Thursday, December 24, 2009
Tuesday, December 22, 2009
Medicare Buy-In: Popular and Saves Money...It Will Be Back
A new poll shows the Medicare buy-in for 55-64 yr olds is quite a popular idea in the electorate:
Even the majority of Republicans like this idea. Throughout the electorate it has a huge 2-1 popularity advantage.
This makes sense. A Medicare buy-in is clearly a good idea. It would lower the cost of health reform, since it would lower the absolute cost (including total cost sharing) of insuring 55-64 yr olds.
Joe Lieberman was entirely wrong on this.
Since Medicare has lower costs, the total federal subsidies to help people pay for health insurance premiums would be lower overall (nationwide, public and private together, in total) since direct health care costs for that age bracket would be lower (due to Medicare administrative efficiency!).
Further, since more people in that age bracket would get excellent Medicare coverage, more preventive care delivered to the 55-64 age bracket would then lower Medicare costs over time as that group with better early preventive care ages over 65. (This is a profound structural advantage of Medicare -- Medicare knows its policy holders will stay in Medicare, therefore it can invest in long term preventive care and wellness efforts that take years to break even and payoff.)
So Medicare buy-in would strengthen the financial soundness of Medicare.
Two large benefits.
Joe is wrong six ways to Sunday.
And the American people clearly like this good idea.
The reason the current version of health care reform has lost some of its popularity is exactly because the public option and the Medicare buy-in were taken out.
The current version of reform has lost popularity among some of those that believe reform is deeply needed and right. The loss of popularity has been because reform has been weakened.
I think this idea will be making a comeback.
The only question is when...
Will we do this addition to reform in 1-2 years? In 5?
We will do it, or some version of additional reform that is very similar, unless Congress keeps its spine and strengthens the measures still inside the current version of reform to improve efficiency and slow health care cost inflation. Elements such as the final medical loss ratio regulation, and the strength and functionality of the panels that will guide Medicare innovation and the applicability of their innovations to Medicare providers, including hospitals.
The bottom line is that the people want powerful reform.
This desire will only grow as medical inflation continues.
24. Do you support or oppose allowing Americans ages 55 to 64 to purchase Medicare coverage?Tot Rep Dem Indep Men Women
Support 64% 50% 81% 57% 64% 63%
Oppose 30 44 14 36 32 29
DK/NA 6 6 5 7 4 8
Even the majority of Republicans like this idea. Throughout the electorate it has a huge 2-1 popularity advantage.
This makes sense. A Medicare buy-in is clearly a good idea. It would lower the cost of health reform, since it would lower the absolute cost (including total cost sharing) of insuring 55-64 yr olds.
Joe Lieberman was entirely wrong on this.
Since Medicare has lower costs, the total federal subsidies to help people pay for health insurance premiums would be lower overall (nationwide, public and private together, in total) since direct health care costs for that age bracket would be lower (due to Medicare administrative efficiency!).
Further, since more people in that age bracket would get excellent Medicare coverage, more preventive care delivered to the 55-64 age bracket would then lower Medicare costs over time as that group with better early preventive care ages over 65. (This is a profound structural advantage of Medicare -- Medicare knows its policy holders will stay in Medicare, therefore it can invest in long term preventive care and wellness efforts that take years to break even and payoff.)
So Medicare buy-in would strengthen the financial soundness of Medicare.
Two large benefits.
Joe is wrong six ways to Sunday.
And the American people clearly like this good idea.
The reason the current version of health care reform has lost some of its popularity is exactly because the public option and the Medicare buy-in were taken out.
The current version of reform has lost popularity among some of those that believe reform is deeply needed and right. The loss of popularity has been because reform has been weakened.
I think this idea will be making a comeback.
The only question is when...
Will we do this addition to reform in 1-2 years? In 5?
We will do it, or some version of additional reform that is very similar, unless Congress keeps its spine and strengthens the measures still inside the current version of reform to improve efficiency and slow health care cost inflation. Elements such as the final medical loss ratio regulation, and the strength and functionality of the panels that will guide Medicare innovation and the applicability of their innovations to Medicare providers, including hospitals.
The bottom line is that the people want powerful reform.
This desire will only grow as medical inflation continues.
Saturday, December 19, 2009
Watch Reform For The Medical Loss Ratio
Health care reform will likely pass and be enacted into law.
Many think this is a bailout of health care in America.
They are correct.
Further, many think this is a bonanza, a windfall, for health insurers.
