What can we learn from Kamala Harris’ position on private insurance?

July 29, 2019

Topics: Quote of the Day

KAMALA HARRIS’ PLAN FOR MEDICARE FOR ALL

KAMALA HARRIS FOR THE PEOPLE, July 29, 2019

(excerpts)

Medicare for All will provide every individual in America with access to comprehensive health care.

HOW DOES THIS PLAN WORK AND HOW WILL WE TRANSITION TO MEDICARE FOR ALL?

Under my Medicare for All plan, we will immediately allow people to buy into a Medicare Transition Plan through an extended 10-year phase-in period.

We will automatically enroll newborns (with an opt-out provision for families with employer-sponsored insurance) and the uninsured into a Medicare Transition Plan, and provide a commonsense path for employers, employees, the underinsured, children, and others on federally-designated programs, such as Medicaid or the Affordable Care Act exchanges, to transition into the Medicare Transition Plan.

Second, after the 10-year transition period, we will have a new Medicare framework where most Americans will be in an expanded and improved public Medicare plan. In my Medicare for All system, similar to Medicare Advantage today, private insurance plans can contract through Medicare and compete with the public Medicare plan. However, these private Medicare plans will be subject to stricter consumer protection requirements than under current law, such as getting reimbursed by Medicare for less than the cost of the public Medicare plan to ensure taxpayers aren’t subsidizing insurance company profits. Americans can then choose whether to stay in the public Medicare plan or opt-into a private Medicare plan.

WHAT ABOUT EMPLOYER-BASED PLANS?

During the transition period, employers can continue to provide private health coverage to employees. However, employers will also have the opportunity to provide health care for their employees through the Medicare Transition Plan, with a shared responsibility payment. Employees will also have the option on their own to buy into the Medicare Transition Plan during the transition period.

Following the transition period, under my Medicare for All system, employers will have the option to provide a private Medicare plan for their employees that will be certified by the Medicare program, similar to how employers can offer Medicare Advantage plans today. Employees could choose to be in that employer Medicare plan, a different private Medicare plan, or the public Medicare plan.

WHAT ABOUT ORGANIZED LABOR AND UNION WORKERS?

Under my Medicare for All plan, union workers will have the option to join Medicare and stop sacrificing wages for better health care. Unions could also continue working with employers to offer a private Medicare plan option or supplemental benefits in addition to the Medicare plan.

DOES YOUR PLAN ELIMINATE ALL PRIVATE INSURANCE?

No. Under my Medicare for All system, the power of big insurance companies will be greatly diminished. After the transition period, private insurance will only exist in two ways:

1) At the end of the day, Americans want to be able to choose their doctor and the care they receive, not the insurance company that provides it. Under my plan, private insurers can compete with the new public Medicare plan, as long as the plans they offer adhere to strict requirements like those laid out below. This would function similarly to how Medicare Advantage operates within the Medicare system today. Today, 35% of seniors are enrolled in private Medicare plans that get paid directly by Medicare and, in fact, 25% of current private Medicare insurance plans are already at or below 95% of Medicare costs.

In my Medicare for All system, Medicare will continue to set the rules of the road for these plans, including price and quality, and private insurance companies will play by those rules, not the other way around. But unlike under the current program, these private Medicare plans will be held to stricter consumer protection standards than they are today, such as getting reimbursed less than what the public Medicare plan will cost to operate, to ensure that they are delivering meaningful value and unable to profit off of gaming consumers or the government.

2) People will be able to purchase supplemental insurance covering services not included under Medicare for All, such as medical insurance for traveling abroad and cosmetic surgery. Employers will still be able to offer their employees retiree supplemental coverage through a private insurance plan.

https://kamalaharris.org/medicare-for-all

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Comment:

By Don McCanne, M.D.

Although there had been a surge in support for the single payer model of Medicare for All, that support is now being qualified with the condition that private insurance plans remain an option to an improved Medicare program that would otherwise cover everyone.

