The Medicare Buy-In: Unworkable Mess and Subsidy to Private Insurers
Washington’s health reform gives billions of tax dollars to private insurers, with the concessions that they accept every applicant; wouldn’t charge the sick higher premiums; and only charge older people only two to three times more than the young. With the Medicare buy-in, even these concessions are meaningless, as Medicare would cover patients age 55 and up. We need Medicare for all, not a plan that takes only the high-cost patients off private insurers’ books and makes them Medicare’s problem.
New York Times Room for Debate Blog, December 10, 2009
The Medicare Buy-In: An Unworkable Mess
By Steffie Woolhandler and David Himmelstein
Milk and lemon both taste good in tea. But mix them together and it’s a curdled mess. Similarly, the latest Senate health reform compromise combines two appetizing elements — a Medicare expansion and tighter insurance regulations –- to create a noxious brew. We need Medicare for all, not a plan that takes only the high-cost patients off private insurers’ books and makes them Medicare’s problem.
Both the House and Senate versions of reform would turn over hundreds of billions of tax dollars to the same private insurers who’ve proven incapable of controlling costs or giving American families the coverage they need. And these bills would make failure to buy insurers’ defective products a federal offense. Together these measures greatly augment insurers’ financial and, hence, political muscle.
The only concessions wrung out of the insurers for this windfall are modest new regulations on the policies they sell to individuals: insurers will have to accept every applicant; they won’t be allowed charge the sick higher premiums; and they’ll be able to charge older people only two to three times more than the young.
Most of these regulations won’t change things for people who get their coverage through an employer, but they’re helpful for the many of the roughly 7 percent of the population who buy their own private insurance.
For insurers, the regulations make the near-elderly who don’t get employer-sponsored coverage into pariahs. On average, they cost insurers far more than twice as much as the near-teens, but they can’t be charged premiums to match their costs.
Now the Senate plans to take some of these high-cost patients off private insurers’ books, and make them Medicare’s problem. Consequently, the costs of this Medicare buy-in will be high — both for patients and for the taxpayers who will subsidize the near-poor starting in 2014.
Meanwhile, younger, healthier and hence more profitable patients will be forced into private insurance. There’s no public option for them, nor for anyone offered employer-sponsored coverage. If you have private insurance and you like it, you can keep it; if you have private insurance and you don’t like it, you still have to keep it.
But even though it’s bad health policy, this new compromise is brilliant politics. For insurers, it offers a hidden subsidy. Meanwhile, it gives the appearance of responding to the vocal and growing legion of single payer supporters who want Medicare for All.
In the end, the Senate compromise, like its House counterpart, will do little to salvage the sinking U.S. health system. Costs will continue to skyrocket, putting coverage more and more out of reach for middle class Americans, and driving the costs of taxpayer-funded subsidies through the roof.
In contrast, a single payer system could save nearly $400 billion annually on health insurers’ overhead and the paperwork they inflict on doctors and hospitals -– savings that would make universal coverage affordable. Medicare for All won’t grow from the Senate compromise, but from its ashes.
Physicians for a National Health Plan Press Conference, December 10, 2009
Steffie Woolhandler, M.D., M.P.H.
Mark Almberg, Physicians for a National Health Program, (312) 782-6006, firstname.lastname@example.org
The Senate proposal to allow uninsured people over age 55 an opportunity to buy into Medicare constitutes yet another government subsidy to the private health insurance industry, a leading health policy analyst and single-payer advocate says.
Dr. Steffie Woolhandler, co-founder of Physicians for a National Health Program and professor of medicine at Harvard Medical School, told a radio host Wednesday morning, “One of the better provisions of the reform legislation was that it prohibited charging older people more than twice (or thrice in the some versions) as much as you charge younger people in the individual market. But by saying everyone over 55 in the individual market can be picked up by Medicare, you’ve really let the insurance industry off the hook.”
Woolhandler continued: “That is, the highest-cost patients in the individual market will be taken off their hands and paid for by the taxpayers; and private insurance will remain the only option for people under the age of 55 and for anyone who gets their insurance through their employer. Another way of saying that is: if you now have private health insurance and you don’t like it, you’re forced to keep it.
“The buy-in to Medicare is only for those 55 to 64 and it’s only for people who are not offered private health insurance through an employer. So it turns into just a subsidy to private health insurance: the taxpayers will pay for the high-cost patients and the health insurance industry can take the lower-cost patients.”
Woolhandler, who also practices primary care at Cambridge Hospital in Massachusetts, is a prominent advocate for single-payer national health insurance, sometimes called an expanded and improved Medicare for All. She says research has demonstrated that replacing today’s multi-payer system, with its wasteful paperwork and bureaucracy, with a streamlined single-payer system would save about $400 billion annually, enough to assure everyone comprehensive, quality care.
“I want to remind people that at its core, this bill takes $450 billion in new taxes from the taxpayers, and hands it over to the private health insurance as subsidies. So, the core of the bill is a financial strengthening of the private health insurance industry. Now, one of the small things that was good about the plan, that is, forcing the insurance industry to lower the prices for older enrollees, has been taken out of the bill, essentially.”
Woolhandler also said the proposal for an exchange of private, nonprofit insurance plans for those under 55 will be of little benefit, noting, “It’s similar to the menu that is offered to federal workers, but of course federal workers actually get money to buy the health insurance. They don’t just get the menu, they get the money.”
A full audio recording of the interview, conducted by an affiliate of KPFK Pacifica radio in Los Angeles, is available here.
Woolhandler is also co-author of several studies published in prominent medical journals this year, including one showing 62 percent of personal bankruptcies are linked to medical bills or illness and another showing that nearly 45,000 excess deaths annually are attributable to lack of health insurance.
Dr. Woolhandler and other leaders of Physicians for a National Health Program are available for interview on the most recent developments in the emerging health reform legislation.
Physicians for a National Health Program (www.pnhp.org) is an organization of 17,000 doctors who support single-payer national health insurance. To speak with a physician/spokesperson in your area, visit www.pnhp.org/stateactions or call (312) 782-6006.
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