The Current Health Care Reform Compromise
So the Sen Ten have reached a secret deal. The main points seem to be that the public option is replaced by an sub – exchange of private non profit insurers (which is very close to nothing at all) and people from 55 to 65 can buy into Medicare.
I was going to give a post about why I like this compromise. Ezra Klein beat me to it. I have little to add to his post. He argues that the compromise is actually better than a level playing field public option assuming that extended Medicare pays Medicare rates. The idea is that if people see how cheap insurance is if the insurer pays health care providers Medicare rates, they will eliminate artificial barriers, such as the age limit of 55. His key sentences are “Right now, Medicare’s rates are largely hidden, as no one pays the full premiums, and so no one can really compare it to private offerings. But if the premiums become visible, and Medicare’s superior bargaining power is capable of offering rates 20 to 30 percent lower than its private competitors can muster, we’ll see how long it is before representatives begin getting calls from 50-year-olds who’d like the opportunity to exchange money in return for insurance as good as what 55-year-olds can get. “
This is why I proposed opt-out and accepted limited access to the public option to people on the exchanges. I agree with Klein that if the public sees what a good deal they can get from the US government, provided it uses its bargaining power with providers, the compromise will not last, since people and firms which provide their employees with insurance will demand the option to buy it from the US government. He has, by the way, been arguing this since Edwards proposed a reform with a public option.
I only add a Leninist argument for centrist compromise. The worse it is the better it is. The 55 year limit is totally arbitrary and unfair. I don’t think that’s an easy line to hold once 54 year olds see how much extra they are paying to keep private insurance companies in business. The 65 year minimum for Social Security old age pensions and Medicare is arbitrary too, but it is now so long standing and familiar that tea partiers can sincerely argue that government run health insurance is unacceptable because it isn’t good for Medicare.
I can’t even imagine how people will argue that it was OK to let people over 55 buy in but not to let people under 55 buy in.
Robert,
I can’t even imagine how people will argue that it was OK to let people over 55 buy in but not to let people under 55 buy in.
Pathetic gimmicks are not worth nuanced argument.
If…if…if…
You can be certain that none of those ‘if’s’ will be decided to the detriment of the insurance companies.
Given that only as select few over 55 can buy in not sure it does much of anything. Early retirees are overjoyed but aside from that?
Buy-in for Medicare Part already exists for people age 65 and older. The Senate deal extends that provision. The Exchange idea overseen by OPM is the insurance Congress and federal employees/retirees have (FEHB) and is very good coverage. Very good. All federal insurance plans are subsidized to some degree (usually 65% min.) Medicare and Medicaid are single-payer programs for which many more people will now be eligible. That makes me happy.
I expect that pretty soon coverage will be expanded to younger people and I will be happier. The very idea that more people can escape the grip of the insurance industry is encouraging. But, I’m used to waiting. Other people will not be happy at all. There you go. I read the other day that my good old Social Security Administration is still running mainframe software on IBM systems that are written in COBOL. That code dates from 1962 in some cases. In SSA, you learn to wait. Relax. Better things may well come of this. 😉
Now That is funny!
It pays to have a good sense of humor if you work in the federal government. Trust me, I’ve got a million of ’em! 🙂 NO
The 55-buy-in could have a side effect of reducing age discrimination among employers.
Keep in mind boys and girls, a good compromise is probably better than no bill at all.
As an administrator for SSA, I speak from experience when I say that Ms. Ortiz is right. We do still run IBM mainframe software written in COBOL. Green text against a black background. With layers of complexity constantly added as entitlement or the law changes. (Think IRMA, Medicare Part D, Ticket to Work, FRA > 65, etc.)
Some of what the software asks of us is arcane, but the reason it hasn’t changed is that it works.
It sounds too good to be true. After all the back and forth and obfuscations my expectations are low and getting lower by the day. It would help many people with pre-existing conditions, many who are waiting to get old enough to get Medicare. Next step would be to include all dependent children in Medicare, like CHIP for all dependent children regardless of income. The industry would not like that, I am sure.
Nancy,
Actually, a lot of the government’s programs were written in cooperation with IBM back in the 1960s; however, the actual data structures are government unique (“DMRs”). And they’re extremely fast in terms of processing data. The govt has transitioned many of its data to more “modern” platforms, but it turns out that the old DMR files are hard to beat in terms of sheer speed. The DMR structure doesn’t lend itself to making pretty reports on the fly, but it’s very cheap and very fast, which is important given the size of most government databases. Also, is SAP’s ABAP all that more current than the COBOL II programs used by a lot of government agencies???
The 55-buy-in could have a side effect of reducing age discrimination among employers.
Good point. That ought to tick off the 54 year olds. Robert’s point is that once the camel sticks its nose under the tent, there is no logical breakpoint.
It may be possible to get coverage for everybody by steps….”baby” steps? If so, so be it. I think it would have been better to have presented the reform as simply extending Medicare to everybody, but that wasn’t what was done. The private insurers should be exposed and indeed attacked in every way possible. Make it very clear that their profits come at the expense of coverage for people. That they are not good news for the vast majority of citizens. That they bribe Congress in a scandalous fashion, etc.
seems to me it might work out the opposite.
people under the age of 55 have mostly not yet reached the age of high medical expenses. so they may get low rates from the private insurers. while people over 55 will have to pay higer rates to cover their expected expenses.
or be subsidized by the government, which gets us back to the sky is falling rhetoric about Medicare.
The rational answer would be to extend Medicare to all and adjust the rate so that the expected lifetime cost would be prorated over the entire working lifetime.
The government would have to do a mighty job of explaining this cost as a “premium” and not a “tax.”
