JAMA Forum: A Tale of 2 Plans

Aaron Carroll, MD, MS

Aaron Carroll, MD, MS

Let’s consider 2 plans for health coverage.

In plan No. 1, the approach is to help everyone under the age of 65 years who doesn’t have insurance coverage. Everyone who is really poor is offered Medicaid. Everyone else will be put into a regulated market.

In this market, there’s a set level of benefits that will serve as a minimum. Insurance companies that want to participate will be forced to issue policies to anyone who wants them, regardless of whether or not they have some kind of health condition. They also won’t be able to charge people who are sick more than those who are not.

Plan No. 1 provides subsidies to help people buy insurance, subsidies that will largely be set through something called competitive bidding and premium support. Insurance companies will all submit bids for how much they would charge to provide someone with the benefit package dictated by regulations. The value of the subsidy will be pegged to the second cheapest plan. The subsidy will then vary depending on how much a person makes and will be applied to help people buy insurance, with individuals covering whatever the subsidy won’t. Only private insurance will be allowed; there is no public option.

We will call this idea the Affordable Care Act (ACA). It’s pretty well supported by Democrats and almost universally reviled by Republicans.

In plan No. 2, the approach is to change the way everyone over the age of 65 years gets health insurance. Everyone who is really poor is offered Medicaid. They—along with everyone else—will also be put into a regulated market.

In this market, there’s a set level of benefits that will serve as a minimum. Insurance companies who want to participate will be forced to issue policies to anyone who wants them, regardless of whether or not they have some kind of health condition. They also won’t be able to charge people who are sick any more than those who are not.

Plan No. 2 also has subsidies for people to help them buy insurance. These subsidies will largely be set through competitive bidding and premium support. Insurance companies will all submit bids for how much they would charge to provide someone with the benefit package dictated by regulations. The value of the subsidy will be pegged to the second cheapest plan. The subsidy will then be applied to help people buy insurance, with individuals covering whatever the subsidy won’t. A public option will exist as well and will compete with the private insurance plans.

We will call this idea the Romney plan for Medicare, as Romney articulated on his campaign website. It’s pretty well supported by Republicans and almost universally reviled by Democrats.

There are political reasons for why people might demonize ideas that seem so similar to others they support. Part of negotiating in the public sphere is giving up as little as possible, even if the end result would be the same. Moving from the status quo ante to the ACA for those younger than 65 years was a move to the left (even though it adopted many of the ideas developed by the right and endorsed by a Republican governor of Massachusetts). Moving from Medicare in its current status to the Romney plan is a move to the right. Even if the ACA is to the right of Romney plan (it lacks a public option, after all), it’s the move that garners support or opposition as well as the final product.

But it’s worth examining the silliness of the rhetoric. The ACA is regarded by some who don’t like it as “tyranny” and “fascism.” If that’s really the case, then it’s bizarre to support anything with more government involvement (such as a public option!) as a less objectionable end product. Similarly, you can object to the change of Medicare from one program to another, but I’ve had friends talk about Medicare as a program of premium support as the worst thing that could ever happen.

Understand that there are concerns with both of these plans for people on both sides of the aisle. The ACA contains cost control mechanisms that many conservatives find objectionable. The Independent Payment Advisory Board may make recommendations in the future to reduce payments to clinicians, hospitals, and others for some care. Accountable Care Organizations will alter the ways health care professionals practice and are paid in order to try and slow the increase in spending. The excise tax will directly penalize insurance that costs above a certain amount in the future.

Similarly, the Romney plan places almost all of its faith in the idea that competitive bidding and premium support will limit spending in the future. It better, because repealing the ACA—another step Romney will take—will remove all the cost controls previously mentioned. If competitive bidding fails to keep spending growth to a rate less than the gross domestic product plus 0.5%, then it appears that seniors might be on the hook for the rest. That will be a real issue for many elderly people in the future.

These are not minor quibbles. They are major points of difference between Republicans and Democrats, and I’m not minimizing them at all. But I wish politicians could lower the heat a little.

The differences between the end points of the ACA and the Romney plan for Medicare are shockingly similar. With enough tweaks and some serious efforts at compromise, one could be accepted in exchange for the other. The powers of both competitive bidding and regulatory reform could be used. We could stop demonizing the other side for trying to “end America” by seeking results that aren’t much different from our own.

I’m not optimistic. It’s an election year. And despite protestations that good policy is the goal, it seems far too often that politicians care more about winning elections than about Americans winning a better health care system.

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About the author: Aaron E. Carroll, MD, MS, is a health services researcher and the Vice Chair for Health Policy and Outcomes Research in the Department of Pediatrics at Indiana University School of Medicine. He blogs about health policy at The Incidental Economist and tweets at @aaronecarroll.

About The JAMA Forum: To provide ongoing coverage throughout this election year, JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide insight about the political aspects of health care. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.



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