But this last proposition depends entirely on the "medical loss ratio" -- the percentage of total annual premiums insurers collect that they pay out for actual health care.
The medical loss ratio is the most important measure of how much premium money insurers keep for themselves. A 80% ratio means that insurers keep the other 20% for themselves.
There will be numbers established in the final bill for the required minimum medical loss ratio.
In the 1990s the average medical loss ratio was well above 90%.
Lately it has been near 80%.
Medicare itself is efficient, and it's medical loss ratio is between 94% and 97% (depending on what parts of health-related spending by other federal agencies are included).
The appropriate medical loss ratio regulation under reform for the year 2014 would be 90% to 92%.
Part of the reason the ratio should return to levels last seen in the 1990s is that private health insurers will no longer need so many administrative workers working hard to deny claims and cancel policies for people that get sick.
I've written important details about how to regulate the medical loss ratio at the end of this post. Establishing a number is only one crucial piece of regulating the medical loss ratio. Regulation must also encourage innovation (under a simplistically rigid ratio, cost-reduction innovations could temporarily reduce profits and thus reduce the motive for such innovation), and I offer a clear, effective method in the link to gain the best of both worlds -- good ratio levels and good incentives for innovation which reduce medical costs.
Many think this is a bailout of health care in America.
They are correct.
Further, many think this is a bonanza, a windfall, for health insurers.
But this last proposition depends entirely on the "medical loss ratio" -- the percentage of total annual premiums insurers collect that they pay out for actual health care.
The medical loss ratio is the most important measure of how much premium money insurers keep for themselves. A 80% ratio means that insurers keep the other 20% for themselves.
There will be numbers established in the final bill for the required minimum medical loss ratio.
In the 1990s the average medical loss ratio was well above 90%.
Lately it has been near 80%.
Medicare itself is efficient, and it's medical loss ratio is between 94% and 97% (depending on what parts of health-related spending by other federal agencies are included).
The appropriate medical loss ratio regulation under reform for the year 2014 would be 90% to 92%.
Part of the reason the ratio should return to levels last seen in the 1990s is that private health insurers will no longer need so many administrative workers working hard to deny claims and cancel policies for people that get sick.
I've written important details about how to regulate the medical loss ratio at the end of this post. Establishing a number is only one crucial piece of regulating the medical loss ratio. Regulation must also encourage innovation (under a simplistically rigid ratio, cost-reduction innovations could temporarily reduce profits and thus reduce the motive for such innovation), and I offer a clear, effective method in the link to gain the best of both worlds -- good ratio levels and good incentives for innovation which reduce medical costs.
Friday, December 18, 2009
Would Republicans Filibuster a $626 Billion Defense Bill?
What? you may ask.
For a fleeting moment, something in us hopes.
Why would Senate Republicans try to block the Defense appropriations bill?
Might it be because of the strain of such a large appropriation on the federal budget?
$626 Billion in one...single...year...is far more money than the contemplated health care reform spending of about $900 Billion over ten years (starting slowly in 2010 with new subsidies for state high-risk health insurance pools).
Any conservative could reasonably consider defense spending efficiency, yes?
How about during a time when the U.S. faces no enemy or rival in the world capable of credibly challenging our navy, air force, or land forces? How about considering we spend far more on defense as a portion of our total economy than any other developed nation?
If we spent 1/2 as much, we would could still overwhelm any current or likely foe.
The answer unfortunately is a Washington game, from the Republican party, which seems enamored of Washington games lately:
Imagine...just for a moment...a more sane world.
A world in which the Republican party filibustered the Defense appropriations bill because it is a massive, budget-destroying $626 BILLION DOLLARS!
Oh....we can only hope we'll have genuine conservatives in the Republican party again someday...
It seems most of the Senators in Washington calling themselves "Republicans" have little or no regard at all for the actual federal deficit, in spite of much repetitive rhetoric.
They want to have it both ways.
They want to talk restraint on Washington spending.
But they been spending America into crisis for years, with budget-busting defense appropriation after appropriation, where even canceling a single out-of-date jet fighter (F-22) that the Pentagon did not want, took a determined effort from the administration so that it was considered a significant victory....
We are in sad, sad shape.
What would put us into better shape?
Sizing defense spending down to proportion to the actual threats we face, instead of being ready to instantly fight a major war (what is "major" you may ask -- "major" is a situation where there is an actual hostile opponent that is fielding organized armies of hundreds of thousands of well-armed and trained troops supplemented by powerful naval and/or air forces that is seriously preparing to fight us; the last such major situation ended in the 1990s as the Warsaw Pact dissolved. The Iraq of 2003 was at most a medium-sized war).