And meanwhile some very serious attention would have to be given to controlling costs. I recommend a public-private answer with a minimum of “regulation.” Rather simply let the existing insurance companies bid to carry out the contracts, with oversight by the government. And limit the mandatory coverage to serious illness, letting the private insurers pick up the more optional coverage.
Keep in mind, federal government programs often expand and rarely contract.
The goals of health care are
cover everybody
control costs
high quality.
This plan will not reach the goals. The plan is not good. It is inadequate.
Many nations have good plans.
Japan, Netherlands, Germany, Taiwan, et al.
I know, 2slug. SSA’s first semi-automated computational devices (EAM machines) were designed by the infant IBM company in late forties and early fities. SSA was the leading proponent of computer design and development outside the defense department at that time and our contract gave them the start they needed in civilian govt computing. You’re quite right that govt systems are proprietary in the most exacting sense of the word. Each program is designed for a particular need and yep, gotta be cheap, fast, and reliable.
However, the people who know how to write COBOL are dying off (or at least retiring). Hard to find people to write the intricate linking software between the new mainly Microsoft WAN/LAN programs running the online IT now in use in SSA and the old COBOL code. To answer your question, I don’t know about other outfits. But, it SSA’s defense, we haven’t missed a payroll since 1936 and since the 50’s, it’s been because of the reliability of the hard/software we run.
So, yeah, you gotta be patient with everything the government does. This isn’t necessarily a bad thing. Not necessarily good either. But, what do you expect with a Senate composed of corporate sockpuppets? Meh. Still. Good can come of this. I hope. NO
Right, some. And, SSA can’t afford to miss a single check run. So, you’re limited in what you can do–no throwing over the board and starting over. We don’t do Revolution in SSA. Ain’t our style. Right, Some Guy? Oh, and as long as you’re going out for lunch, can you stop by the stock room and bring me a new green eyeshade when you get back? 😀 NO
Yes, but America is “exceptional”. Which, in this case, conveys no advantage, and in fact, is a barrier to reform. No one involved in this battle will admit the US is doing the wrong thing. So, if some expansion of Medicare/Medicaid is as good as it gets, we better take yes for an answer. NO
Nancy,
I work on the DoD/Army side. And in 2003 the Army (along with the other services) started transitioning to one of those big ERP monstrosities. And some of the Army life cycle management commands were unable to generate approved financial statements for several years because it was such a mess. One command could not tell you within the nearest $10B how much inventory it had on its books.
You are exactly right about old COBOL programmers retiring and dying off. That’s a huge problem. The legacy systems written in COBOL are on life support and the new ERPs are shot through with custom coding, hang-ons and kludges. Oh, and lots of lawsuits. The Army is now considering the entire modernization effort a success if it can achieve 70 percent of the former functionality at only twice the cost. So paying more for less is considered a stretch goal.
How about adding that Senators over 55 will be required to buy into Medicare rather than getting health insurance from their employer (i.e., the federal government) ?
…can’t even imagine how people will argue that it was OK to let people over 55 buy in but not to let people under 55 buy in…
Hey, I’m eagerly awaiting the (anticipated) Republican logic that explains how allowing a 64-year-old non-subsidized access to Medicare is a nightmare beyond imagination, but guaranteeing subsidized access the moment he/she turns 65 is a moral imperative.
Coberly, we do know the government will have to subsidize the 55 and over if it does come to pass. The insurance industry is cherry picking the profitable age groups. The Democrats have to pay a heavy price in order to get a little for the people. It would not surprise me if health care costs will be even more than the 16% of GDP we have now. The reform will not make the economy more competetive as Obama said it should, but the health care sector will get even fatter.
Nancy, and we will not worry bout any deficit until they start worrying about cost/benefit of military expenses.
lys
too true.
let me note the “government subsidizes the 55 and over” means younger people pay a tax that goes to the health care of the older. the younger people could just as well not pay the tax but pay an insurance premium that recognizes that they will get older too one day. of course this is just a psychological difference. and probably no private company could figure out how to work on a “life cycle” basis. oh, for Cantab’s benefit, that tax that goes to pay for the health care of the older is “really” a way for the younger to pre pay their own health care. it’s the same thing. except in the minds of people who can’t understand it.
Thanks for that information, 2slug. As you know, no money gets put into the “infrastructure of the infrastructure” like long overdue systems design improvements. How the government performs its funcions defines and limits its effeciency. Same for DOD as the domestic side of the house. But, buildings we’ll build. Meanwhile, we have people suffering real want for lack of work and real pain from lack of health care. Something wrong with this picture. Still, I’m comforted to know that SSA isn’t alone in its woebegone state. And, I’m glad glad glad to be one of those obsolete old COBOL codgers whose out to pasture. NO
Yes’m, Ms. Lysistrata. You gots it. NO
Michael C–Yes, we all await these gems of insight with baited breath! Hit us with your best shot, guys! Some of us are old enough to remember Truman, so it better be good! NO
I would like to pose this question to any Senator worth their salt (assuming the senator is not a attorney). Why is TORT REFORM not a major component of this bill? Studies performed by http://www.BenefitsManager.net and http://www.DentalInsuranceUtah.net that liability insurance costs are approaching nearly one third of the operating expenses for specialty care physicians, units and facilities. Aside from medical provider costs, insurance carriers such as Humana Health Plans state that their costs of medical liability and defensive medicine accounts for nearly 10 cents out of every premium dollar collected (verified). Compare that to Humana’s reported pharmaceutical claims of 15 cents out of every premium dollar collected. Or better yet, 21 cents out of every premium dollar collected is paid back to physicians for physician treatments. Without TORT REFORM, medical provider costs will never drop.