Destroying Medicare to Save ObamaCare: Hillary Clinton’s 'Public Option' Plan
“The narrative” is that Sanders is pulling Clinton left, and one example is Clinton coming out in favor of a “public option” for Medicare. Unfortunately for the narrators, Clinton’s proposal is insultingly unserious, the “public option” has always been a defense against single payer rather than a step towards it, the Democrat nomenklatura remains as implacably opposed to single payer as it has ever been, and, most important of all, the “public option” — as a neo-liberal, market-based solution — could have a significant negative impact on Medicare. In other words, Clinton attempt to save ObamaCare politically by supporting a “public option” is — to mix metaphors terribly — a poisoned chalice for the health care system, and not an olive branch to the left. Let’s get the narrative out of the way first, and then treat the rest of these topics in order
“The Narrative” on Clinton’s “Public Option” Proposal
Unsurprisingly, the Times headline tells the story as the Democrat Establishment would like it to be told. In re-emphasizing her support for the public option:
Hillary Clinton Takes a Step to the Left on Health Care
Pete Petersen’s Fiscal Times agrees:
Clinton made those comments after coming under mounting pressure on health care reform not only from Sanders, her long-shot rival for the Democratic nomination, but also from some Democratic members of Congress, rank and file Democrats and health care professionals who say she should be more open to changes to address major shortcomings in Obamacare
At a campaign stop Monday in Northern Virginia, Hillary Clinton reiterated her support for a government-run health plan in the insurance market, possibly by letting let Americans buy into Medicare, to stem the rise of health-care costs.
(Note the fundamentally neoliberal mindset: The state is, as it were, (1) inside the market, instead of (2) the market being inside the state. But if you want “the rule of law,” for example in contract enforcement, you should choose Door #2. Otherwise, the rule of law is for sale, which is more or less what we see in today’s orgy of corruption and looting, supported by official Washington on a thoroughly bipartisan basis.) Bloomberg continues:
“I’m also in favor of what’s called the public option, so that people can buy into Medicare at a certain age,” the Democratic presidential front-runner said during a roundtable with local residents at the Mug’N Muffin coffee shop. “Which will take a lot of pressure off the costs.”
Wow. When Clinton said she wasn’t a “natural polititican,” she wasn’t kidding, was she? Heaven forfend that we should have an inclusive health care system that seeks to alleviate suffering “for all.” No, “the costs” is the issue Clinton latches onto. (Of course, if you think “cost” is a good faith reason to support neo-liberal solutions like ObamaCare, you have to deny the existence of a “Medicare for All” system that treats everyone, with equal or better outcomes, at much lower cost, say sixty miles north of Burlington, Vermont.)
For good measure, Bloomberg does some Pravda-like rewriting of history:
The idea of a government-run insurance option long has been favored by the liberal wing of the Democratic Party, but it was stripped from the final version of Obamacare legislation in the face of firm opposition by Republicans and the insurance industry.
No, and note the lack of agency in “was stripped.” In fact, Obama cut a secret deal with Big Pharma to strip the “public option”, such as it was, although career “progressives” continued to advocate for the policy long afterwards, because Obama considered them useful idiots (“f*cking retarded”) who didn’t need to be in the loop. One charitably assumes.
So much for the narrative, which is disinformative in every way. To see how, let’s turn first to the public option proposal through which Clinton proposes to save ObamaCare politically, at least for this campaign season. Since Clinton is famously wonky, and access to health care is a life and death issue to many citizens, you’d think she would have worked out every policy detail, right? Wrong.
Clinton’s Proposal Is Insultingly Unserious
“The narrative” on Clinton’s wonkiness is summed up well in this headline from WaPo:
Clinton’s wonky policies of fine-grained complexity contrast with rivals’ grandiose ideas
(How true. It is known that grandiosity is central to the Canadian identity.) And WaPo expands:
To her, complexity is realism.
Clinton says she simply can’t make the simple, grand promises of her rivals — free college tuition, a big, beautiful, free wall. Instead, she skips ahead to what policy looks like the way it’s actually been done: complicated, ugly and in small steps… Clinton treats policymaking like watchmaking — a lot of whirring, tiny, hidden gears
Naturally, I began by looking eagerly for those tiny little gears at the Clinton campaign website in the health care section. If you want to give them the hits, you’ll see that the public option is completely undefined (not surprisingly, to those who know the history, which we’ll get to). So we’ll have to rely on news reports. We’ll see that Clinton’s “plan” for the “public option” ignores the following key implementation issues: (1) The platform; (2) the age cut-off; (3) the income cut-off; (4) subsidies; and (5) coverage. We’ll also see (6) that the “public option” is another tax on time, increasing complexity without necessarily adding value.
