March 9, 2010
Grayson Introduces Public Option Act
Congressman Alan Grayson, D-Fla., today introduced a bill (H.R. 4789)
which would give the option to buy into Medicare to every citizen of the
United States. The "Public Option Act," also known as the "Medicare You
Can Buy Into Act," would open up the Medicare network to anyone who can
pay for it.
Congressman Grayson said, "Obviously, America wants and needs more
competition in health coverage, and a public option offers that. But
it's just as important that we offer people not just another choice, but
another kind of choice. A lot of people don't want to be at the mercy
of greedy insurance companies that will make money by denying them the
care that they need to stay healthy, or to stay alive. We deserve to
have a real alternative."
The bill would require the Secretary of Health and Human Services to
establish enrollment periods, coverage guidelines, and premiums for the
program. Because premiums would be equal to cost, the program would pay
"The government spent billions of dollars creating a Medicare network of
providers that is only open to one-eighth of the population. That's
like saying, 'Only people 65 and over can use federal highways.' It is
a waste of a very valuable resource and it is not fair. This idea is
simple, it makes sense, and it deserves an up-or-down vote," Congressman
H.R. 4789 - "Public Option Act" or "Medicare You Can Buy Into Act":
http://thomas.loc.gov/ Click Bill Number. Enter H.R. 4789. Click
Search. From there you can access the text of the legislation (very
short bill), cosponsors, and other information.
Video of Grayson's introduction of H.R. 4789 to House (5 minutes):
Article XVIII, Sec. 1818
Article XVIII, Sec. 1818A
Medicare premiums for 2010
Comment: Throughout the reform process members of Congress have been
fighting over whether or not the reform legislation should include the
option of purchasing a government-sponsored plan through the proposed
insurance exchanges - the so-called "public option." Since Congressman
Alan Grayson introduced the "Public Option Act" or "Medicare You Can Buy
Into Act" three days ago, a wave of enthusiastic support has been
generated based on the perception that this is the perfect solution.
Today's comment briefly discusses this legislation, and it will sound
really great at first blush, but do not draw any firm conclusions until
you read through to the end.
Okay. What does this bill do? It simply allows any legal resident of the
United States under age 65 to buy into Medicare. The program will be
paid for by the premiums to be collected from the individuals purchasing
the coverage. Six age brackets are established for purposes of pooling
funds. This reduces the financial burden on younger, healthier
individuals by requiring older individuals to pay the higher premiums
that would be required to fully fund their less healthy risk pool.
Many are not aware of this, but Medicare already has a buy-in program.
Under Title XVIII, Sec. 1818, individuals over 65 who have fewer than 40
quarters of Medicare-covered employment who would otherwise not be
eligible for Medicare can still participate by paying a full premium for
Part A coverage (hospital) or a reduced premium if they have 30 to 39
quarters of Medicare-covered employment. Likewise, under Sec. 1818A,
disabled individuals whose entitlement ends due to having earnings that
exceed the qualification level can also purchase Medicare Part A.
Grayson's bill adds a new Sec. 1818B to Title XVIII to expand the buy-in
option to anyone under 65.
For 2010, the premium under Sec. 1818 and Sec. 1818A to buy into
Medicare Part A is $461 per month. The premium for Part B (supplemental
medical) is the same as for qualified retirees - $110.50 and up, based
on income (ignoring the hold harmless exception). Thus the buy-in is
about $571 per month, or more for those with higher incomes.
Although Medicare beneficiaries have a high rate of chronic disease plus
the costs of end-of-life care, the risk pool is diluted with a very
large number of healthy seniors, thus the premiums are not as high as
one might think. On the other hand, it is likely that the risk pools for
the older but still under 65 age groups in the Grayson proposal would be
subject to adverse selection. Since the premiums must pay all costs,
they may be higher, perhaps much higher, than the diluted post 65 risk
pool. Grayson has not included any risk adjustment mechanism to
compensate for this.
At any rate, the Grayson proposal seems to be the true public option,
run by the government, that progressives have been fighting for. So what
could be wrong with it?
The greatest concern of all is that it still does not fix our
outrageously expensive, administratively wasteful, highly inequitable,
fragmented method of financing health care. It merely provides another
expensive option in our very sick system of paying for health care.
Providing yet one more option that people can't afford really hasn't
moved the process.
Although Medicare is a very popular program, it is highly flawed. It has
an oppressive central bureaucracy. It fails to use more efficient
financing systems such as global budgeting for hospitals and negotiation
to obtain greater value in health care purchasing. There are serious
questions about whether Medicare funds are being distributed equitably
and in a manner to promote greater efficiency. Its benefit package is
relatively poor, covering only about half of health care costs for our
seniors. Most Medicare beneficiaries feel that they essentially are
forced either to purchase Medigap plans, which provide the worst value
of all private health plans, or to enroll in Medicare Advantage plans,
which waste too many tax and premium dollars. It would be both much less
expensive for all of us and better for Medicare beneficiaries if the
extra benefits of these private plans were rolled into the traditional
Medicare program. Part D should be stripped of its private market
administrative and profit excesses and also be rolled into the
traditional program. Medicare also has failed to introduce beneficial
innovative programs such as the British NICE system, which would improve
both quality and value in our health care.
When we advocate for an improved Medicare for all, we really aren't
advocating for Medicare with a few tweaks. We are advocating for
replacing Medicare with a single payer national health program that
covers everyone, which we can still call Medicare, just as the Canadians
do. Adding another buy-in program to the two buy-in programs that
already exist in our highly dysfunctional system will do virtually
nothing to fix these flaws we now have. It does nothing to slow the
growth in our national health expenditures, and the high premiums for a
package of mediocre benefits will do little to reduce the numbers of
For those who say that a Medicare buy-in is an incremental step towards
health care utopia, explain precisely how that is going to work. Explain
each problem that it solves. Explain how it is going to morph into a
universal or near universal system in which each individual is paying
the full actuarial value of the coverage. It won't happen.
Playing with a Medicare buy-in is an unnecessary diversion at a time
that we need to get serious about reform. We need to fix Medicare and
expand it to cover everyone. Nothing less will do.