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.
