Public Plan

COVERAGE: Evaluating the Public Plan, Man

Paul Testa — Thu, 19 Nov 2009 20:23:00 -0500

Slate's Timothy Noah provides a thoughtful overview of the intellectual origins and political evolution of the public option's place in health reform.

It's a complicated case, the public option. Lotta ins. Lotta outs. But Timothy Noah is the Big Lebowski of health writers, and is the man for the job to keep all these strands together. (Yes, we know we've made that joke before, but like our living room rug it really ties the blog together.)

Noah's goal was to understand why the CBO and others estimated that premiums for a so-called level playing field public option would cost more than private plans. Noah spoke with New America's Len Nichols, whose paper with John Bertko helped outline how a public option with negotiated payment rates could compete on a level playing field with private plans.

At the heart of Noah's question are the assumptions these estimates make about the nature of the public option and the potential for adverse selection between insurers (in this case more sick people choosing the public option over private plans). Noah nicely illustrates the intricacies of this debate, and we'd like to add a few more points to consider.

First, we would argue the fears that a public option will necessarily attract a less healthy (higher cost) population are overblown. Health reform legislation encompasses new insurance market regulations (community rating, affordability standards tied to actuarial values, guaranteed issue and renewal). Coupling those new rules with the requirement that all Americans purchase health insurance removes much of the ability and incentive for private insurers to engage in the kind of cherry picking and lemon dropping that the Slate article addresses. Insurers will still try to attract healthier customers through advertising and marketing, but their ability to actively select customers based on health status and other risk factors would be limited. Risk adjustment will further address variation that might arise through this sort of "soft" risk selection.

Second, it seems unlikely that sicker individuals will drop existing coverage and flock to the public option. If they're offered coverage through an employer and that coverage is deemed affordable relative to their income, they're ineligible for the exchange. Furthermore the transition costs of switching plans when you've already set up a network of providers to care for your conditions are such that if you like what you have, you will probably prefer to keep it.

Finally, there is the question of how a public option would operate -- specifically, how would it employ methods of utilization management. Utilization management is ungainly jargon even for health policy. It should not be conflated with the cherry picking and lemon dropping of risk selection. When practiced correctly, utilization management is about delivering value for our health care dollar. It's about paying for what works, reducing unnecessary tests and procedures, and encouraging healthy behaviors. It's about avoiding the MRI when an X-ray will do, or making it easier for a diabetic to manage her blood sugar and avoid crises and complications that could send her to the ER -- or the OR. Or the ICU.

There are many real world examples where utilization management done right both saves money and improves patient care. But the CBO and others in their estimates basically assume that a public option would ignore the examples of plans like Group Health or Kaiser, and keep paying providers along the lines of fee-for-service Medicare. Why would the Secretary of HHS design a public option to perpetuate broken payment models, when it could be a driver for innovation in payment and delivery system reform? So for all the hand wringing over a public option, when it comes to estimates of adverse selection and utilization, remember, that "yeah, well, you know, that's just, like, your opinion, man." Cost estimates are important, but implementation is what really matters.

HEALTH POLITICS: Tying it All Together

Paul Testa — Wed, 11 Nov 2009 18:56:00 -0500

First, thank you to all our veterans for their service and sacrifice.

This Veteran's day we're a bit caught up in the upkeep of grant reports, so he's a quick run down of the news and issues that caught our attention:

Tuesdays with Harry: Politico reports that Senate Majority Leader Harry Reid took procedural steps yesterday that would allow him to open debate on a bill Tuesday next week. Of course there a lot that needs to happen before then, including the release of bill with CBO scores, but still, it's a good sign that things are moving in the Senate.

My Life, Your Work: Former President Bill Clinton spoke to Senate Democrats at their weekly meeting Tuesday. His message? Git'er Done. "The worst thing to do is nothing," Clinton told reporters.

An Option You Can't Refuse? The New York Time's Kevin Sack looks at the likelihood that states would actually opt-out from a public health insurance plan. Aside from the politics, Sack argues the critical factors affecting a state's decision are its uninsured population and the amount of competition in its insurance market. Health Affairs and RWJF have put out a helpful brief explaining how a public health insurance plan would actually work.

