The (short-run) Obama health care plan?

by on February 22, 2009 at 8:07 am in Medicine | Permalink

Don't take this as definitive, but it's more than I've seen elsewhere:

Obama's budget request would create "running room for health reform,"
the official said, by reducing spending on some health programs so the
administration would have money to devote to initiatives to expand
coverage. The biggest target is bonus payments to insurance companies
that run managed-care programs under Medicare, known as Medicare
Advantage.

The Bush-era program has attracted nearly a quarter of Medicare
beneficiaries to private health insurance plans that cover a package of
services such as doctor visits, prescription drugs and eyeglasses. But
the government pays the plans 13 to 17 percent more than it pays for
traditional fee-for-service coverage, according to the Medicare Payment
Advisory Commission, which advises Congress on Medicare financing
issues.

Officials also are debating whether to permit people as young as 55
to purchase coverage through Medicare. That age group is particularly
vulnerable in today's weakened economy, as many have lost jobs or seen
insurance premiums rise rapidly. The cost would depend on whether
recipients received a discount or were required to pay the full price.

There's also a good deal of information about Obama's proposed budget in that article.  On health care, here is Alex's earlier post on Medicare Advantage.  Medicare at age 55 is an idea I don't hear much about; is the goal to lower the standard by ten years, every now and then, to move toward a single payer system?  I would think that the 55 and overs would have an incentive, and the power, to block the extension of Medicare to everyone else and thus free-ride on a medical infrastructure financed by others.  The Medicare extension also has to cost real money.  If you believe in adverse selection, offering Medicare at any given premium will attract only the worst risks at that premium level.  So what's the break-even point?  Overall the real gains from spending more money are in public health programs for the relatively young.

Anonymous February 22, 2009 at 8:27 am

The starting point for a good health insurannce system: prohibit health insurance with a deductable of less than, say, $2500 per year. And then give everyone a tax credit of the same amount per year. When you figure out who would be opposed to this idea, you’ll see it a good one.

Angela February 22, 2009 at 10:00 am

Medicare Advantage programs are a big scam. I can’t believe George W. Bush thinks that program is a highlight of his career. It also is the greatest expanse of social spending ever- I can’t believe he thinks he is fiscally conservative. If given the choice, people should choose Medicare over private insurance and definitely over Medicare Advantage programs. Everyone is concerned about Canadian-style rationing but socialized Medicare is as good as it gets here in America. Believe me, private insurance rations much more than Medicare. It is the best choice available. Sure it needs reforming, is wasteful and expensive but the administrative costs are lower and you know the rules. Insurance companies don’t let you know what you are or aren’t. They ration worse than Medicare, and they are only covering older sicker patients at a very steep price.

gorobei February 22, 2009 at 12:20 pm

Hmm, adverse selection if we offer medicare to the 55yro crowd. Well, duh! Easy to solve, though: give it to them all. And why stop at 55? How about at birth? Adverse selection problem solved.

Lord February 22, 2009 at 3:51 pm

Only the worst risks? I think not. There are many reasons someone may choose it besides that. Minimal cost and possible subsidies. Dissatisfaction with other insurers would also be common. Anxiety over loss of future coverage. Concern over insurers financial stability. The competition alone would likely improve other plans.

otto February 22, 2009 at 4:28 pm

I’m in a advantage plan. It’s a good deal for me in many respects but it’s a scam on the govt because it’s costing the Treasury about 13% more than providing me with the regular Medicare program. Therefore, I expect it disappear soon when I expect the insurance company to hit me with a bunch of charges so they keep making money out of it. At which point I and everyone else in advantage schemes will return to regular Medicare. For some reason this rip off doesn’t seem to bother hard line Republicans who are subsidizing my healthcare. Thanks guys. Republicans are forever screaming about the cost of healthcare but whenever anyone starts to try deal with the problem with solutions like comparative studies of treatments, universal computerization of records under a common standard, or getting rid of rip off programs like advantage, they scream blue murder. In reality they want to retain the grotesquely inefficient system that is costing the country twice as much as any other because it hugely profitable for certain players and provides loads of cover to muddy the waters and promote urban myths. The problem the Republicans have with their healthcare plans is that basically none of them work in terms of reducing cost, or increasing access for the nearly 50 million without insurance because of cost or “pre-existing conditions.” They know this, that’s why McCain couldn’t explain his during the election because it had more holes than swiss cheese and once it got under the klieg lights it showed. The GOP is not going to win this argument. 75% of the country believes they either don’t have or don’t want to bring about a solution. I’ve been reading pieces from places like Heritage or these mass of secret front groups for drug and insurance companies for years and their actual plans like McCains don’t make any sense so they are usually larded with scare stories of people dying in the streets of Canada, England, France and Germany. None of which I’ve personally observed while living in these countries and experiencing their systems which while not perfect worked fine overall.

