• The Rep. Ryan plan morph

    Earlier this month I speculated that Gail Wilensky might be favorable to competitive bidding among plans participating in Medicare. My reading of  her piece in the New England Journal of Medicine is that she is. In it, she describes how to morph Rep. Ryan’s plan into a competitive bidding system that includes traditional, fee-for-service Medicare. Here’s the key passage:

    [T]he subsidy must be sufficient for purchasing at least one available health plan in each geographic area at whatever percentage of premium coverage is assumed to be appropriate at the outset. Although an important policy decision must be made regarding subsidy levels, let us assume that the subsidy would be expected to cover 75% of the cost of a premium for coverage of the benefits currently available to seniors. […] Thus, at least one plan would have to be available in each geographic area for which the Medicare subsidy would cover 75% of the premium. […]

    [C]onsideration should be given to making traditional Medicare available on a premium basis, so that the subsidy could be used to buy it as well as private plans. Since traditional Medicare will be available anyway as long as Americans who are currently 55 years old are alive, continuing Medicare as a choice, as a defined-contribution plan, might be a politically important compromise.

    More on competitive bidding in many posts.


    • Two points. First, the amount of the subsidy matters a lt. The CBO projects that by 2030, the Ryan plan will pay about 33% of the costs of a premium. That is much different than what Wilensky proposes.

      Second, her last paragraph makes no sense to me. If we assume, arguendo, that both the CA using the IPAB and Rayn’s plan through private insurance could reduce costs, why should as I as a physician care that much about how we achieve that end? If the IPAB or private insurance cuts my fees by 20%, I still end up with the same income.

      The differences I can think of that would matter to me, would be my own expenses and how cuts are made. With Ryan’s private insurance plan, I also bear significant administrative expenses. It costs me more to bill private insurers than it does Medicare. If cuts are made based upon scientific literature showing that some treatments are not effective, those end up being acceptable to most docs. If the cuts are made by insurers based upon marketing surveys, influenced by advertising, I amy be less supportive.


    • Obviously lots of folks here understand the policy issues involved in this issue better than I do (especially Austin). Acknowledging this, I can’t imagine offering Medicare buy-in for purely political reasons. The optics of higher-income Americans purchasing a service that was once available to all would be unimaginable. If something like the Ryan plan comes to pass, Medicare simply has to be off the table for the next cohort.

      I also wonder if the transition to vouchers might also radically improve the prospects for the public option. Over the 10 year window leading to the end of Medicare (sorry Politifact) many soon-to-be retirees would likely be anxious about the new program. The option to purchase something that sounds a bit like Medicare will be very appealing to many. As seniors were the age group most likely to oppose the public option last year, even moderate support from that group would mark a major change in the debate.