Some Basic Info on CBO Scoring of Healthcare Bills
Via ThinkProgress, both the Baucus Bill and the plan put forward by Pelosi will enroll some more people but most will not be in the Public Option and it will not cover everyone:
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CBO: Public Option To Attract Only 6 Million Enrollees & Doesn't Offer Lower Premiums
The public option would attract about 6 million enrollees by 2019 and charge premiums that are "somewhat higher than the average premiums for the private plans in the exchanges." This is because the public option would "engage in less management of utilization" by its enrollees and "attract a less healthy pool of enrollees," the office concludes. Moreover, since the House bill expands Medicaid up to 150% of the federal poverty line, it's possible that the enrollees that would have enrolled in the public option went into Medicaid instead.
Below is a comparison of the relevant provisions in the House and Senate Finance Committee legislation:
| CBO Score Of House Bill | CBO Score Of Baucus Bill | |
| Costs | Reduce deficits: $104B/10yrs Cost: $894B/10yrs Spends on subsidies: $605B/10yrs On Medicaid/CHIP: $425B/10yrs On Small Employer Credit: $25B/10yrs |
Reduce deficits: $81B/10yrs Cost: $829B/10yrs Spends on subsidies: $461B/10yrs On Medicaid/CHIP: $345B/10yrs On Small Employer Credit: $23B/10yrs |
| Insured | Uninsured reduced by: 36M Uninsured in 2019: 18M In Exchanges: 30M | Public Plan: 6M In Medicaid: 15M |
Uninsured reduced by: 29M Uninsured in 2019: 25M In Exchanges: 23M In Medicaid: 14M |
| Revenue | Mandate penalty: $33B/10yrs Pay-Play penalty: $135B/10yrs New taxes: $572B/10yrs |
Mandate penalty: $4B/10yrs Free rider penalty: $23B/10yrs New taxes: $196B/10yrs |
| Medicare and Medicaid |
Total savings: 426B/10yrs Medicare Advantage: $170B/10yrs |
Total savings: 404B/10yrs Medicare Advantage: $117B/10yrs |
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With a Single Payer solution it would be everybody in and nobody out - AND it would save a heck of a lot more money for everyone.
The difference is not just everyone being covered but HUNDREDS of BILLIONS of DOLLARS saved every year:
The reason we spend more and get less than the rest of the world is because we have a patchwork system of for-profit payers. Private insurers necessarily waste health dollars on things that have nothing to do with care: overhead, underwriting, billing, sales and marketing departments as well as huge profits and exorbitant executive pay. Doctors and hospitals must maintain costly administrative staffs to deal with the bureaucracy. Combined, this needless administration consumes one-third (31 percent) of Americans' health dollars.
Single-payer financing is the only way to recapture this wasted money. The potential savings on paperwork, more than $350 billion per year, are enough to provide comprehensive coverage to everyone without paying any more than we already do.
Under a single-payer system, all Americans would be covered for all medically necessary services, including: doctor, hospital, preventive, long-term care, mental health, reproductive health care, dental, vision, prescription drug and medical supply costs. Patients would regain free choice of doctor and hospital, and doctors would regain autonomy over patient care.
There are too many reasons why so many Doctors and Nurses support single payer. Some frequently asked questions concerning Single Payer:
- How much could the states save on administrative waste by adopting a statewide single-payer program?
[update] Susie Madrak at C&L suggests you do the math:
Go ahead and figure it out for yourselves. Is this making healthcare more affordable for you?The bill provides financial assistance on a sliding scale. Premiums range from 1.5 percent of income to 12% for those at 400% of the Federal Poverty Level. The plan provides additional assistance for households up to 400% of the FPL by limiting cost-sharing to 3% of plan costs at the lowest tier, to 30% of plan costs at 350-400% of the FPL.
For instance: If your income is under 133-150% of the poverty level, your premiums will be limited to a range of 1.5 to 3%. That means you'll pay 3% of plan costs, with an annual out-of-pocket cap of $500 for individuals and $1000 for families.
And so on:
150-200% - 3-5.5% - 7% - $1000/$2000
200-250% - 5.5-8% - 15% - $2000/$4000
250-300% - 8-10% - 22% - $4000/$8000
300-350% - 10-11% - 28% - $4500/$9000
350-400% - 11-12% - 30% - $5000/$10,000The Federal Poverty Level is:
Persons in family
1 $10,830
2 14,570
3 18,310
4 22,050
5 25,790
6 29,530
7 33,270
8 37,010For families with more than 8 persons, add $3,740 for each additional person.