irmaly February 22, 2009 at 7:39 pm

I turn 55 years old in a few days, I am healthy (as far as I know), and I would be the first in line to buy into Medicare. My husband retired with employer health care. I am tagged onto that health care plan, and the costs for me to do so are astronomical and getting worse. While my husband will start Medicare this year, I am still stuck with his employer-based plan. I have worked hard to look for ways to get off that plan, but it is really hard to do so. I won’t go in to all the details on that, but suffice it to say that once you’re on a plan, it is hard as hell to move over to something else, especially at my age. The benefits are being reduced this year on our policy big time this year as the plan is in the hole as a result of more and more people being priced out. Vicious cycle. Plus that, the premium is going through the roof again this year. I am ready and more than willing to get in to Medicare as soon as possible. And, yes, I know about Medicare’s benefits, etc. My father passed away a year ago, and we went through a year of claims on his behalf. I don’t know what our family would have done without Medicare.

I would like to suggest this is a good idea on other levels as well: younger people into the current Medicare system, top age bracket off current private provider policies, and a lowering of costs for patients. Of course, I’m sure there are plenty of politicians out there who will find some way to argue we shouldn’t have this choice. They should walk a day in my shoes.

Andrew February 23, 2009 at 6:52 am

torabora said:

“But since defense spending is job 1, the government must avoid this expense…”

Whoa! Check your priorities! What makes you say that so-called defense spending is job 1? Why should the Pentagon have first claim on the national treasury? What criteria are using to determine which category of public good should have priority? I expect that the US conventional forces nowadays makes a minimal contribution to increasing the live expectancy of the average American, a contribution which is probably too small to measures. I admit that spending money on FBI wiretaps and airport security may lengthen life expectancy, but the Copenhagen Consensus said that the benefits of spending more on anti-terrorism as too small to measure, smaller even than the benefits of taking an extra tonne of CO2 out of the atmosphere. Many Americans, I suspect that the lavish budget of the US military isn’t really delivering a public good.

The US govt should focus on addressing measurable risks with calculable (e.g., fat children) rather than those that are rare and impossible to calculate. I’m not saying that Obama’s plan will make Americans healthier, but Torabora, you need to think as an actuary does and present some numbers, hard or soft, to support your little theory.

Wendy February 23, 2009 at 9:58 am

Just so we are all clear, what is being advocated here is the sacrifice of old sick people for the sake of providing younger people “coverage,” which doesn’t even translate into actual medical care for them. It is sometimes helpful to keep track of your victims when you are do-gooding on their behalf.

Gene-Fairfax, Va February 23, 2009 at 10:53 am

Here’s the problem. Most seniors love Medicare because it pays for almost everything with few restrictions including prescriptions. But it is bleeding to death due to payment of up to 30% of claims that are fraudulent. That more than makes up the difference in administrative costs.

A system that effectively eliminates fraud, holds down administrative costs, bargains hard for reduced prices from doctors and pharmaceutical companies and restricts doctors from “overdoing” medical procedures is the target. Eliminating the profit margin of insurance companies would also leave a few dollars on the table for expanded coverage. Who is going to create this?

Unfortunately, Congress has proven that it is incapable of standing up to lobyists and Obama thinks that throwing money at IT will create an efficient system. And nobody is talking about the fact that the US is losing the most cost-effective part of its healthcare delivery system- primary care. Only 2% of this years graduating class intends to enter primary care and most countries shoot for a 50% primary care work force.

So, the debate is not whether we should provide healthcare to more people at an affordable cost. It is really about how we get our leaders to leave politics and lobbyists out of the process and create a system that works. And also, to restrict care, otherwise known as rationing, to those things that give us the most bang for the healthcare dollar. Of course that means that many folks who have generous insurance will complain and threaten the process by applying pressure to their representatives in Congress.

How do you feel about all this?

jjv540i February 23, 2009 at 7:07 pm

I think offering Medicare to 55 – 65 year old people is one of the best health care reform ideas I’ve heard so far. Many of the people I know in that age range are eligible to retire at 55 as far as pension plans go. But they don’t retire because they don’t want to lose their company health care. Instead they wait untill they are over 65 so they can be eligible to enroll in Medicare at a reasonable cost. Opening up Medicare to the 55 to 65 year old age group would open up Jobs to the younger people due to the fact older workers who are staying employed only for the health benefits would retire younger. People retiring younger would leave more openings for the 21 – 45 yr. old workers who need the jobs to raise families. It’s a win situation in my opinion….helps both young and old!