(1) The platform. Bloomberg:
While Clinton long has supported including a public option in the insurance market, her campaign said she was floating the idea of letting Americans not yet of retirement age buy into the Medicare system as one way of accomplishing that. She’s also open to creating a separate government-run option on the Obamacare exchanges.
“Open to” is a nice way of saying “Hasn’t decided whether” (assuming good faith) or “is concealing the decision to” (being more realistic). If you’ve invested hours of your time fighting through an ObamaCare exchange — as Clinton’s based constituency of credentialed professionals generally does not — this matters to you.
(2) The age cut-off. Fortune:
While she didn’t specify what the age cutoff might be, the implication was that the expansion would be available for those who are at least 50 or 55 years old.
Ah. “The implication.” The actual age is important, since Medicaid estate recovery (see below) kicks in at 55.
(3) The income cut-off. Bloomberg:
She was responding to a question from a resident who complained that she’s just above the cutoff level to enjoy subsidies on the Obamacare exchanges.
“There’s just a cutoff, instead of what I’d like to see which is a kind of gradual diminishment. People shouldn’t just—once they get to a certain income level shouldn’t lose all their benefits,” Clinton said. “That’s something I’m looking at.”
Lots of little cut-offs are still cut-offs, and will present the same ethical dilemmas that the current system does: That is, people on the bubble are incentivized to lie, depending on which side of the cut-off they want to end up on, as are their advisors, if any.
(4) Subsidies. The Times:
Mrs. Clinton did not say, for example, whether lower-income Americans choosing Medicare [through the buy-in] would receive help paying their premiums, as they do when they buy private plans on the new marketplaces in the Affordable Care Act. Without such subsidies, Medicare might be an affordable option only for wealthy or very sick customers.
(It’s not clear to me why being “very sick” makes Medicare more “affordable.” Did I not get the memo?)
(5) Coverage. Don McCann from PNHP:
[W]ithout additional coverage such as [neo-liberal infestations like] Medigap plans, the traditional Medicare program leaves individuals potentially exposed to significant costs. It does not even have a catastrophic cap on coverage. Would an individual opting for a Medicare buy-in need to also purchase a Medigap plan? Or would a special Medicare plan be offered that included those benefits?
(6) Tax on time. Avalere Consulting once more:
While Medicare is widely popular among Americans, Avalere experts say it is not immediately evident that Medicare coverage would be a better option for all people over 50 [assuming that to be the cut-off]. Specifically, when compared to products sold through insurance exchanges, the analysts note that traditional, fee-for-service Medicare tends to offer a broader network of providers and lower deductibles relative to unsubsidized exchange products. However, because of the unusual structure of the Medicare fee-for-service program, consumers enrolling in the program may have higher costs and more benefit limits than exchange products.
So, the “public option” is yet another tax on time, that won’t necessarily yield a benefit if consumers citizens trapped in the maze of options make a wrong choice.
What a mess. I don’t know what they’re doing in Brooklyn besides a Bataan death march, but there’s a simple and obvious policy change — one of those tiny little gears — that would greatly appeal to the citizens at the Mug’N Muffin: Eliminating Medicaid estate recovery, whereby over-55 people forced into Medicaid by ObamaCare’s eligibility rules have any costs incurred clawed back from their estates. Since the only real asset most people may have is their homes, that means sick elders might not be able to pass their homes down to the kids. Fixing that injustice would be one of those incremental changes Clinton is supposed be so enthusiastic about. Since Clinton doesn’t bring up something so obvious, the only conclusion I can draw is that the Democrats just don’t give a future coprolith.
In short, Clinton’s “public option” is mere handwaving. This is unsurprising to those who know the history of the “public option,” to which we now turn.
The True Role of the “Public Option”
To understand how the “public option” — I hope I’ve put shudder quotes round the phrase throughout — functioned to suck all the oxygen away from single payer in 2009-2010’s health care battle, see this post and this post from PHNP; please read both in their entirety. Because that history is not the main point of this post, I’ll quote the bottom line:
Bait and switch: How the “public option” was sold
The people who brought us the “public option” began their campaign promising one thing but now promote something entirely different. To make matters worse, they have not told the public they have backpedalled. The campaign for the “public option” resembles the classic bait-and-switch scam: tell your customers you’ve got one thing for sale when in fact you’re selling something very different.
When the “public option” campaign began, its leaders promoted a huge “Medicare-like” program that would enroll about 130 million people. Such a program would dwarf even Medicare, which, with its 45 million enrollees, is the nation’s largest health insurer, public or private. But today “public option” advocates sing the praises of tiny “public options” contained in congressional legislation sponsored by leading Democrats that bear no resemblance to the original model.
