of the road think tank Brookings employs many different minds:
“As a non-profit organization, Brookings describes itself as independent and non-partisan. The YT has referred to the organization as liberal, liberal-centrist, centrist, and conservative. The Washington Post sometimes describes Brookings as liberal but usually does not characterize the institution and has quoted both Republican and Democratic scholars. The LA times described Brookings as liberal-leaning and centrist before concluding these labels made no sense. In 1977, Time Magazine described them as the ‘nation’s pre-eminent liberal think tank.’ The organization is described as centrist by the progressive media watchdog group Fairness and Accuracy in Reporting.
Some liberals argue that despite its left-of-center reputation, Brookings foreign policy scholars have been overly supportive of Bush administrative policies abroad. Matthew Yglesias, for example, has pointed out that Brookings’s Michael O’Hanlon frequently agrees with—and appears on stage with—scholars from conservative organizations such as the AEI, The Weekly Standard, and the Project for a New American Century.”
Elmendorf also worked at the Fed under the Bush Adminstration for that great liberal economist “Greenspin” and he also spent time with that Labor and Unemployment sympathezier Larry Summers . . . both of whom contributed greatly to today’s issues by fighting W$ regulation. It is amazing how much damage has been done to the economy under Bush’s Tax cut policies and failure to regulate W$ and financial institutes for which we are paying now. You don’t want to go there Jimi.
So Pelosi and Byrd (blue dog) selected him? It proves once again they don’t research their candidates or at least Pelosi doesn’t.