How much for that horse of yours? Politico's Jonathan Allen and Patrick O'Connor have an excellent story on the political horsetrading that went down to secure the final passage of the House bill Saturday. Meanwhile House Whip James Clyburn (D-SC) told MSNBC that the controversial Stupak amendment on abortion netted the bill about 10 votes -- enough to push the legislation over the 218-vote threshold, but less than previous suggestions of a 40-vote swing.

If you like it then you shoulda put a cost control on it? Our colleagues have written about the existing cost control measures in the bill and the potential improvements that could be made. The New York Times' David Leonhardt weighs in with a detailed list of recommendations and one of the best explanations for why this matters:

It is not simply about bending the curve, or slowing the growth, of Medicare's projected spending. It's also about preventing thousands of needless deaths from hospital infections. It's about making sure you get the best cancer treatment, even when that treatment is not the most profitable one. It's about keeping health costs from denying most families a decent pay increase, as has happened in recent years.

Making the medical system more efficient is, in short, about saving lives and giving Americans a long overdue raise. It is arguably the single most important step that the federal government could take to improve people's lives.

Do you know where the majority of our nation's toothpicks come from? Maine, which Gardner Harris calls the Charlie Brown of Health Care:

The state's legislators have tried for decades to fix its system, but their efforts have always fallen short: health insurance premiums are still among the least affordable in the nation, health care spending per person is among the highest and hospital emergency rooms are among the most crowded. Indeed, many overhauls to the system have done little more than squeeze a balloon -- solving one problem while worsening another.

But like the Peanuts character, the state keeps trying.

We hope that includes the state's senior Senator.

COVERAGE: To Opt or Not To Opt? Is That the Question for the Public Plan?

Len Nichols — Thu, 29 Oct 2009 17:38:00 -0400

This post appears on the National Journal's Health Care Experts Blog where you can also see what other health policy analysts have to say about allowing states to opt out of a public health insurance option.

The public plan debate marches on this week as we discuss whether or not states should be allowed to “opt-out” of the public health insurance plan. Allowing states to choose not to provide the public health insurance plan as an option in their markets has its virtues. It establishes the infrastructure necessary to create a public health insurance plan nationwide, but it also makes the decision ultimately a state judgment. This may be a safer way to go for those who worry about government expansion.

While we do not know the details of what kind of public plan states would be able to “opt-out” of, we suspect the center of gravity is closer to a level playing field approach, such as that proposed by Senator Schumer (where the plan would have to negotiate payment rates with providers) as opposed to the version supported by progressive Democrats in the House (where the plan would administer prices based at least in part on Medicare rates). If the level-playing field approach is in fact adopted, assertions that the plan would simply “underpay providers” rather than “driving real reforms that bring down costs and improve quality” are unfounded.

Also, let’s remember that all versions of the public plan under serious consideration require it to be self-financing. Taxpayers will not be subsidizing the public plan. Rather the main cost of reform will be providing low-income subsidies that can be used to purchase the policy of individual’s choice -- public or private. Americans will get these subsidies whether or not their state chooses to offer them a choice of the public plan, and whether or not they choose the public plan if it is offered to them. Therefore, the argument that somehow residents of opt-out states will be footing the bill to finance a public plan they are unable to access is just wrong. The public plan will not be financed by taxpayers.

Repeated fears that the public option will pay less than market rates and somehow be subsidized by taxpayers deny what is being considered seriously by Congress and signal paranoia about the future. Critics are right to be vigilant. But we should not decide against doing something that could add real value in markets where insurer competition is lacking just because it might possibly be “turned” into a bad idea by a future Congress. If someone proposes to give the public option unfair advantages in the future, let’s debate it then, fairly and forthrightly.

Senator Reid’s announcement is not the end of the public health insurance plan debate. A weakness of the opt-out approach is that many of the states most likely to “opt-out” because of ideological reasons are the same states that you could argue need the public plan the most because of lack of competition and affordable policies.

