Jacob Hacker, the health policy expert known now as the "Godfather of the public option," qualifies his widely reported endorsement of the Medicare buy-in proposal in a new post at TNR's Treatment blog: he likes the idea, but doesn't know enough of the details.
What I said (on PBS "Newshour") is that I like the idea of a Medicare buy-in for uninsured Americans aged 55 to 65, and I do. We don’t know the details of the buy-in--and the details matter a great deal for whether it is a workable idea for this age group and their families--but this could be a simple, popular way of providing affordable coverage. It’s also one, valuably, that could be made available almost immediately, not almost a half decade from now, like the rest of the Senate bill’s big steps.
He then goes on to talk in detail about the other part of the compromise, the OPM idea.
To put it briefly, offering one or a few national plans under the auspices of the OPM won't provide what a public plan can--the choice of a broad, transparent, accountable, and affordable plan that doesn't deny needed care, restrains the growth of premiums over time, and serves as a benchmark for private plans. Indeed, because Blue Cross and Blue Shield (BCBS) is the most likely national non-profit to take advantage of this new opening, and because the Blues dominate most states, the plan perversely amounts to trying to increase competition and choice by encouraging Blue Cross and Blue Shield to compete against, you guessed it, Blue Cross and Blue Shield. That’s competition?
The public plan has been at the core of the health debate for a number of reasons: (1) it will significantly reduce costs; (2) it will provide broad, transparent coverage at an affordable price, setting a benchmark private insurers will be pressed to follow; (3) it won’t be in the business of denying or delaying needed care to people with costly conditions or shifting excessive costs onto them; and (4) it’s a vehicle for driving delivery and payment system reforms that private plans have proven unable and/or unwilling to do. Since we live in a democracy, it also seems relevant that (5) the public plan has been consistently popular with Americans (and doctors, according to a recent survey in the New England Journal of Medicine), despite the unrelenting false attacks on it.
We were reminded of (1) again last week. The CBO, which has been lowballing estimates of the potential savings of a public plan, told the Senate negotiators that if they dropped the public option, they would give up $25 billion in savings. That’s right: viewed through the CBO’s pessimistic lens, the Senate public option saves $25 billion, even though it not only requires that the Secretary of Health and Human Services negotiate rates directly with providers (rather than use rates based on Medicare’s, as I originally proposed), but also allows state political leaders to forgo offering the public option within their boundaries by passing a state law.
The OPM alternative, by contrast, isn’t going to be able to deliver serious savings. The Federal Employees Health Benefit Program (FEHBP) run by the OPM had premium increases almost exactly as large as the rest of the private insurance market between 1985 and 2002--and much larger than the growth rate of Medicare per capita. According to a just-released Congressional Research Service brief (not available online), premiums for enrollees increased almost 9 percent last year, and some plans had double-digit increases.
The most revealing statistics in the brief concern the Blue Cross and Blue Shield plans. These are the only national plans offered by FEHBP that are not affiliated with a federal employee organization. As such, a national BCBS plan would be the most likely--and perhaps only—OPM-sponsored plan to emerge under the proposed Senate deal. In 2010, BCBS will raise the premiums charged enrollees of its "standard" (more generous ) plan 15 percent for individuals and 12 percent for families, and it will raise the rate of its "basic" (no out-of-network coverage) plan 9 percent.
The regulations on private insurers in the current Senate bill are weak in many areas. Moreover, their implementation is left mostly to the states, many of which lack the wherewithal or will to regulate private plans effectively. So a dreamily hopeful vision of the OPM might see it as potentially providing much-needed national regulatory clout. But that's not a realistic vision. The OPM is already stretched thin. Even if a bunch of new resources could be found for it, it isn't in the business of creating a transparent, accountable plan; it is a manager and contractor and regulator of private plans, much like an exchange, only with even less regulatory power. OPM's former director, Linda Springer, says bluntly, "I flat-out think that OPM doesn't have the capacity to do this type of role...I don't think it would be a good call."
That's a long excerpt, but it's really a very good, and important, post. The public option is being sacrificed purely for politics, not for policy reasons. Done right, it saves money, provides much needed competition, and would provide what the American people want and need "broad, transparent coverage at an affordable price." What the group of 10 cooked up, this OPM excuse for Blue Cross to be able to increase its hold on the insurance market, is not a substitute, and we don't know enough of the Medicare buy-in yet to evaluate.
For now, I'm with Hacker, who concludes "Since I’m being called "the godfather," let me put it this way: this phony public option is an offer I can refuse."