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POLICY: Wyden’s health care plan

Wyden_smile
Oregon Senator Ron Wyden’s health plan is announced with a flourish and a call with a gaggle of bloggers. Best quick explanation is by Ezra

The bill is a replacement of employer-based health care with the purchase of individual insurance via regional pools, which look very like Clinton-style regional health alliances–except they’re now called “health help agencies”. No underwriting, guaranteed issue, community rating and an individual mandate with subsidies up to 400% of poverty and a minimum benefits package equivalent to the BCBS plan in the FEBHP. All very similar to Enthoven circa 1984

From the call. Some notes…

Wyden said that the Hillary bill was too big in 1994 and you can’t expect the Senate to consider a bill that has to be moved around in a wheelbarrow. His is “only” 160 odd pages.

Maggie Mahar asked if the plans just wouldn’t pay the providers for the cheapo plan way way less to the things they provide for the more expensive plans. Wyden says that there’ll be a “floor of decency,” and that all those commercial plans will pay a better rate than Medicare—so he sees the end of Medicaid and second class health care citizens. No global budgets, because the plan would reduce costs  also be a slightly barer plans than some employers provide now. Cost reductions would come from increased competition as people trade down to less rich plans, and through reduced administrative costs—he has a Lewin report to prove it (something else that smacks of 1993!)

Max Sawicky asked whether relying on consumer choice and market competition to hold costs down will work. Here’s what Wyden said. From the first paycheck, employees will see the added health benefits in their paycheck right now, and they’d be required to go out and purchase the basic package. (It would be a wash from tax standpoint for now, as they’d get a new deduction). After the first two years, there’s no longer a requirement that employers would have to pay the salary “increase” but employers would keep the wages up because otherwise the good workers would leave. But after that every employer would be required to make a payment based on their size—and that tax would total more than $100bn) a year. He was asked if that looks like an extra tax which penalizes the employers who were already good citizens and were providing rich insurance already. His response was that overall employers will pay less because in the first two years, the employers will not pay for the growth in health care costs over those two years, they’d just pay the cash amount they were paying in Year Zero. (That does presumably mean that any cost increases will be paid by consumers). Employer wins on day 1 because they don’t pay the increase. Then in 2 years they pay the tax. …..but they haven’t quite figured out that transition for the employers that had very rich benefits. How do you have real consumer choice? How do you make a market? Right now we don’t have one—he thinks his transition will help it.

I asked, so if that works, how are you going to get the provider and supplier industry to not object with extreme prejudice? After all, if we’re going to spend less money they’ll be less industry income! His argument is that primary care docs are going to get a boost in reimbursement; there also be a boost in chronic care preventative spending (although to be honest I missed the details). The doctors will also be bought off with malpractice reforms and all doctors will get paid commercial rates for all patients. He didn’t mention anything about the rest of the industry beyond primary care docs. So I think that he knows he’s in for a big fight! And of course if the plans actually do compete on not increasing costs to consumers in years 1 & 2 with a fixed benefit package, by definition less money will be flowing providers’ way.

Wyden ends by saying that elected officials have been way too timid, and nothing much has happened about health care for far too long. He wants a specific bill to force the debate so that Presidential candidates will have to engage in the debate. And that I suspect is the point, although I fear that he’s 4 years too soon. (And of course given the condition of S. Dakota Dem Senator Tim Johnson, there may not even be a Democratically elected Senate to introduce the bill into!)

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Michael FrazierAnemia TreatmentJoe ShieldsH.RushingGJ Recent comment authors
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Michael Frazier
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Michael Frazier

Senator Wyden has the best plan. The Republicans need to get past the simple NO keep everything as it is. Row or get out of the boat.

Anemia Treatment
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Useful infomation. I learned something today…. Keep the good work. Very impressive.

Joe Shields
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Joe Shields

I like the Wyden plan. In fact, I will no longer vote for any candidate for national office, regardless of party, who does not unequivocally support the Wyden Health Care plan. If no candidate for a specific office supports the Wyden Plan, I will write in “Ron Wyden of Oregon” on the ballot.