We are ready to fight massive enemies not because there are any massive enemies anywhere in the world.
There are not.
We spend this much because it is profitable for military contractors and attracts votes in the current set of Senators and Representatives that represent these for-profit military contractors.
President Eisenhower, who was also Supreme Allied Commander during World War II, warned us about this -- the "military-industrial complex" -- but somehow his party, the Republican party, seems to have little regard for this wise and experienced conservative leader of the 1950s.
(For perspective, it might help readers to know I was an avid supporter of Reagan (from 1975) and his massive defense spending, though I was not old enough to vote in a presidential election until 1984. I favored Reagan's military buildup, until Gorbachev began to clearly signal major change in 1986-1988. By 1988 it was clear that ideas and technology and information were changing the world, not military strength.)
For a fleeting moment, something in us hopes.
Why would Senate Republicans try to block the Defense appropriations bill?
Might it be because of the strain of such a large appropriation on the federal budget?
$626 Billion in one...single...year...is far more money than the contemplated health care reform spending of about $900 Billion over ten years (starting slowly in 2010 with new subsidies for state high-risk health insurance pools).
Any conservative could reasonably consider defense spending efficiency, yes?
How about during a time when the U.S. faces no enemy or rival in the world capable of credibly challenging our navy, air force, or land forces? How about considering we spend far more on defense as a portion of our total economy than any other developed nation?
If we spent 1/2 as much, we would could still overwhelm any current or likely foe.
The answer unfortunately is a Washington game, from the Republican party, which seems enamored of Washington games lately:
If the filibuster on the $626 billion defense bill had succeeded, Democrats would have had to scramble to find a way to fund the military operations, because a stopgap funding measure for the Pentagon will expire at midnight Friday. Such an effort to come up with another stopgap defense bill might have disrupted the very tight timeline on health care.
Imagine...just for a moment...a more sane world.
A world in which the Republican party filibustered the Defense appropriations bill because it is a massive, budget-destroying $626 BILLION DOLLARS!
Oh....we can only hope we'll have genuine conservatives in the Republican party again someday...
It seems most of the Senators in Washington calling themselves "Republicans" have little or no regard at all for the actual federal deficit, in spite of much repetitive rhetoric.
They want to have it both ways.
They want to talk restraint on Washington spending.
But they been spending America into crisis for years, with budget-busting defense appropriation after appropriation, where even canceling a single out-of-date jet fighter (F-22) that the Pentagon did not want, took a determined effort from the administration so that it was considered a significant victory....
We are in sad, sad shape.
What would put us into better shape?
Sizing defense spending down to proportion to the actual threats we face, instead of being ready to instantly fight a major war (what is "major" you may ask -- "major" is a situation where there is an actual hostile opponent that is fielding organized armies of hundreds of thousands of well-armed and trained troops supplemented by powerful naval and/or air forces that is seriously preparing to fight us; the last such major situation ended in the 1990s as the Warsaw Pact dissolved. The Iraq of 2003 was at most a medium-sized war).
We are ready to fight massive enemies not because there are any massive enemies anywhere in the world.
There are not.
We spend this much because it is profitable for military contractors and attracts votes in the current set of Senators and Representatives that represent these for-profit military contractors.
President Eisenhower, who was also Supreme Allied Commander during World War II, warned us about this -- the "military-industrial complex" -- but somehow his party, the Republican party, seems to have little regard for this wise and experienced conservative leader of the 1950s.
(For perspective, it might help readers to know I was an avid supporter of Reagan (from 1975) and his massive defense spending, though I was not old enough to vote in a presidential election until 1984. I favored Reagan's military buildup, until Gorbachev began to clearly signal major change in 1986-1988. By 1988 it was clear that ideas and technology and information were changing the world, not military strength.)
Tuesday, December 15, 2009
Republicans and Lieberman Trying to Keep Their Familiar Place
Every opponent of good health reform ideas are in the end only trying to secure a place for themselves and make a living and have a decent life, personally.
When Joe Lieberman (Senator of Connecticut) basically kills or puts off into the future one of the best reform ideas to date -- the Medicare buy-in for ages 55-64, which would lower overall national (public and private) health care spending, strengthen Medicare, and reduce federal deficits -- well, he's only trying to keep the life he knows.
Joe feels important, at the center of things. He loves it.