Moving forward we should be on the look-out for new public plan ideas that possibly meld Schumer’s “level playing field” with Reid’s “opt-out,” Snowe’s “trigger,” and Carper’s state “opt-in.” Stay tuned.

HEALTH POLITICS: Houston, We've Got a Lieberman

Joanne Kenen — Wed, 28 Oct 2009 21:16:00 -0400

We were tempted to say that providing all Americans with affordable health care is not as hard as landing on the moon... but then we remembered that we have landed on the moon...

Sen. Joe Lieberman (I-CT) may not be, to use Harry Reid's own words, "the least of Harry Reid's problems."

After all, Reid does have to worry about a couple of other guys and gals (from Roland '"no-leverage-point" Burris to Blanche "tough race in 2010" Lincoln). But Lieberman's comments about possibly joining a Republican filibuster of health reform with a public plan certainly got everyone talking today, and he's been on our minds too. Earlier this month, while all eyes were on Maine Republican Olympia Snowe, who cast her ambivalent "aye" vote for the Senate Finance bill, anyone listening to the radio might have noticed that Joe Lieberman was making a lot of worrisome noises.

He made them louder this week and the papers and blogs are full of commentary. Nate Silver at fivethirtyeight.com, wondering if this is all a cry for attention, wrote a piece called "Somebody Buy Joe Lieberman a Puppy" (because his record, according to Silver, suggests that it would be an oversimplification to assume he is crying only for insurance industry campaign contributions). Tim Noah at Slate wonders whether Reid can really count on Lieberman in a pinch, (even when the pinch has nothing to do with Iraq.). As Katie Connolly notes in Newsweek's The Gaggle:

What's Lieberman got to lose? He can spend the better part of a presidential campaign trashing the Democratic nominee and yet be welcomed back into their caucus. What's his motivation to start acting like a dutiful caucus member.

Still there are complex calculations to be made here, in both policy and politics. It's not the end of the story. And as Newsweek's blog points out Lieberman left himself plenty of "wiggle room" between here and any vote on final passage. There's still time for negotiations, horse-trading, arm-wrestling, hey, even statesmanship. And there's still time for Lieberman to join a 60-vote health reform voyage that will take us over the moon.

HEALTH REFORM: Reid Backs State "Opt-Out" For Public Plan

Joanne Kenen — Mon, 26 Oct 2009 22:05:00 -0400

Senate Majority Leader Harry Reid (D-NV) said the merged health reform Senate bill will contain a public plan option but states can opt out until 2014. He said the "public option" is not a silver bullet but will boost competition, keep insurers honest, and give people more choices. He said it will add "meaningful reform" to a broken health care system.

Reid is sending his proposed bill to CBO for scoring "in a few hours." At a news conference he stopped short of saying he was positive he had 60 votes, but expressed quite a bit of confidence about health reform. He said he had the support of the White House, and key Democratic negotiators Max Baucus and Chris Dodd.

UPDATE: Statement from Chairman Baucus:

“It is time to make our system work better for patients and providers, for small business owners and for our economy. It is time for health care reform. For more than a year, we’ve been working to meet the goals of reducing the growth of health care costs, improving quality and efficiency and expanding coverage. There are a tremendous number of complicated issues that go into reform and the public option is certainly one of them. I included a public option in the health reform blueprint I released nearly one year ago, and continue to support any provision, including a public option, that will ensure choice and competition and get the 60 votes needed to pass the Senate. Success should be our threshold and I am going to fight hard for the 60 votes we need to meet that goal this year.”

HEALTH REFORM: The Polls Are In! ...So What Exactly Do They Mean?

Meredith Hughes — Fri, 23 Oct 2009 21:59:00 -0400

Friday, the Kaiser Family Foundation released the latest results of the monthly Kaiser Health Tracking Poll. Public opinion is holding fairly steady from last month's poll, starting a gradual rebound after support for reform dipped during the raucous August congressional recess.