So although I've been on unemployment for the past year, I would be expected to pay approximately $4000 a year. Huh? Your individual mileage may vary, but those figures aren't very reassuring to me.
Do the math, and let me know if you think this is affordable.
The CBO analysis of the House bill is deceptive. Despite its estimate regarding "average" premiums, it is almost certain that susbcribers to a public plan will pay less than they would for the same private plan, and so the public option will be an overall cost saver. See
http://tpmcafe.talkingpointsmemo.com/talk/blogs/tonnyb/2009/10/cbo-public-option-premiums-hig.php?ref=reccafe#_login
October 30, 2009 5:09 PM | Reply | Permalink
There is no getting around the fact that it will not cover everyone. None of the bills proposed are "Universal Healthcare". And we will still be paying too much for too little.
October 30, 2009 7:16 PM | Reply | Permalink
Their conclusion seems pretty reasonable. But the "public option" always was a lie--the HCAN leadership and the Herndon Alliance have been pushing this to avoid having to fight for real reform.
October 30, 2009 8:37 PM | Reply | Permalink
The public option as originally proposed by Jacob Hacker was not a bad road to take. It was a reasonable compromise, IMHO.
But none of the bills currently in the House and the Senate even remotely resembles the original Public Option that they campaigned on.
And if none of them are good enough to solve the problems then even if they go the reconciliation route to get around the idiot Senators there still won't be much worth considering at the end of it.
October 30, 2009 9:07 PM | Reply | Permalink
It wasn't a bad compromise, no. The problem is, as the leaders of HCAN knew from the start, nobody was ever going to implement anything like it. Even with Medicare rates the "public plan" was supposed to insure only 10 million. Richard Kirsch was ever so happy to load everyone on this bandwagon.
October 30, 2009 9:17 PM | Reply | Permalink
This "healthcare debate" was never about lowering costs. It's Kabuki theater played out in the halls of congress. Something will change, but not what anybody expects or wants, unless you're a CEO of an insurance company or medical testing laboratory.
October 31, 2009 12:45 AM | Reply | Permalink
Once the House decided to negotiate with providers instead of imposing Medicare reimbursements on them, the cost savings from a public option declined, They were never dramatic, even before, and they are even less so now, but neither are they completely trivial.
Although the headlines have trumpeted a CBO estimate that a "typical" public option premium would be slightly higher than "average" private plan premiums, this message obscures the point that for any given set of medical services, a public plan will still cost less, or conversely, at the same cost as a private plan, it will provide more services. The CBO explanation, along with the laws of arithmetic, make this clear. According to the same CBO analysis, public plans will pay providers at the same rates as private plans but experience lower administrative costs. Their expenses will be additionally reduced by their non-profit status. For this to hold, they must inevitably charge less for a given set of services (otherwise, with lower costs, they would end up with a profit).
The CBO seems to be estimating (based on sophisticated models) that the greater appeal of public plans will bring in a greater proportion of subscribers with health problems. This would entail more services provided and higher costs - but higher only because of the greater value provided. This is the basis for the headlines about higher premiums. Even so, if the costs were so much higher as to match private insurer costs, the public plan would lose its extra appeal, and so in a sense, the higher "typical" premium reflects the greater value per dollar paid in.
One could argue that getting much better health for slightly more money is not a "cost saving", but that is a matter of philosophy. In dollar terms, if the alternative, in an exclusively private market, were to get much better health for much more money, then the difference between public and private scenarios does add up to a cost saving.
October 31, 2009 11:53 AM | Reply | Permalink
I think my point is that if the "reform" was about reducing healthcare costs, we would be initiating different and much more sweeping changes than what we're seeing.
October 31, 2009 2:00 PM | Reply | Permalink
Universal Health Care isn't universal either, not if people don't utilize it.
A certain part of that 12 million legal non-elderly remaining uninsured will be people who are medicaid eligible but simply refuse to jump through the hoops to enroll and what are known as the 'invincibles', people who decide they don't need health insurance or that it should take a back seat to their alcohol, drug, music clubbing, or ski habits/addictions. Some of these people would not utilize a NHS style care system even if it was available, ya think every person in Europe sees their doctor for routine preventive care on a regular basis?
I want single-payer but the idea that it is a magical silver bullet that means everyone gets exactly the right amount of medical care when they need it is somewhat a fantasy. Someone always falls through the holes of any safety net.
