The news that Senate Democrats may have reached a tentative deal on a substitute for the public option has lead to another round of rhetoric about what will happen to poor old Grandma.
The proposal reportedly includes a new national network of private health insurers administered by the federal government and a Medicare buy-in for people 55 to 65 who don't have employer coverage. Details about the proposal are few, and key Senators are reserving judgment until the Congressional Budget Office comes back with a new estimate of its impact on the budget.
Still, the lack of details hasn't stopped people from staking out a strong position against the proposal, and especially against the Medicare buy-in. As reported in The Hill blog, Senator Chuck Grassley (R-IO), the ranking Republican on the Senate Finance Committee, opposes the Medicare buy-in because "The last thing you want to think about when the Titanic is sinking [is to] put grandma and more of your family on the boat." (Medicare is taking on the role of the Titanic, I presume.) Last week, Senate critics repeatedly made a similar argument that Grandma would suffer as a result of proposed Medicare cuts in the bill. (Given the average age of U.S. Senators, I would think that their own grandmas would be well over 100 years old, but that is another matter.)
The ACP has not yet taken a position on the public option compromise and the Medicare buy-in, because we would like to see the details before deciding. It is a complicated issue, and accordingly, deserves a thorough understanding of what is being proposed. But I would suggest that there is fundamental illogic to a key argument being made by critics. The argument goes like this:
Medicare is going broke. Therefore, cutting Medicare is wrong because it takes money from a program already facing bankruptcy. Therefore, adding people 55-65 to the program will further accelerate Medicare's demise.
The first statement is true - Medicare Part A is estimated to run out of money by 2012.
The second statement makes no sense. The Medicare cuts (which for the most come from reductions in the rate of payment increases to non-physician providers) in the Senate bill will mean that almost a half a trillion fewer dollars will flow out of the program over the next decade, delaying by years the date when the trust fund will run out of money. As any family knows, if you currently are spending more than you are taking in, and then you start to spend less, your money lasts longer.
The third statement might be true, but then again, it might not. Allowing some people 55 to 65 to buy into Medicare, out of their own premium dollars, would have no impact on the solvency of the rest of the program, if the premiums collected are high enough to cover the costs for this age group and the funds are segregated from the rest of Medicare. If people aged 55 to 65 have lower annual health care costs than those 65 and older, and if their contributions are intermingled with the rest of Medicare, they could actually help the solvency of the rest of Medicare, since it would spread risk more broadly among a healthier beneficiary population. If the Medicare buy-in attracts a sicker group of 55 to 65 year olds and the premiums collected from them are too low, it could hurt the solvency of the rest of the program by drawing funds out of the other trust funds to make up the shortfall.
Beyond the issue of whether the buy-in will help or hurt Medicare's solvency, there is a real concern about the impact on physicians and hospitals of having more patients paid under the discounted Medicare rates. Even here, though, much would depend on whether the buy-in would be open only to people 55-65 who don't have health insurance coverage through an employer or retiree plan, or to all people 55 and older. If the former, the number of people added to Medicare would be relatively modest, and doctors and hospitals would at least be sure of getting Medicare rates for care that they may now be providing on an uncompensated and charitable basis. If the latter, it likely would have a big adverse impact on the bottom line.
I am not suggesting that the current Medicare buy-in proposal is one that the ACP should support, but it deserves a serious analysis - not a knee-jerk response - once we know the actual details. I do know that the argument that taking money out of Medicare will accelerate its insolvency, as the Senate and House bills would do to help pay for health reform, makes no sense, since it will do the opposite and extend the life of the trust fund. It remains to be seen if allowing some people 55-65 to buy Medicare coverage will help or hurt Medicare's fiscal outlook, and what it will do to the "bottom-line" for physicians and hospitals.
Today's questions: What effect do you think the Medicare cuts in the health reform bills will have on Grandma? What about a Medicare buy-in for people 55 to 65?