That's the life he wants.
In Connecticut are big insurers, such as health insurers like Aetna (in Hartford.)
Aetna itself is part of Senator Lieberman's constituents.
Joe wants to protect Aetna, and help it thrive.
Aetna represents a part of Connecticut jobs. Jobs in Hartford.
Joe wants to be important, and wants to preserve and strengthen Aetna's profitability.
...
Republicans....want to have a place.
If Health Care Reform is tremendously successful -- such as would follow from the recently proposed ideas of the Medicare buy-in for ages 55-64, from regulating the Medical Loss Ratio (percentage of health insurance premium income health insurers must pay out for actual health care) up to 90%....
Well, such pieces of reform would accelerate the benefits of health care reform and make good results clearer, sooner.
And having a social program designed largely by the Democrats thrive and benefit Americans in a more obvious and rapid fashion would make the Republican party seem less useful.
Less useful, less needed.
Who needs Republicans if Senators like Ron Wyden already offer the best market-based ideas?
Republicans don't want to lose more elections and become a smaller party.
They want to be important.
They want to regain that heady power they loved.
Power, importance, control.
Reform opponents are pushed to ignore the best interests of America as a whole by three strong motivations.
1. Because they want to be important and have power.
2. Because they want to have a place and make a living.
3. Because they believe in the evolving narrative, the invention, the fiction of a certain Russian emigre who renamed herself Rand. It's a powerful, self-serving world view in which only select individuals are important and produce the good things in the world, and everyone else is second class -- a lower class of people that should look up to their superiors. (More is coming about this very important fact in a later post.)
But of these motivations, the second -- just a need to have a place, to make a living -- is the one that counts, that increases the number of opponents of reform from a scattered few to an important minority that are unable to see all the sides of important issues.
When Joe Lieberman (Senator of Connecticut) basically kills or puts off into the future one of the best reform ideas to date -- the Medicare buy-in for ages 55-64, which would lower overall national (public and private) health care spending, strengthen Medicare, and reduce federal deficits -- well, he's only trying to keep the life he knows.
Joe feels important, at the center of things. He loves it.
That's the life he wants.
In Connecticut are big insurers, such as health insurers like Aetna (in Hartford.)
Aetna itself is part of Senator Lieberman's constituents.
Joe wants to protect Aetna, and help it thrive.
Aetna represents a part of Connecticut jobs. Jobs in Hartford.
Joe wants to be important, and wants to preserve and strengthen Aetna's profitability.
...
Republicans....want to have a place.
If Health Care Reform is tremendously successful -- such as would follow from the recently proposed ideas of the Medicare buy-in for ages 55-64, from regulating the Medical Loss Ratio (percentage of health insurance premium income health insurers must pay out for actual health care) up to 90%....
Well, such pieces of reform would accelerate the benefits of health care reform and make good results clearer, sooner.
And having a social program designed largely by the Democrats thrive and benefit Americans in a more obvious and rapid fashion would make the Republican party seem less useful.
Less useful, less needed.
Who needs Republicans if Senators like Ron Wyden already offer the best market-based ideas?
Republicans don't want to lose more elections and become a smaller party.
They want to be important.
They want to regain that heady power they loved.
Power, importance, control.
Reform opponents are pushed to ignore the best interests of America as a whole by three strong motivations.
1. Because they want to be important and have power.
2. Because they want to have a place and make a living.
3. Because they believe in the evolving narrative, the invention, the fiction of a certain Russian emigre who renamed herself Rand. It's a powerful, self-serving world view in which only select individuals are important and produce the good things in the world, and everyone else is second class -- a lower class of people that should look up to their superiors. (More is coming about this very important fact in a later post.)
But of these motivations, the second -- just a need to have a place, to make a living -- is the one that counts, that increases the number of opponents of reform from a scattered few to an important minority that are unable to see all the sides of important issues.
Tuesday, December 8, 2009
Excellent Health Reform Compromises Emerge
Imagine my surprise to see that 3 major compromises being worked out in health care reform all actually improve reform as it stands at the moment.
1. The excellent Federal Employees Health Benefits Program (FEHBP) will be used as the exchange model so that well-regulated private insurance in a FEHBP-like exchange with community rating will bring the far-superior Federal Employees types of insurance to the individual and small group market. This is a much better alternative than less-regulated exchanges with very weak public options.