A majority of respondents (55 percent) believe it is more important than ever to tackle health reform right now. By party, that's 73 percent of Democrats and 55 percent of Independents, but only 30 percent of Republicans. A majority of Republicans believe they would be worse off if health reform passes, while only 29 percent of Independents and only seven percent of Democrats believe health reform would hurt them. According to the Kaiser Family Foundation's Mollyann Brodie, 8 out of 10 Americans are in favor of eliminating insurance denials based on pre-existing conditions, making it the most popular of all the reform provisions currently under consideration. The poll also found a majority of Americans are confused about the timetable of reform, thinking insurance market reforms and help for the uninsured will occur immediately after the bill is passed -- in reality, changes will be phased in over the course of several years.

Public opinion polling data has abounded in the health care debate -- some of it enlightening, and some of it downright confusing. Together with the Alliance for Health Reform, the Kaiser Family Foundation put together a panel of experts to shed some light on health care polling numbers at the event "Public Opinion on Health Reform: What Do the Polls Mean?"

Karlyn Bowman, from the American Enterprise Institute, warned that politicians shouldn't rely on polls to make policy. When it comes to policy, especially policy that is as complicated as health care policy -- the average person usually doesn't have a complete enough understanding to make a decision about whether or not the policy is a good one.

Mark Blumenthal, of Pollster.com explained that language and phrasing had a huge impact on peoples' answers and opinions. Take for example, the much contested public option -- do people want it? Do they love it? Do they hate it? Different polls can say different things. People react strongly to wording, said Blumenthal, which means public opinion can be malleable. As we've mentioned before, some recent polls came to the rather baffling conclusion that Americans were more supportive of the public option than bipartisanship, or for that matter, health care reform itself.

Our favorite slide of the event came from Mr. Blumenthal. It turns out, when you say "public option," only about 56 percent of people even know you are talking about health care at all. Energy? Unemployment? Banking? 33 percent didn't even have a good guess.

So what should we use public opinion polling for? The speakers tended to agree that public opinion polling (especially on health care) has the most value when people are asked about their beliefs, values or personal experiences. Questions like: have they missed a doctor's appointment because they couldn't afford it in the past year? Do they think health care is too expensive? Are they satisfied with the quality of care they or their family members are getting? These questions are the fuel behind reform itself. Americans want affordable, sustainable health care, and they expect the government to take action to make that a reality.

Humphrey Taylor, of Harris Interactive, said that polls describe consistent deep tides in public opinion -- so "we shouldn't be confused by ripples on the surface." The basic reactions to different concepts underlying the public option, as tested by pollsters, has been pretty consistent since July, said Blumenthal. Most people are unhappy with the current health care system and favor reform, said Taylor. They think that some kind of government intervention is necessary, but they can't agree on how much intervention is appropriate. And as polls have shown, it isn't clear what people think of or understand by the phrase "public option."

Another important fact to keep in mind is we don't have a definite, single, solid health care bill yet. Different amendments, different versions of the public option, and different versions of health care reform in general are still in the process of being merged together for a final vote. Once Americans have a singular definition of, for example, what exactly the public option means -- they might have a better idea of whether or not they support it.

COVERAGE: The Old Plan of the Sea

Paul Testa — Fri, 23 Oct 2009 17:44:00 -0400

In the odyssey of health reform, the public plan is the Proteus of our wonkish mythology -- constantly shifting, capable of divining the future, but never willing to give you a straight answer. Sorry, Politico's Pulse already took the soap opera metaphor, "As the Public Option Turns" so we had to get Homeric.

Still, trying to get a handle on where the public plan stands is like wrestling a wet seal.

Earlier in the week, Democratic House leadership felt confident they had the votes to pass a "robust public option" tied to Medicare payment rates, but the latest whip counts suggest the leadership still has some work to get 218 votes in the House.

Meanwhile, in the Senate, Majority Leader Harry Reid (D-NV) is leaning toward including a public insurance option that would allow the states to opt out. The White House is said to favor a trigger option, hoping to keep the Republican Penelope from Maine weaving at her loom.