H.Rushing
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H.Rushing

When the public is fed up with this piece meal approach to healthcare, we will vote in politicans that will work on an improved universal(single payer system that covers all).We must take the insurance industry out of the healthcare business.They are parasites that do nothing to benefit the quality of healthcare.A great deal of anti-universal healthcare propoganda is put out by talk radio “shock jocks”, but if their listening audience would really start to look at the statistics of the system,they would understand a complete overhaul is needed.Their is no way out except universal coverage for all. We cannot continue… Read more »

GJ
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GJ

Scott wrote: “The 63 days without coverage clause is ONLY if you are going to group to group coverage. Here is the rule of thumb; Ind to Group – Prex’d, Ind to Ind – Prex’d, Group to Group depends on the 63 day rule – coverage before 63 days – NO Prex’d, coverage after 63 days – Prex’d and the only exception to that is if you had COBERA because COBERA qualiyies for “proof of creditable coverage”. I don’t know what else to say, but what I am telling you is a fact.” Scott, just so we beat this dead… Read more »

Tim
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Tim

Jay, Good point. I’m not licensed in every state. Here, just about every carrier I can name covers everything up to a lifetime maximum or 2M, 3M, and 5M. I’ve seen policies with annual limits on them, but they are much higher than that ($25,000 for example). On the other hand, even those carriers on group and individual plans can alter the rules for certain things. I have a small group where the owner of the company takes a self injected shot twice a week at $700 per week. The carrier not only limits his total amount of medication in… Read more »

Tom Quigley
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ok everyone’s right lets move on. Jay is the brightest one of us with is last sentence.

jay
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jay

“That’s going to happen sometimes. The risk pool will occasionally have a bad year. Depending on your carrier, they may go by zipcode, or county lines. Exactly how yours is divided up, I can not tell you. All in all, individual policies are STILL much better than group for several reasons. First, if you qualify to get in, you’re in. And you are now part of a much larger and healthier group. That’s why the rates are so much less expensive. Second, you own the policy. You can take it with you. No COBRA worries. Third, even when they go… Read more »

Scott
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Scott

Sorry about that. Yeah I meant Tim.

John Fembup
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John Fembup

“John wrote: “Scott, I agree we are speakign about two different things.”
Scott, FWIW I think it was “Tim” not “John”.

Scott
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Scott

John wrote: “Scott, I agree we are speakign about two different things. But as Quigley pointed out, as long as you don’t go more than 63 days without coverage, you can’t be pre x’d. ” This is the last time I am going to attempt to explain this. The 63 days without coverage clause is ONLY if you are going to group to group coverage. Here is the rule of thumb; Ind to Group – Prex’d, Ind to Ind – Prex’d, Group to Group depends on the 63 day rule – coverage before 63 days – NO Prex’d, coverage after… Read more »

John Fembup
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John Fembup

Peter, you asked “How do you handle your company budget if it gets “exhausted”. We have accumulated a substantial contingency reserve plus we explicitly over-budget by 5% per year. That margin not only reduces the likelihood of an operating deficit for the year, but it reduces the size of any such deficit if one emerges, and when there is a budget surplus, it’s put into the contingency reserve. We keep the reserve at about 6 months worth of claims. Finally we purchase stop-loss isurance against the possibility of a truly catastrophic claim. Earlier this year we had a preemie who… Read more »

Peter
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Peter

John, you speak as though creating budgets through government is somehow worse than creating budgets in corporations. How do you handle your company budget if it gets “exhausted”. You also seem to assume that patients are turned away if a hospital runs over it’s budget. Not so. There are contingencies and day to day management like any corporation would have. Taxes have been raised to cover increasing costs but also there is a continuing process to look for savings like any company would. One of the biggest differences is the amount of high tech equipment. Canada has less of it.… Read more »

Tim
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Tim

Scott, I agree we are speakign about two different things. But as Quigley pointed out, as long as you don’t go more than 63 days without coverage, you can’t be pre x’d. The biggest difference between individual and group plans is automatic issue. You can get into a group, no problems, but some things may be pre X’d if you have any lack of coverage for more than 63 days. The individual policies can do the same ( some even rider things out altogether ), but you have to qualify to get the policy ( get into the pool ).… Read more »

John Fembup
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John Fembup

Peter that is very interesting.
“By setting budgets (limited resources) and holding hospitals accountable for those budgets the whole system works hard to best spend limited dollars”
How do the provinces handle it when the budget is exhausted? Has theat ever happened? If so, does Ottawa kick in extra funds? Do the provinces have additional funds set aside for suvh contingencies?
“Patients have control through the political process to affect health policy and budgets.”
Yes, I imagine about the same amount of patient control thru the political process as in the US.