Polling organizations have added this qualification to routine polls on Medicare for All, but without asking if there would be a preference for a public plan that would offer more benefits than the typical private plan, with greater choice of physicians and hospitals, and lower costs for most individuals and families. To no surprise, the majority participating in the polls would like to have the option to choose a private plan in addition to having available a guaranteed public plan – Medicare for All.

The media have latched onto this preference for having the option to choose a private plan, but some have expanded it to say that many Americans prefer their private plans and should not have them taken away.

Today’s message is about the concept of not eliminating the option of choosing a private plan. It is not about Kamala Harris’ campaign. The reason she is mentioned is that the media has been pounding on her about whether she would prohibit private plans as an option to Medicare for All. With the second round of debates coming up this week, she would certainly be hit hard on this if she didn’t adjust her message. So, although we are examining her defensive policy adjustment, the changes she is supporting represent the more moderate views of those who would support a Medicare public option instead, along with adjustments to the Affordable Care Act. That is, the changes represent allegedly mainstream views that voters may be looking for in the upcoming primary and general elections.

The issues are complex, and her suggestions add to the complexity. So how do you straighten this all out? Well, she asks to expand the transition to Medicare for All to ten years. But look at what happened to the Affordable Care Act after ten years of political shenanigans. It’s worse than what they began with. The numbers of uninsured have been increasing again, the out-of-pocket costs have become less affordable, and provider networks have markedly narrowed, especially with the largest ACA expansion – Medicaid. Does anyone really believe that the ten year transition would escape political sabotage?

Perhaps even more alarming is that the private insurance options proposed are basically the private Medicare Advantage plans that are being touted as being preferred by seniors. (It is merely because the private plans can offer better benefits by being overpaid at the same time the traditional Medicare program has been neglected, especially by not providing catastrophic protection.) This is fulfilling the dream of the private insurance industry that has been advocating for “Medicare Advantage for All” that places the entire nation in private health plans.

Harris’ proposal does call for the private plans to be paid 5% less than the costs of Medicare, just like the original Medicare + Choice program wherein the private insurers promised that they could provide higher quality at lower costs. It turns out they couldn’t, so the Choice program was terminated and profitable private Medicare Advantage replaced it. We know what happened there. The insurers were very successful in marketing their plans to the healthy while high cost patients were left in the traditional Medicare program. In response, the government then introduced risk adjustment to compensate for the overpayment to the private plans. The plans then expanded the diagnoses codes making their relatively healthy patients seem to be sicker than they were in order to quality for upward adjustments in the payment rates. Thus they are still being overpaid though there is disagreement as to how much. At any rate, the insurance industry is so powerful that you know there is no way that they would be compensated at rates 5% below traditional Medicare payments.

But what about the general principle of using multiple competing private plans as opposed to one single universal risk pool in a single payer Medicare for All program? One of the most important advantages of single payer is that administrative costs are dramatically reduced. Close to half a trillion dollars per year could be recovered by switching our fragmented system to single payer. Splitting up the risk pool amongst a slew of private insurers greatly increases the administrative complexity.

So what about those countries in Europe that they tell us use private plans successfully for their health care financing systems? In a Quote of the Day analysis of a 2011 OECD/WHO report on the Swiss health system, I commented: “It is not clear why so many in the U.S. are enamored of the Swiss health insurance system when this OECD/WHO report confirms that it is highly inefficient and fragmented, with profound administrative waste, inequitably funded, with regressive financing and with wide variations in premiums, has the highest out-of-pocket costs, has an increasing prevalence of managed care intrusions, and is controlled by a private insurance industry that has learned how to game risk selection at significant cost to those on the losing end.” (https://pnhp.org…)

So Kamala Harris might have repaired her debate sound bite on the private insurance option for Medicare for All, but she, and almost everyone else, are sure screwing up the message on single payer policies. Their policy modifications would have tragic results if eventually enacted and implemented, compared to a well designed single payer Medicare for All. (https://pnhp.org…)

As the title of a recent Quote of the Day states, “Do not sacrifice policy for the sake of political expediency.” (https://pnhp.org…)

PNHP does not support any politician or political campaign. This message is intended to reflect only on the wisdom, or rather lack thereof, of offering private insurance plans as an option in a single payer Medicare for All program.

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