Today, Senate Finance Committee chairman Max Baucus is meeting with the other members of the committee to discuss options for expanding insurance coverage. The slides they are using to guide their discussion — available here — are illuminating to say the least.
Among other things, they indicate that the committee is considering a requirement that, if an Obama-like plan were to pass, all health-insurance plans would have to conform to one of four benefit designs: lowest, low, medium, and high. That’s it. Four options for everyone in the United States, determined by the federal government.
Of course, the committee is cognizant of President Obama’s promise that Americans who like the insurance they have today will be able to keep it. So they create a carve-out for “grandfathered plans.” Existing insurance can stay just as it is, they say.
Except that’s not really true. Because elsewhere in the document, the committee makes it clear that existing insurance arrangements that do not comply with government requirements cannot enroll new entrants. Nor can any enrollees get the new premium subsidies the committee is contemplating. Consequently, no “grandfathered plan” will be viable, or at least not for long. Understandably, many people would want to leave them to get government’s money, and the pool for spreading insurance risk would become less stable as people exit for a host of reasons (like when they switch jobs or get married) but cannot be replaced with a new entrant.
Regarding “affordability,” the committee is apparently looking at providing new premium subsidies to everyone below 400% of poverty. For a family of four, that’s about $88,000 per year. A very large segment of the working-age population falls below that threshold. If enacted, it would be a massive new health-care entitlement piled on top of the unaffordable ones already on the books.
And then there’s the government-run insurance plan. The committee outline suggests four options: a Medicare-like plan; a plan which looks like Medicare but pays higher rates to doctors and hospitals; a plan that tries to create some distance from the government with “third-party” administration; and a state-based public plan. (The committee also notes that it is possible the legislation would not include a new government-run option at all.)
These alternative design options for the “government option” are really a distraction because it really doesn’t matter what such a plan looks like at enactment. What matters is what it will become over time. Safeguards today can be easily overridden later. When the government micro-manages health insurance, it is inevitable that arbitrary price-setting will become the favored method of trying to control total costs because it creates the illusion that beneficiaries are protected. It’s only the doctors and hospitals who are getting paid less for each service rendered, politicians claim. Of course, that’s the first step down the slippery slope to waiting lists.