The Medicare Buy-In as a Sneaky Back-Door Route To...
I'm following the debate about the Senate Democrats' deal to ditch the public option in exchange for a Medicare buy-in. And it occurs to me that the blogs are treating it something like an ancient Roman omen. In the shadowy contours of the buy-in, everybody sees an irrefutable sign that the thing they wanted or feared would happen is going to happen, but now even more certainly! What's remarkable here is the diversity of predictions about where the Medicare buy-in will lead: Financial ruin? Lower premiums? Single-pay for all? Means-tested Medicare? It's all there.
What do the health care prophets see? They foretell...
The Wall Street Journal projects higher prices for all consumers of medical care, arguing that hospitals, faced with lower reimbursement rates, would rather raise premiums for everybody else than eat losses.
Since the 55-64 year buy-in crowd can choose Medicare over more expensive private insurance plans on the exchange, Ezra Klein thinks this will encourage private insurers to lower their premiums to compete with the government.
Means Tested Medicare
Mickey Kaus, in a long syllogism, argues that the buy-in crowd will eventually demand similar premiums as the 65+ crowd, which will squeeze funds and force Congress to make Medicare "means-tested," where greater coverage is reserved only for poorer folks.
As the exchanges grow over time while employer-based health insurance unravels, they will turn into a social safety net for families, predicts Matt Yglesias. As (I think) he suggests, as more people choose to enter "exchangeland," the government might be forced to put Medicare on the exchange for more and more people.
The Washington Post thinks that expanding Medicare is going to encourage the next tranche of Americans -- say, 45-54 -- to be added to the next round of Medicare buy-ins. In other words, it's far more likely that this plan will lead to single-payer than the watered down public option.
The Mayo Clinic is harsh in its condemnation, arguing that expanding Medicare before reforming the way it rewards quality care would drown providers in red. "Mayo Clinic alone lost $840 million last year under Medicare," they claim.
Truly, I'm torn on the buy-in. On the one hand I agree that the WSJ and Mayo Clinic are right that squeezing hospitals with reimbursement rates for the 55+ crowd could force them to shift the costs onto other patients, like squeezing one part of a balloon makes the other side bulge. And I share Megan's concerns about adverse selection and its impact on Medicare's truly terrifying long-term deficit, which is the foot on the engine of our long-term debt crisis.
On the other hand, I sympathize strongly with the impulse to put our health care system in a corset. Mayo is right that we need innovations and a shift-away from fee-for-service. But we're not going to get that in a world where a screwy market where hospitals have every incentive to use more of our most expensive medical stuff. When a dude who wears only Muumuus visits an all-you-can-eat buffet, he's got every reason to gorge because nobody will see the effects. Same with our health care system, where employees don't see their true health costs and hospitals are paid best for the most expensive services rather than the best ones, and we've all got every reason to gorge. We're living in a Muumuu world, and I wonder if the Medicare buy-in plan isn't the corset we need.