A snapshot of Medicare X

The ongoing COVID-19 pandemic has exposed many systemic inequities in our country, particularly within our health-care system. COVID-19 put more pressure on these fault points. The fact that nearly 15 million people lost their health care and jobs in this pandemic begs the question: why do we tie health care to employment? For this reason, as well as the prohibitive cost of health care, our legislators have been motivated to propose a number of policy reforms. 

Sens. Bennet and Kaine have recently reintroduced their health-care reform bill, Medicare X Choice, which is considered a “public option.” Their intention is to make health-care more accessible and affordable to Americans. This public option is a government-funded health insurance plan that would exist in addition to private health insurance. Medicare X would become a new option offered in the ACA marketplace. The various public programs, such as Medicare, Medicaid, V.A., etc. will continue to be available.

This public option aims to cut prescription drug prices by removing the provision that restricts the government from negotiating drug prices for Medicare. The U.S. Department of Veteran Affairs is allowed to negotiate drug prices, which has resulted in prices approximately 40 percent lower than the prices paid by Medicare.

Although not specifically stated in Medicare X, some other public option plans state a provision to establish an “independent review board” to assess a drug’s value and determine an appropriate price. Review boards are a staple in other high-income countries.

Medicare X premiums will be based on a sliding scale related to income. The Congressional Budget Office (CBO) estimates premiums for public options would be 7-8 percent lower on average from the private plans currently on the exchange. Cost sharing co-payments for both silver and gold plans remain.

The higher the premium payment, the less you pay out of pocket for health-care costs. The premiums would be capped at 13 percent of total income in the current version of the Medicare X bill. 

Provider payments for this public option are proposed to be near Medicare rates with an additional 25 percent increase for rural areas. This may become a potential drawback if providers choose to restrict or not accept Medicare X patients, opting for patients with private insurance instead because of the more generous reimbursement rates.  

The ACA out-of-pocket maximums still apply to the public option. The out-of-pocket limit for a Marketplace plan can’t be more than $8,550 for an individual and $17,100 for a family in 2021.

The benefits for the public option seem to be similar to the ACA marketplace. Among the 10 essential health benefits included are prescription drugs, primary care, maternity services, lab work, mental health care and specific preventive services. Not included are hearing, dental, vision and long-term care.

A public option may improve provider and hospital transparency on prices and outcomes. A 2019 government rule required all hospitals to post prices of services online. Unfortunately, hospitals complied by posting confusing spreadsheets of abbreviations, medical codes and numbers. Two-thirds of the largest hospitals are not complying with this transparency rule. If this public option requires the health-care system to be more transparent, it would go a long way to protecting patients from surprise medical bills by posting prices clearly and in advance of service.

A 2020 study by the American Journal of Public Health estimated total administrative waste in health-care costs about $500-$800 billion annually. (Total health-care spending in the U.S. is $3.6 trillion.) By comparison, America spends three times as much as our peer countries on administration. It is estimated that a public option may realize 20-30 percent administrative savings.

By maintaining private insurers and a two-tiered system of plans, (gold and silver), a public option continues a system that stratifies Americans into different classes of coverage by ability to pay, maintaining health inequities.

The principal behind public options is to offer incremental change that doesn’t send shock waves but offers a method to test whether a public plan will be competitive enough to apply pressure on private insurers to reduce prices. Keeping the private insurance system we have now doesn’t allow for a large reduction in current health-care costs, nor does it help people to more easily navigate a confusing system.

This is merely a snapshot of the proposed Medicare X Bill.

– Jan Phillips, Durango