Below is a statement from Representative Rick Larsen’s (D-2nd) Chief of Staff Kim Johnston, received via email by The Bellingham Herald:
After reading the section of the bill containing the public option, Rep. Larsen has come to the conclusion that he supports the public option in this bill. This new public option will work for Washington state. In the original bill (H.R. 3200) payment rates in the public option would have been based on Medicare, which would have shortchanged Washington state. But the payment rates in this new public option (H.R. 3962) will be negotiated between doctors and the Secretary of Health and Human Services. This will ensure that doctors and hospitals are paid closer to market rates. Paying doctors fair market rates will ensure that they are able to accept patients covered by the public plan.
Rep. Larsen has also said that he believes any public option must compete under a “level playing field” with the private health insurance market. The public option in this bill will do just that: it will be subject to the same rules that private insurance plans are subject to, and it will not be subsidized by the government.
Representative Larsen previously stated he was likely to support the bill, but wanted to read it before making further comments.
Last week, four Snohomish County representatives, Marko Liias (WA-21st), John McCoy (WA-38th), Mary Helen Roberts (WA-21st) and Mike Sells (WA-34st), wrote a letter of support for a public option in healthcare reform to Unites States Congressman Rick Larsen (2nd).
“We write to express our enthusiastic support for the inclusion of a strong public option in the health care reform bill presently being debated in the House. As state legislators, we would be remiss if we did not voice our opinions on the current debate,” the letter states. “A strong public option is a critical fallback for the many different groups that would be covered under the reform plan.”
They go on to say, “The implementation of a strong public option would create incentives for insurance companies to charge competitive rates and become more efficient. Lower prices and better efficiency would benefit everyone, including those that presently have health insurance. In addition, the competition created by a strong public option would incentivize insurance plans to focus more on primary care and preventative medicine, leading to improved health outcomes and better care.”
The House healthcare bill unveiled this morning does not force a public option plan to use Medicare rates to compensate providers, in what is seen as a big win for moderates, and in my view a big win for Washington state. This from a Yahoo! story:
Liberals generally wanted the government to dictate the rates to be paid to doctors, hospitals and other health care providers, with the fee levels linked to Medicare.
Moderates, fearing the impact on their local hospitals, held out for negotiated rates between the government and private insurers — and won.
As I said in an anticipatory post last night, I think this is a big win for Washington state as it means a public option might actually exist and work in this market. While this would not mean as fundamental a shift in the insurance marketplace here as it would in places like Alabama (where 92% of the insurance market is dominated by one plan), it would still mean a significant shift in the economics of insurance here.
Again, in my view, I think this is a big win for Washington state. Let’s see what happens when it comes to the floor.
I watched this interesting interview on Countdown tonight with Markos Moulitsas. What I almost said aloud as I watched this was “a ‘robust’ public option means no public option for Washington state.” That is just a fact of the market in Washington state that doesn’t exist in the same way in other parts of the United States.
Progressives are all over the idea of not just a public option, but a “robust” public option. That term, “robust,” is actually code – not for a strong or resilient public option – but rather a plan that has rates pegged to Medicare.
I’ve explained this before, but the CEO of the Everett Clinic, a national leader in getting positive outcomes for Medicare patients at a low cost, makes the point just as well. We posted his letter to the Washington delegation earlier. Here’s the crux.
As you know, Medicare pays less in Washington than it pays in other states. Providers in our state are penalized because we deliver care more efficiently…
Under the original Medicare fee-for-service model, we lose $464 per patient each year. This year we are projecting a loss of approximately $11.7 million treating Medicare patients.
Under the current system, the commercial insurers in our state subsidize Medicare payments by up to 40 percent. This subsidy is essential for us continue to care for our Medicare patients. If in addition payments for private pay patients are lowered to the level currently paid for Medicare patients in Washington, the entire healthcare financing system in our state will be permanently damaged.
In Washington state, our Medicare reimbursement rates are so low compared to the rest of the country, providers are cutting Medicare patients off of their patient panels. They are refusing to take Medicare as insurance.
