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PNHP RESOURCES

'Medicare buy-in' called a subsidy to private insurers

The following radio interview with Dr. Steffie Woolhandler, co-founder of Physicians for a National Health Program and professor at Harvard Medical School, took place on the morning of Dec. 9 with an affiliate of Los Angeles-based KPFK Pacifica. A number of details about the bill were still unknown at that time.

Click here to listen to the interview.

 


 

Is it accurate to say that, even though this version of the Senate bill is still using the term “public option,” it’s really now going to be run by private health insurance companies?

That’s true. What the “public option” is going to be for folks under the age of 55 is just a menu, a menu of private plans that they can buy. 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. So under the age of 55, if you’re uninsured, you will be offered this menu of nonprofit plans.

The issue about the folks over the age of 55 being able to buy into Medicare is actually quite bad as well. One of the better provisions of the reform legislation was that it prohibited charging older people any more than twice (or thrice in the some versions) as much as you charge younger people in the individual market. But by saying anyone over 55 in the individual market can be picked up by Medicare, you’ve really let the insurance industry off the hook.

That is, the highest-cost patients in the individual market will be taken off the insurance companies’ 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.

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. And even one of the small things that was good about the plan, that is, forcing the insurance industry to lower the prices for older enrollees – that’s been taken out of the bill, essentially.

Explain the subsidy, a little bit further; is this what the government would offer, as help for low-income Americans who cannot buy insurance? Because this bill, I’m assuming, also still has the mandate that all Americans have insurance, is that true?

That’s true. I live in Massachusetts, where we already have a very similar plan in place, and people do get subsidies if their income is less than 300 percent of poverty. The problem is that the subsidies are not very large, so you might get several thousand dollars in subsidy, but your insurance plan might be $10,000 or even $15,000, so that the mandate forces many low-income people to continue to take thousands of dollars out of their pocket and hand it to the private health insurance industry. So, in effect, the taxpayers are giving money to private health insurance, the individual family is being forced to hand over thousands more to the private health insurance industry.

What do you make of the words of Senator Max Baucus, who’s been a leading figure in the health care reform movement coming from the state of Montana, and getting huge numbers of campaign contributions from insurance companies? He is claiming that this compromised bill is the only kind of proposal, he said it’s probably the closest proposal so far that could get the support of 60 senators. “It’s got legs,” he says.

The issue here is what private health insurance wants. They did give Max Baucus $1.4 million in campaign contributions, but more significantly than that, Max Baucus has an assistant who’s actually writing the bill. We know she’s writing the bill because when you look at the documents that the Senate Finance Committee is putting out, for instance the so-called Baucus Framework, and you right-click and look at the properties box, you’ll see that the framework was written on the computer of Elizabeth Fowler. Her previous job was as vice president of WellPoint, the nation’s largest insurance company. So the insurance company is right there, on the inside, writing this bill. Not a word goes on that piece of paper that they don’t have an influence on. And when you look at something like the Medicare buy-in, you have to ask, “Well, what did the insurance industry get out of it?” because they have indeed hijacked this process and are writing the bills. Now they’re lobbying with these swing senators to get more and more and more of what the private insurance industry wants out of the bill.

One of the things in the House version of the bill that did, have some, that some progressives did like was the possibility that states individually could potentially start their own single-payer system. What’s the status of that in this bill?

An amendment was put forth in the House but not included in the final bill would have allowed state single-payer bills. Senator Bernie Sanders has been talking about putting an amendment forward in the Senate. We certainly expect to see that and hope that he’ll do that. But the bill that seems likely to emerge from the Senate and from the conference committee will probably not have that single-payer option in it. We’d like to see it because that would encourage people at the state level to continue to work on single payer, it would make their work easier, but we doubt that is actually going to be in the final bill. We’re still hopeful, but we doubt it.

I think we have to look at the totality of the bill at this point, and the totality of the bill is that it’s absolutely no solution. It’s going to make some people better off, some people worse off, but it’s going to leave us with probably 25 million uninsured people when fully implemented in 2020. It’s going to cost the taxpayers $450 billion in taxes that end up going straight to the private insurance industry as subsidies. There are many, many bad things in this bill that reflect the role of the insurance industry.

There is also the amendment that would prohibit any kind of government subsidies for plans that might offer abortion services; again, this is similar to the House version of the bill that was put forward as a way to get the votes of pro-life, anti-abortion senators.

Well, the anti-abortion planks are still in play. That is, within the House version there is a complete prohibition on plans sold through the exchange covering abortion. That’s obviously a major step backwards for reproductive rights. Right now, government money can’t support abortions, but there’s never before been a restriction on private plans. So, the House bill for the first time would put a restriction on abortion into private health insurance plans.

In the Senate, my understanding is that it is still in play. Senator Nelson is saying he refuses to support the bill unless he gets a Stupak [anti-abortion] amendment in there. The proposal on the table is to come up with some elaborate system to try and separate the monies that are public and private so that private plans might still offer abortions, but only out of the private monies, but that issue is still in play in the Senate bill.

It’s amazing that they are still calling the health insurance exchange, the private health insurance exchange, a public option. Do you see this step in the entire health care debate as basically being just not really worth carrying on anymore, from your perspective? You’d like to just stop and start over?

Yes. I think we need to start from scratch and throw this bill away. We need to start over, with the Medicare-for-All framework: that everyone in the country would have the same type of insurance that would be paid for by taxes, that the patients would have complete free choice of doctor or hospital.

The beauty of the Medicare-for-All approach is that you get so much on administrative savings that you can pay for the expanded access. You save more than $350 billion annually through administrative simplification and that’s the money you need not only to cover all of the uninsured, but also to plug the gaps in coverage for people who now have private coverage with gaps in it.

That’s the direction we need to be heading – toward that single payer. As long as we are leaving the private health insurance industry in the bill, it’s enormously expensive. One of the aspects of the bill that we haven’t discussed is that it has 10 years of taxes in it, but only 6 years of new coverage. That is, the tax provisions go into effect immediately, but all of the coverage provisions go into effect in 2014. So the only way they even got this bill to balance financially is by putting 10 years of taxes against 6 years of coverage. So the bill is really not affordable. Even if your only issue or concern was about cost and affordability, this bill is not affordable over the long run.