According to the Congressional Budget Office, the “public options” described in the Democrats’ legislation might enroll 10 million people and will have virtually no effect on health care costs, which means the “public options” cannot, by themselves, have any effect on the number of uninsured. But the leaders of the “public option” movement haven’t told the public they have abandoned their original vision. It’s high time they did.
Today’s Clintonian “public option” is, of course, the “tiny” version. Don McCann summarizes today’s bait and switch:
Medicare buy-in or public option is not a step towards single payer. It would be merely another player in our dysfunctional system. Worse, it would further postpone enactment of the reform that we really need merely because we would be thinking that we’ve done something when we really haven’t.
The Democrat Nomenklatura Remains “Incremental”
To see that the (miserably inadequate) “tiny” “public option” is the maximum that consumers citizens can expect from the Democrat establishment, listen to the staffers. Morning Consult:
“Yes, premiums are going to be higher, and that is something that is not good for anyone. But we’re not comparing apples to apples here. We’re comparing to a world pre-ACA,” said a Senate Democratic aide, one of several interviewed about premiums.
I love the blithe dismissal of “higher premiums.” I don’t know what this aide’s life is like, but when I take money out of the coffee can on the kitchen table to pay for stuff, I care about how much money I have to take out of the coffee can today, and not any coulda, woulda, shoulda about “a world” in some historical romance or science fiction future. What’s wrong with these people?
The aides say Democrats are aware affordability needs to be discussed going forward. But the political environment around Obamacare in the last few years (i.e., repeal or nothing) has meant the law hasn’t been substantially amended since it was passed.
Mean Republicans were so brutal they prevented Democrats from even proposing anything!
“What we all have come to know now is the uninsured rate is the lowest it’s ever been before,” one aide said. “Proposing that there are still interesting or fundamental things that can be changed within our current reality is appropriate.”
“What we have come to know.” “Our current reality.” “Appropriate.'” Have you ever heard more arrogant or entitled language? Especially the tone-policing “appropriate”? We think of the bubble these people live in as huuuge, but in fact it doesn’t even include Canada; the pointy end of Newfoundland would pop it.
“The bottom line for us is we set the bar here,” another aide chimed in. “Clearly there’s an array of things to be done on affordability … but we can’t just go back in time and start anew.”
Whaddaya mean, “we”? And another Democrat aide, this one willing to go on the record:
“The Republican party is imploding,” said Jim Manley, a former aide to Democratic Leader Harry Reid (D-Nev.), in an email. “They will try to make hay out of the increases. But they don’t have an alternative and their presidential nominee is politically radioactive so Democrats should just hang tight.”
In other words, if Donald Trump did not exist, the Democrat Party would have to invent him. Keep that Big Pharma and health insurance money coming in! Ka-ching….
The “Public Option” Will Damage Medicare
Finally, we come to the most important issue of all: Clinton’s “public option” — while preventing Medicare for All, as it is designed to do — will damage Medicare. PNHP explains:
The “public plan option” won’t work to fix the health care system for two reasons.
1. It forgoes at least 84 percent of the administrative savings available through single payer. The public plan option would do nothing to streamline the administrative tasks (and costs) of hospitals, physicians offices, and nursing homes, which would still contend with multiple payers, and hence still need the complex cost tracking and billing apparatus that drives administrative costs. These unnecessary provider administrative costs account for the vast majority of bureaucratic waste. Hence, even if 95 percent of Americans who are currently privately insured were to join the public plan (and it had overhead costs at current Medicare levels), the savings on insurance overhead would amount to only 16 percent of the roughly $400 billion annually achievable through single payer — not enough to make reform affordable.
2. A quarter century of experience with public/private competition in the Medicare program demonstrates that the private plans will not allow a level playing field. Despite strict regulation, private insurers have successfully cherry picked healthier seniors, and have exploited regional health spending differences to their advantage. They have progressively undermined the public plan — which started as the single payer for seniors and has now become a funding mechanism for HMOs — and a place to dump the unprofitably ill. A public plan option does not lead toward single payer, but toward the segregation of patients, with profitable ones in private plans and unprofitable ones in the public plan.
Hmm. So the unprofitable patients will be dumped into Medicare? Sounds like a recipe for a Medicare death spiral, to me. And that’s not a bug. It’s a feature.
In summary, Clinton’s attempt to save ObamaCare politically by adding on the “public option” is a bait and switch operation designed to eliminate the threat of Medicare for All. It worked that way in 2009, and Clinton’s pulling the same play out of the Democrat playbook for 2016. In, fact Clinton’s “public option,” despite her wonky reputation, is so skimpy on detail is to be insultingly unserious, exactly like the public option in 2009. The Democratic Establishment remains implacably oppposed to Medicare for All, and if by some miracle they manage to pass the public option, that will undermine the existing Medicare program, which is no doubt their goal. On the life-and-death issue of providing health care to all Americans, there is more that divides us than unites it.