October 31, 2009 11:47 AM | Reply | Permalink
CBO's projection that only 6 million people will enroll in the PO by 2019 is both based on a misconception and has given rise to others.
CBO's analysis is influenced by their methodology which implicitly assumes that everyone will play fair and by the rules and so that insurance companies will adjust their business practices to maintain market share by competing among other things on price against the PO. Based on history this seems to me unlikely and ignores history of such things as the HMO debacle. Rather than try to implement managed care everywhere the companies simply walked away from those markets, mainly rural, where they couldn't maintain enough economies of scale to hit their share targets.
Plus there seems to be a fundamental confusion between PO enrollment and PO eligibility with people taking CBO's low numbers for the former as being proof that there are barriers to the latter. And there really are not. The Exchange and so the Public Option will be available to everyone not otherwise covered with public insurance (Medicare, Medicaid, VA, Tri-Care) by Jan 1, 2015 except and unless the Health Care Commissioner decides to meter the entry of 'larger' employers into it. The idea that 200 million people are locked out is just due to a mis-read of the bill language.
I have a long post on this up this morning at Angry Bear with extensive quotes from the actual legislative language. Comments and criticism more than welcome.
CBO simply assumes that the path of least resistance for most employees will be to not opt-out of employer plans and for most employers to not choose to go through the Exchange or if they do not offer the PO as a choice to their employees. I don't know where this assumption comes from and don't agree with it. What I do know if that no employee is REQUIRED to accept any specific employer plan and can if they choose opt-out in favor of the PO AND get an employer subsidy to do so. This might well leave them somewhat out of pocket and maybe enough to justify CBO's numbers that they will stay in, but mostly the Wyden Bill seems to be a solution in search of a problem that doesn't really exist. People just didn't do a close enough reading of HR3200 and now of its successor HR3962. These bills just do not deserve the scorching they are getting, a lot of it I believe driven by a certain ideology that holds that The Man is ALWAYS going to screw you over. Even where 'The Man' is a woman Speaker plus a guy (Dingell) who spent 50 years trying to get Single Payer through before deciding this was the only way to get close to his goal.
http://angrybear.blogspot.com/2009/10/health-care-exchange-eligibility-vs.html
October 31, 2009 12:07 PM | Reply | Permalink
In the House merged bill, PO eligibility is limited to those acquiring insurance through the Exchange. The Exchange excludes employees currently covered by employer group plans unless the employers are small businesses. A small business can choose the PO for its employees, but can also choose to continue covering them with its current plan outside of the Exchange (ultimately, though, any plan will need to meet basic requirements to qualify, in or out of the Exchange). If the small business continues its current coverage, employees can't choose to use the Exchange instead - that's an employer decision.
After the first two years, the Exchange might be extended to larger employers, but this is left vague, and the degree of large employer inclusion is not specified.
An employee who is not currently covered, or who is covered in the individual market, can, of course, choose to go to the Exchange rather than accept an employer-offered plan, but those already covered can't opt out as long as the current plan remains basically unchanged.
October 31, 2009 2:21 PM | Reply | Permalink
The more I parse the CBO analysis, the more I see it as based on their expectation that a PO would engage in less "management of utilization" than a comparable private plan ostensibly offering the same level of benefits. This means that the PO, like traditional Medicare, would pay for unlimited subscriber choice of providers operating on a fee for service basis, in contrast, say with Medicare Advantage plans, some of which are HMOs.
From a subscriber perspective, the unlimited choice might be seen as an extra value, worth a bit more money, but while it would entail additional choice, it's not clear it would yield commensurate benefits in terms of better health. Since PO plans have not yet been formulated, it might be worthwhile for those looking ahead to consider introducing some degree of managed care into what they offer so as not to encumber themselves with costs they must pass on to subscribers in the form of higher premiums.
October 31, 2009 2:36 PM | Reply | Permalink
Actually, the House bill does seek to utilize more efficient delivery mechanisms under the PO than unrestricted fee for service, including
"payment
3 mechanisms and policies under this section may include
4 patient-centered medical home and other care manage5
ment payments, accountable care organizations, value6
based purchasing, bundling of services, differential pay7
ment rates, performance or utilization based payments,
8 partial capitation, and direct contracting with providers."
October 31, 2009 4:27 PM | Reply | Permalink
I appreciate the comments and the serious discussion provided within.
October 31, 2009 7:40 PM | Reply | Permalink