DoctorRobot February 25, 2009 at 9:05 pm

Ok folks, I am an actual doctor here and I will let you in on a little secret: you might think that Obama can cover everyone with some wonderful government-run health plan that offers to pay for everything under the sun including doctor visit, prescriptions, etc., but what you don’t know is that if this plan goes into effect you will be unable to find a doctor to take care of you!

Obama wants to pay for this expanded coverage by, among other things, cutting reimbursement to doctors like me. Well guess what? Most doctors’ practices are about to go under water because of the poor medicare reimbursement. Staff costs money, equipment costs money, vaccines cost money, etc. As a result, every year, more and more doctors stop seeing medicare patients altogether. If reimbursement is cut any more, you will see a mass exodus of doctors from participating in medicare (we’re talking about doctors who actually stay in practice and don’t retire early altogether). Doctors will go to cash for service practices which means I will be charging you CASH to see me. Need to see a specialist? Get ready to plunk down your credit card instead of your insurance card. The only docs who will be left accepting medicare will be bottom of the barrel ones who you know you don’t want to see.

You might think this is greedy, but it is not. Medicine is unfortunately a business. I need to be paid so I can pay my nurses and staff. I need to earn a good living too for all the sacrifice I’ve made and continue to make to be available to take good care of my patients. Just curious: how many of you would get up and go to work each morning if the cost of traveling to work cost more than the salary you earned that day? Didn’t think so.

Frank D April 14, 2009 at 7:51 pm

Actually, if you look at a chart of the US Federal budget expenditures, defense dwarfs everything else.

Its really striking.

If money talks, money is saying that defense of US interests is priority #1. The last time I saw this graphed out was in 2005, but I think its still safe to say that the US probably spends more on its DOD-related budget than the entire rest of the world does on ITS defense.

JasonLee December 9, 2009 at 3:45 pm

I HOPE WE CAN MAKE MEDICARE FLY FOR PEOPLE WHO HAVE REACHED 55 EMPLOYERS JUST DON’T WANT TO PAY HEALTH INSURANCE FOR US !
AND WERE DYING! WITH THESE HIGH HEALTH CARE RATES!! JUST NOT FARE!!

MR. PRESIDENT PLEASE MAKE THIS ONE COME ALIVE!!

Jared Strom May 3, 2010 at 9:43 pm

I’m also a physician and I agree with DoctorRobot. What the general public fails to realize is that physicians have spend their entire adulthood years (15+ years) studying/training to be a physician. Residency can take 5-7yrs after medical school. Residency salaries are 30K/yr at best with very limited benefts. Some programs don’t even offer medical insurance plans or retirment savings plans. Physicians in training spend long days studying in college, medical schoool, and residency that usually equate to 70 hrs+ week of hard work. They never see their families, and many don’t have the time to maintain relationships. They have pretty much sacrified their entire lives to provide the best medical services to people. Now with that said, I know it would have been much easier to sit on the couch and study sociology, business, french, biology, or go into an easy career like teaching. No other profession requires one to train for so long and requires the physician to uphold full liability for his decisions regarding patient care. Also, physicians have at least 300K+ interest in debt that they are required to payback. Most physicians struggle to save for retirement with enormous debts. On top of this they can be sued for everything they owned at any time. That’s insane!

The public needs to realize that if phyiscian livehoods are compromised through medical reforms which prevent them form running a successful practice, then they may not have the resources to provide the standard of care to all patients, put food on the table, and pay off their medical schools loans. By providing care to ALL patients, they will go into more debpt and bankrupcy will follow. Reminder to all that SMART PEOPLE WILL NOT WANT TO SCARFICE THEIR ENTIRE LIVES TO HELP PEOPLE, HAVE 400k+INTEREST IN MEDICAL SCHOOL LOANS, AND THEN STRUGGLE THE REST OF THE LIVES ON A TEACHER’S SALARY, GO BANKRUP..ETC…. MOST PHYSIANCES WILL EXIT THE FIELD OR PUT A GUN TO THEIR HEADS.

OBAMA SHOULD REALLY THINK ABOUT CUTTING THE SALARIES OF INSURANCE COMPANIES, CAPPING PROFITS OF INSURANCE COMPANIES…AND REEVALUATION WHAT IS GOING ON IN THE BUSINESS SECTOR WHERE BANKERS ARE MAKING SALARIES IN EXCESS OF GDPs OF SMALL COUNTRIES. WHY ISN’T THE FEDERAL GOVNMT TAXING THESE PROFITS AND PUTTING THEM INTO THE HEALTHCARE SYSTEM…

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