2. The "health benefits ratio", aka "medical loss ratio" -- the portion of annual health insurance premium income insurers pay out for actual health care -- sounds like it will be regulated to be 90%. This is an excellent number. Vastly better than the 80% we heard only a week or so ago. Compare this ratio to the current average of 80% in the private market (and less in the individual market), and compare to average payout ratios that were above 90% during the 1990s.
3. Perhaps one of the most dramatic improvements possible: Instead of expanding the stigmatized Medicaid so broadly (as previously proposed to everyone up to 150% of poverty level), Medicare itself would be opened up for buy-in to everyone 55 and older (instead of only available at age 65 as now). Individuals age 55 to 64 could pay premiums to buy-in to Medicare coverage (with low-income people still receiving the previously proposed premium subsidies.) The significance? Medicare is highly cost-efficient, with a "health benefits ratio" between 94-97%. This means reform gets more bang for the buck, and thus the premium subsidies can be more sustainable.
These are just simply very, very good outcomes.
I would not have dared to hope for such good compromises.
Those who like to write Congress might find it a good moment to say "Yes!" to their representative and Senators on this compromise.
1. The excellent Federal Employees Health Benefits Program (FEHBP) will be used as the exchange model so that well-regulated private insurance in a FEHBP-like exchange with community rating will bring the far-superior Federal Employees types of insurance to the individual and small group market. This is a much better alternative than less-regulated exchanges with very weak public options.
2. The "health benefits ratio", aka "medical loss ratio" -- the portion of annual health insurance premium income insurers pay out for actual health care -- sounds like it will be regulated to be 90%. This is an excellent number. Vastly better than the 80% we heard only a week or so ago. Compare this ratio to the current average of 80% in the private market (and less in the individual market), and compare to average payout ratios that were above 90% during the 1990s.
3. Perhaps one of the most dramatic improvements possible: Instead of expanding the stigmatized Medicaid so broadly (as previously proposed to everyone up to 150% of poverty level), Medicare itself would be opened up for buy-in to everyone 55 and older (instead of only available at age 65 as now). Individuals age 55 to 64 could pay premiums to buy-in to Medicare coverage (with low-income people still receiving the previously proposed premium subsidies.) The significance? Medicare is highly cost-efficient, with a "health benefits ratio" between 94-97%. This means reform gets more bang for the buck, and thus the premium subsidies can be more sustainable.
These are just simply very, very good outcomes.
I would not have dared to hope for such good compromises.
Those who like to write Congress might find it a good moment to say "Yes!" to their representative and Senators on this compromise.
Monday, November 30, 2009
Insurance Premiums Under Reform Steady or Lower
The CBO analysis of the change in health insurance premiums under reform (2016), compared to what premiums would have been without reform, shows what common sense would indicate -- most premiums would be about where they would have been without reform, some would be lower, some would be higher due to the insurance itself covering more and thus lowering out-of-pocket costs.
For the group that sees higher premiums under reform, out of pocket costs will be much lower due to reform. The only group that would see these higher premiums are those in the individual market that don't qualify for subsidies and would be required to purchase better insurance than they currently have.
Not only will this group have better coverage -- they will get a lower overall average cost! While they will pay more in premiums and get more insurance, they will save money under reform on the administrative costs of that insurance and in out-of-pocket expenses. The net result will be less total spending on health care even for this group.
Since the effects of reform analyzed by the CBO are so much better than the rhetorical claims of reform opponents, it is worth reporting:
For the group that sees higher premiums under reform, out of pocket costs will be much lower due to reform. The only group that would see these higher premiums are those in the individual market that don't qualify for subsidies and would be required to purchase better insurance than they currently have.
Not only will this group have better coverage -- they will get a lower overall average cost! While they will pay more in premiums and get more insurance, they will save money under reform on the administrative costs of that insurance and in out-of-pocket expenses. The net result will be less total spending on health care even for this group.
Since the effects of reform analyzed by the CBO are so much better than the rhetorical claims of reform opponents, it is worth reporting:
The Senate Democrats' health care overhaul bill would substantially reduce premium costs for 57 percent of people who buy subsidized coverage through new exchanges, while rates would hold steady or decline slightly for large and small employers, a long awaited analysis from the Congressional Budget Office showed Monday.
People who buy their own coverage but don’t qualify for government subsidies, however, could see increases of 10 percent to 13 percent, mainly because the coverage offered in the exchanges would cover more benefits compared with what is currently purchased, and thus would be more expensive. The analysis compares rates with what they would be under current laws, and focuses on 2016 as the time when the provisions of the new legislation would be fully implemented.
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