At the same time, commercial rates from plans like Premera and Regence, which pay doctors rates negotiated in the marketplace, are much higher than Medicare. What occurs, therefore, is one of the many cost shifts in health care: the payments to doctors from commercial plans are high enough that they subsidize the care provided to Medicare patients.
Take away commercial plans and their reimbursements, and you take away the subsidy to doctors which allows them to keep their doors open to Medicare patients.
So, if a new public option is created in Washington state, it is very unlikely physicians will contract with it to see patients covered by the plan – that is if the public option rates are pegged to Medicare rates in what is called the “robust” option.
It is altogether even possible that the Washington State Hospital Association and Washington State Medical Association would push to “opt out” of such a plan (assuming that is an option for states in the bills released this week). I doubt the Legislature would go for that, but that potential activism would demonstrate the antipathy of providers to a “robust” option.
All that said, a public option that is allowed to negotiate rates with doctors based upon the market, and which sets patient premiums based upon the costs of providing the plan (without a subsidy from the general fund to the plan, like Medicare gets), would be a huge benefit to Washington state citizens and a fundamental asset to market reforms here. But, they better get the details right or it will be all for not. Updated: Typo fixed.
Yesterday, Everett Clinic CEO Richard Cooper wrote this letter to Representative Jay Inslee. The letter also went to Senators Patty Murray and Maria Cantwell and Representative Rick Larsen.
Dear Representative Inslee:
We are writing to express our opposition to the “Public Option” proposal that is currently being considered in the U.S. House of Representatives. We are very concerned that the “Public Option” would pay the same rates as Medicare. Our experience is that Medicare rates are not sufficient to cover the costs of providing care.
As you know, Medicare pays less in Washington than it pays in other states. Providers in our state are penalized because we deliver care more efficiently.
The Everett Clinic cares for more than 28,000 Medicare patients and we just completed an independent review of our Medicare finances. Under the original Medicare fee-for-service model, we lose $464 per patient each year. This year we are projecting a loss of approximately $11.7 million treating Medicare patients. With anticipated growth in the Medicare population, it is estimated that the loss will grow to $70 million over the next five years. If these same rates are also applied to a segment of our private insurance customers, it will have a devastating effect on our bottom line and our ability to care for patients.
Under the current system, the commercial insurers in our state subsidize Medicare payments by up to 40 percent. This subsidy is essential for us continue to care for our Medicare patients. If in addition payments for private pay patients are lowered to the level currently paid for Medicare patients in Washington, the entire healthcare financing system in our state will be permanently damaged. Patients will find it difficult to access care as providers struggle to keep their doors open.
As you are aware, The Everett Clinic, along with others in our area, have received national recognition for providing high-quality, low-cost care. We believe there are ways to improve healthcare that do not involve a radical overhaul of the entire healthcare system. Instead, there should be a concerted effort to implement proven measures that will reduce costs while improving care.
Thank you for the opportunity to share our views. We look forward to discussing this issue further at your earliest convenience.
On Sunday, Senator Maria Cantwell appeared on “State of the Union with John King” and discussed Medicare reimbursements and bending the healthcare cost curve.
I just love it when she says:
“Well, you’re not going to get an argument about bending the cost curve from me because my state almost subsidizes the rest of the healthcare system because we’re so efficient and the rest of the country delivers more inefficient care.”
Here is video of Senator Maria Cantwell and Govornor Chris Gregoire discussing healthcare reform options with local industry leadership. The discussion took place on Tuesday, June 30th at University of Washington School of Medicine before an overflow crowd. This was the first time Senator Cantwell came out in favor of a public option.
At a far smaller-scale town hall today, President Barack Obama said, “I think a public option is affordable.” He also spoke directly to those worried about the costs of healthcare reform, saying, “If you’re a deficit hawk, you should be especially concerned about healthcare reform, because Medicare is going to be bankrupt in eight years.”