All this is subject to change, and next week, it will no doubt change again. And the week after that, too. However, lawmakers should not let the protean politics of the public plan obscure other key aspects of reform. Insurance market reforms like guaranteed issue and community rating, may not have the same siren call of public plan debate, but they are critical in making health reform work.

A new issue brief from the Robert Wood Johnson Foundation and Health Affairs provides a thorough overview of the issue, looking at why insurance market regulation is needed, what's proposed in the various bills, and the possible objections and barriers to proposed solutions.

The report provides a clear overview of the purpose of insurance market reform:

The goal is to provide affordable private health insurance to people who now have difficulty getting it, either because they must purchase it on their own or because they work for a small, lower-wage business. The changes would broaden federal regulation over private health insurance, a sector that has primarily been regulated at the state level. There is substantial bipartisan support for these reforms as well as broad backing, with some conditions, from private health insurance companies

The report provides a clear and concise overview of these bipartisan reforms included in the bills being considered:

Guaranteed issue of insurance
Guaranteed renewal of plans
Ending exclusions for pre-existing conditions
Modified community rating of premiums.
No lifetime limits on the amount insures will pay for a policy holders behalf
Caps on out-of-pocket spending for consumers
Insurer reporting of medical loss ratios (the percent of premiums spent on medical claims)
"Risk adjustment" payments to insurers so that they don't lose money or make money based on the health status of their enrollees

The report also presents a nuanced view of some of the subtle differences between the House and Senate Bills, such as who would provide oversight for reform (state or federal), and what markets would be affected by reform (all private markets or just the small and non-group markets). Criticisms of reform focus on the strength of requirements to purchase insurance, the generosity of benefits, and how these changes would affect the overall affordability of insurance for different groups of people.

IN THE NEWS: Health Reform Ads Actually Worth Watching

Paul Testa — Thu, 22 Oct 2009 17:42:00 -0400

As health reform draws closer to the goal line, efforts to influence the debate have never been fiercer. Lobbying from health care groups is proceeding at a record pace, and everyday seems bring a new crop of ads. In fact, the most recent Kaiser Health tracking poll showed that over half of all Americans (54 percent) had seen, heard, or read an ad in the past week having to do with health reform -- up more than 30 points from June. Of those who’d seen an ad in the past week, 35 percent saw ads in favor of passing reform, 29 percent saw ads opposed, and 29 saw both.

While it’s hard to keep track of the ad wars, two recent productions caught our attention.

The first comes from Americans for Stable Quality Care, a diverse coalition of health care industries and providers, “who share the common belief that all Americans deserve access to stable quality health care.” The ad is titled "House."

“House” is probably the best broadly pro-health reform ad we’ve seen because it says it all, without having to say anything. Instead, the stark images of a middle-aged man selling his house to pay for his wife’s medical treatments drive home the ad’s simple message: “No one should lose everything because they’re denied affordable health coverage.”

For comparison’s sake, check out Americans for Stable Quality Care’s first ad from this August, titled “What Health Reform Means for You.” The ad has the same high production value, and a similarly simple, straightforward message making the case for health reform, but it lacks the emotional power that makes “House” such a good ad. Still, it makes a lot more sense than this ad.

The second ad comes from progressive advocacy group, MoveOn.org, proving the point that while reasonable people disagree on a public health insurance option, we can all agree on Heather Graham. While we prefer the artistic integrity of Ms. Graham’s early work, she does a solid job portraying the potential of a public health insurance option to compete on a level playing field with private plans.

HEALTH POLITICS: Hardball in October

Paul Testa — Wed, 21 Oct 2009 16:03:00 -0400

The Nationals may have never had a shot at the playoffs, but Washington's senators are still playing hardball in October.

Much of the action centers on the public plan, which has reemerged as one of the central issues in merging the Senate's HELP and Finance bills.

Senate Finance Chairman Max Baucus told reporters on Monday that he believed a "pure public option" did not have the votes to pass the Senate, but that there were many options on the table that could form the basis of a compromise.

