Medicare Part Everyone

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Medicare Part E(veryone)

• Gerard Anderson
• Hugh Waters

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Basic Assumption

• Covering the uninsured is desirable
• Public opinion surveys
• IOM reports
• An article a week in most journals and newspapers
• Major topic on Presidential campaigns

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Basic Question - How

• 100 Years of Congressional debates
• 100s (1000s?) of different proposals

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IOM Guiding Principles To Compare Alternatives

• Universality
• Continuity
• Affordability to families
• Affordability to society
• Enhancement of population health

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(No Transcript)
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U.S. Health Care Expenditures, 1965-2015 in
Trillions of Dollars
This is where I became involved
Source National Expenditure Accounts
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Motivation For Medicare Part E(veryone)

• Keep It Simple Stupid. Americans want
• Everyone insured
• Not to pay too much
• Not to affect their own health care
• Uninsured did not cause the higher health
  spending they should not have to wait until
  health care spending is under control
• No Pay Go

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Brookings/ Hamilton Project Alternatives

• Medicare Part E Anderson and Waters
• Vouchers Fuchs and Emanuel
• Taking Massachusetts National Gruber
• Employer Sponsored Insurance - Butler

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Uncertainty

• The consequences of new programs are difficult to
  predict
• Uncertain costs
• Unintended consequences
• Individuals are risk averse and generally are
  happy with the care they receiving
• Policy change is generally incremental

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Why Not The Private Sector?

• Medicare is less expensive than private insurance
• Lower administrative costs in 2003
• Medicare 127 per enrollee
• Private insurers - 421 per enrollee
• Private insurers administrative costs per
  enrollee increased twice as fast as Medicare from
  1986 to 2003

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Why Not The Private Sector?

• Medicare had slower overall rates of increase in
  health care spending between 1970 and 2004
• 10.1 percent private sector
• 9.0 percent Medicare
• Less incentive for risk selection
• Keeping people with chronic conditions from
  enrolling

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Why Not Medicaid?

• Very generous (expensive) benefit package
• More generous than most private insurers
• Very low payment rates to providers
• Many do not participate in Medicaid
• National and not a state problem
• Wide variation in percent uninsured by state
• States will attempt to pass the uninsured to
  other states if possible

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Why Not FEHBP?

• Unclear benefits package
• More generous benefit package than many private
  insurers
• One private insurer Blue Cross given
  additional market power
• Premiums higher than Medicare

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Why Not States?

• National problem
• Uneven burden - Significant variation in percent
  of uninsured by state
• Control - Money comes from the federal government
  in most proposals
• Multistate firms many different rules to follow

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Why Medicare?

• National program
• Offers reasonable benefit package
• Has established rules and regulations
• Reflects years of political compromises
• Any new system will also face political scrutiny
• No guessing what will happen

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Medicare

• Part A hospitals
• Part B physicians
• Part C health plans
• Part D drugs
• Part E the people (Everyone)

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Medicare Part E(veryone)

• Everyone is required to enroll in Medicare unless
  they have public or private health insurance
  coverage
• Medicare part E is self-sustaining
• No trust funds
• No deficits permitted

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Medicare Part E(veryone)

• Nationally rated premiums - same for everyone
• 3900 adults in 2006
• 1100 children in 2006
• Community rating
• Less than private insurers for most individuals
• Premiums are subsidized for low income
  individuals (up to 400 of FPL) by federal
  government
• Government will subsidize adverse selection

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Medicare Part E(veryone)

• Same benefits as traditional Medicare
• Parts A,B,C,D
• Same payment system
• Same rules and regulations
• Using an existing insurance system would require
  minimal new rules and new bureaucracy
• Use Medicare program to collect revenues

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Buying into Medicare Part E

• Individuals and firms can purchase Medicare part
  E coverage at actuarially determined rate
• Individuals
• Small firms
• Firms with older and higher risk individuals
• Entire firm is required to join
• Premium is 10,000 for family of four in 2006
• 12 less than average private sector premium

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Opting Out of Medicare Part E

• Initially all health plans would be eligible
• Minimal requirements to opt out
• 98 of provider bills must be paid
• Penalties for not paying bills to providers
• Health plans loses accreditation status
• Person must enroll for 5 years in Medicare

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Opting Into Medicare

• Individuals and firms allowed to participate
• Lower premiums especially for individuals, small
  firms and firms with older workers
• Subsidies for low wage workers
• Everyone in firm must enroll

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Health Plans Can Participate

• How?
• Medicare Part C managed care option
• Medicare Part D drug plans
• Medigap coverage
• Also sell private insurance directly to
  individuals and firms

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Cost Estimates

• Issues
• Take up who will enroll?
• Crowd out who will drop private coverage?
• Adverse selection higher costs of those who
  enroll
• Premium subsidy income levels of people joining
  Medicare Part E

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Estimated Total Enrollment in Medicare Part E

• 97 million adults
• 69 million employed in good or excellent health
• 7 million employed in poor or fair health
• 7 million unemployed in good or excellent health
• 3 million unemployed in poor or fair health
• 7 million not in labor force in good or excellent
  health
• 4 million not in labor force in poor or fair
  health

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Estimated Total Enrollment in Medicare Part E

• 97 million adults
• 13 million below 100 of FPL
• 18 million between 100 and 200 of FPL
• 31 million between 200 and 400 of FPL
• 35 million above 400 of FPL

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Estimated Total expenditures in 2006

• 459 billion
• 176 billion from employers
• 147 billion from individuals
• 152 billion from government

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Possible Concerns About Medicare Part E

• Mandates
• Labor force participation
• Crowd out of private insurance
• Impact on existing Medicare beneficiaries
• Impact on providers
• Ability of Medicare to control spending
• Undocumented immigrants

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Why Not Medicare For All?

• Many people want to keep their own coverage and
  telling them they have to change is politically
  difficult
• Federal budget would be totally spent on health
  care in 2010 given tax revenues and projected
  health spending