Greenbeard
Gold Member
I see. While that is not a bad option I have a few concerns with that. For one, I believe that Medicare is being dropped by many places because the payments are very low and the payment cycle takes too long for many providers.
There are certain access issues, though the majority of Medicare recipients report no problem in finding a physician. The big problem is that Congress hasn't yet found the will to permanently fix the flawed sustainable growth rate formula that triggers large cuts in reimbursements to Medicare providers (the situation we're in this week). The uncertainty brings with it a certain fatigue from some providers.
In its last report to Congress, MedPAC looked into the question of whether Medicare reimbursements are adequate. In their words, "We find instead that hospitals under financial pressure tend to control their costs, which makes it more likely that they profit from Medicare patients." In other words, hospitals that suffer losses from Medicare's (relatively) low reimbursement rates are those that are already swimming in money from other sources. Providers that are somewhat cash-strapped ("under financial pressure") are forced to operate more efficiently and consequently they actually turn a profit on Medicare patients. Give them more and they'll spend more, but that's not good for costs and it's not necessarily good for care, either.
If I am not mistaken, Medicare will pay what it deems fit and that essentially means that the public option would be operating under a price control system where the insurance companies would be at a major disadvantage not having the same prices. I need to look into that concept a little more as it sound intriguing.
Medicare does set its own rates but not quite as capriciously as "what it deems fit" might imply. From an excellent overview of how they do it:
DRG is a prospective payment system that covers payment for all patient costs for each hospitalization except doctors’ fees, which are covered separately under Part B. For each patient and each admission, the hospital is paid a fixed amount that is meant to cover all hospital costs and charges for services that would be needed to treat a patient with a particular problem. About five hundred DRG categories have been created, each associated with a specific disease or injury. [...]
The values of DRG’s are set empirically, based on actual data collected about costs of hospital services, and modified on a regular basis to reflect changes in costs and management approaches. There is one baseline DRG for each condition, but that baseline payment for hospitals is adjusted for other factors, including local labor costs, hospital location, teaching and training programs, large Medicaid and non-paying populations, and so on. The dollar value of the modifiers often exceeds the dollar value of the underlying DRG. It is these modifiers that account for the large region to region variation.
The values of DRG’s are set empirically, based on actual data collected about costs of hospital services, and modified on a regular basis to reflect changes in costs and management approaches. There is one baseline DRG for each condition, but that baseline payment for hospitals is adjusted for other factors, including local labor costs, hospital location, teaching and training programs, large Medicaid and non-paying populations, and so on. The dollar value of the modifiers often exceeds the dollar value of the underlying DRG. It is these modifiers that account for the large region to region variation.
To the universal coverage achieved in this bill: That is most likely the BIGGEST beef I have with this bill. It gives the insurance companies a captive audience without increasing competition aka: enforced monopoly. That is a TERRIBLE idea and only has the potential to increase prices. If it is illegal to nopt purchase my product why sell it at a lower price?
There are a few points to think about there. First, in creating the health insurance exchanges, the law does make for a more competitive individual market. It's transparent (HealthCare.gov is set to launch next week and will aid shoppers by containing details about plans in the individual market, though comparative price information won't be up for a few more months). It encourages competition on price--right now, insurers can compete on risk (i.e. excluding certain individuals or charging them higher rates for the same policy sold more cheaply to someone else) but after the community rating and guaranteed issue rules go into effect in the exchanges, price competition will be the only option left for insurers. Moreover, insurers will be subject to medical loss ratios (80% for individual plans in the exchanges), meaning that 80% of premium money must go toward care. All administrative and other costs, as well as profits, must be squeezed out of the remaining 20%. Jacking up rates simply to pad profits (without corresponding increases in reimbursements for care) will just result in rebates being mailed out to customers.
That said, in this situation there are limits to competition (among insurers). As I hinted in my post above, the nature of the mechanism by which reimbursements are set is key: insurers negotiate with providers. Increasing the number of insurers just reduces each one's leverage relative to providers, allowing providers to demand higher reimbursements. As it is, we already have some evidence that in many states providers already have enough clout to extort ever higher reimbursements from insurers.
So there's somewhat of a delicate balance here between designing a competitive marketplace and getting carried away with the competition.
As of now, insurance cannot be sold across state lines because of legal differences in coverage and insurance requirements. If this coverage is not under the same guise, that is another fairly large advantage given to the public option that the insurance companies would have a hard time competing against.
Part of what this law does is provide some uniformity to minimum standards, regarding benefits and underwriting. There are provisions in it for multi-state (private) plans to be sold under the supervision of the Office of Personnel Management (the arm of the federal government that oversees the Federal Employee Health Benefits Plan). There are also provisions encouraging state compacts that would allow plans to be sold across state lines.
The original public option (in H.R. 3200) was specifically directed to play by the same rules as any other plan: "ENSURING A LEVEL PLAYING FIELD.—Consistent with this subtitle, the public health insurance option shall comply with requirements that are applicable under this title to an Exchange-participating health benefits plan, including requirements related to benefits, benefit levels, provider networks, notices, consumer protections, and cost sharing."
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