One option is Sen. Tom Carper's (D-DE) idea of allowing states to decide whether to create a public health insurance option. Sen. Chuck Schumer (D-NY) supports the proposal, Sen. Evan Bayh (D-IN) seems interested and Sen. Ben Nelson (D-NE), long skeptical of a public option, says he's intrigued by the idea. And while the latest polls show a majority of the public favors a public option, NPR's Ron Elving cautions us on placing too much faith in polls because a lot depends on how you ask the question.

Two other issues are at the top of the docket in the Senate. One is finding a permanent fix to the Sustainable Growth Rate formula that threatens to cut Medicare payments to doctors by 21 percent in 2010 and by about 5 percent in each of the next few years.

The AMA and AARP sent a letter last week to Senate Majority Leader Harry Reid, urging him to repeal the SGR. The House included the so-called "doctors fix" in its legislation but exempted it from budgetary provisions that would require offsets. Reid's Democratic colleagues in the Senate have balked at such an exemption, which would cost around $247 billion over ten years, and Senate Budget Committee Chairman Kent Conrad (D-ND) is looking at potential ways to pay for the fix.

Meanwhile, Politico's Pulse reports that Reid, Schumer and Senate Judiciary Committee Chairman Patrick Leahy will "announce that legislation to repeal the health insurance industry's anti-trust exemption will be offered as an amendment during health reform." From a media advisory from Leahy's office:

The Health Insurance Industry Antitrust Enforcement Act of 2009, introduced in September by Chairman Leahy, would promote competition in the health insurance and medical malpractice insurance industries that will benefit consumers. Providing antitrust exemptions for insurance companies has been anticompetitive and damaging to the American family and the American economy.

The three Senators will be joined by Jim Guest, president of Consumers Union, at 11:30 am for the announcement in the LBJ room of the U.S. Capitol. For more on the history and implications of the antitrust issue, check out this thoughtful post from our colleague Julie Barnes.

Meanwhile, in the other chamber of Congress, the latest leaked estimates put the CBO's preliminary score of the House bill at $871 billion, according the Associated Press. Speaker Nancy Pelosi continues to advocate for a strong public option and some of her colleagues are floating the idea of re-branding it as Medicare Part E (for everyone). While Speaker Pelosi looks to hold together the various factions of her Democratic caucus, she might check out WhoRunsGov.com, which has a useful tracker of the reform positions of all 535 senators and House members, including a special section just for Blue Dogs.

COVERAGE: The Public Plan. Again. Still.

Joanne Kenen — Wed, 30 Sep 2009 20:14:00 -0400

The public plan option, in the Senate at least, is beginning to remind us of one of those really really convoluted word problems back in sixth grade math.

"If there are 60 Democratic senators, and 50-something (maybe) back the public plan and none really want to kill health care reform but 15 want to make the playing field more level and four want to leave it to the states, and two are named Nelson and twenty are up for re-election and 9 come from red states... and one is named Reid" how many cookies did Johnny eat?

And would Johnny have eaten all those cookies if he had better primary care?

The Washington Post said the Senate Finance votes were "crippling" to the public plan, the NY Times called it a "setback" to the President (who wants a public plan but has indicated he may not insist on one), while the Wall Street Journal said it's "all but dead." USA today said it was "on a ventilator" (and we can think of one former Alaska governor who would eagerly pull that plug) "Shelved for the moment," quoted the Boston Globe. "A blow to advocates," said the LA Times.

But Sen.Tom Harkin, whose HELP committee bill does have a public option, said: "We have the votes," (apparently assuming that the Democrats can find a procedural way of getting 60 votes to keep the process alive, but only 51 for the public plan) No we don't, says Finance Chairman Max Baucus.

Sen. Olympia Snowe has yet to offer her trigger amendment -- and as Len Nichols has argued, a carefully-designed trigger could work in states that woefully lack competition. Senators Tom Carper and Maria Cantwell are each working on alternatives to create some kind of compromise -- Carper by allowing states to create their own public entity, Cantwell by having some kind of state-insurer affordable basic health plan for the uninsured.

So Johnny may not be done with his cookies.

And we haven't even mentioned the House...