Senate Dems Compromise- public plan is out

Insuring Resources Commentary

The Senate Dems reached a compromise today (the details of which I predicted three months ago on this blog). I said back then that the final bill would not have a gov't run public plan but instead would use private plans heavily regulated by the Feds much like Medicare Advantage.

In addition the Senate Bill now includes a Medicare buy-in program for persons age 55 and up to buy in to Medicare early. This particularly helps early retirees.

The bill also requires insurance companies to spend at least 90 percent of their premium income providing benefits. By the way, according to the Wisconsin Association of Health Plans (WAHP) their 16 member health plans pay out 91% of premium in benefits. I've long touted those companies (Dean, GHC, Gunderson and others) as models on which to build the foundation of health care reform. Perhaps this is the stick that incents plans to base reimbursement on quality outcomes and efficiency.

From WAHP's website: "In 2007, the Association-member health plans participating in the commercial health insurance market in Wisconsin paid out approximately 91 cents in health care services for every $1 of insurance premium taken in. They spent less than 10 cents on administration, and profits remained among the lowest in health care: less than 2 cents for every $1 in premium."
http://www.wihealthplans.org/inner.iml?mdl=about_us.mdl


So what does Sen. Feingold think about this compromise (copied from below). "I do not support proposals that would replace the public option in the bill with a purely private approach. We need to have some competition for the insurance industry to keep rates down and save taxpayer dollars," Feingold said.

Competition may reduce premiums 1-2% while waste reduction, payment reform and quality incentives could have ten times the impact.


Time for my FIFTH phone call to his office staff.


---------------------------------------------

Dems reach deal to drop gov't-run plan
Dec. 8, 2009

After days of secret talks, Senate Democrats tentatively agreed Tuesday night to drop a full-blown government-run insurance option from sweeping health care legislation, several officials said, a concession to party moderates whose votes are critical to passage of President Barack Obama's top domestic priority.

In its place, officials said Democrats had tentatively settled on a private insurance arrangement to be supervised by the federal agency that oversees the system through which lawmakers purchase coverage, with the possibility of greater government involvement if needed to ensure consumers of sufficient choices in coverage.

Additionally, the emerging agreement calls for Medicare to be opened to uninsured Americans beginning at age 55, a significant expansion of the large government health care program that currently serves the 65-and-over population.

At a hastily called evening news conference in the Capitol, Majority Leader Harry Reid, D-Nev., declined to provide details of what he described as a "broad agreement" between liberals and moderates on an issue that has plagued Democrats' efforts to pass health care legislation from the outset.

With it, he added with a smile, the end is in sight for passage of the legislation that Congress has labored over for months.

The officials who described the details of the closed-door negotiations did so on condition of anonymity, saying they were not authorized to discuss them publicly. Several officials stressed that so far, Democrats had technically agreed only on submitting proposals to the Congressional Budget Office for their impact on the bill's cost and other analysis.

At its core, the legislation would expand health care to millions who lack it, ban insurance companies from denying coverage on the basis of pre-existing medical conditions and rein in the rise of health care spending nationally.

The developments followed a vote on the Senate floor earlier in the day in which abortion opponents failed to inject tougher restrictions into sweeping health care bill, and Democratic leaders labored to make sure fallout from the issue didn't hamper the drive to enact legislation. The vote was 54-45.

Taken together, the day's developments underscored the complexity that confronts the administration and Reid as they seek the 60 votes needed to overcome Republican opposition and pass a bill by Christmas. Despite their reluctance, some senators had talked openly and in detail earlier in the day about the progress of the negotiations.

The provision in the legislation to be dropped under the emerging agreement provides for a government-run insurance option to be available to consumers, with individual states permitted to drop out. Liberals have long sought such as arrangement, as a means of forcing competition on insurance companies.

One participant in the talks, Sen. Tom Harkin, D-Iowa, referring to a deal among the negotiators, told reporters he didn't like it, but added, "I'm going to support it to the hilt" in hopes of securing passage of the health care bill.

Another senator involved, Sen. Russ Feingold, D-Wis., issued a statement saying, "I do not support proposals that would replace the public option in the bill with a purely private approach. We need to have some competition for the insurance industry to keep rates down and save taxpayer dollars." But he did not rule out voting for the measure.

The White House quickly applauded the developments. "Senators are making great progress and we're pleased that they're working together to find common ground toward options that increase choice and competition," said a spokesman, Reid Cherlin.

In his comments to reporters, Reid said the emerging compromise "includes a public option and will help ensure the American people win in two ways: one, insurance companies will face more competition, and two, the American people will have more choices."

It wasn't clear what he meant by a "public option," the Medicare expansion or a fallback in case private insurance companies declined to participate in the nationwide plan envisioned to be overseen by the Office of Personnel Management. One possibility was for the agency to set up a government-run plan, either national in scope or on a state-by-state basis.

Under the tentative agreement, liberals lost their bid to expand Medicaid, the federal-state program that provides health care for the poor, elderly and disabled. But they prevailed on the Medicare expansion, and the negotiators appeared ready to maintain a separate health care program for children until 2013, two years longer than the bill currently calls for, according to officials familiar with the details.

Additionally, there was consensus support for a requirement long backed by Sen. Jay Rockefeller, D-W.Va., and other liberals for insurance companies to spend at least 90 percent of their premium income providing benefits, a step that supporters argue effectively limits their spending on advertising, salaries, promotional efforts and profits.