"HELP Releases Public Plan Outline"
The Senate Health, Education, Labor, Pensions (HELP) committee has released its much anticipated outline of the public health insurance option. Earlier this month, in an effort to find common ground with Republicans and iron out some of the most contentious issues, the committee’s ‘“Affordable Health Choices Act,” omitted language on the employer mandate and the new public option.
At the time, the New York Times had reported that the committee was considering a public plan that would reimburse providers 10 percent above Medicare rates. The outline released today doesn’t preclude that possibility, but it makes it less likely.
The new HELP framework allows the public plan to “reimburse health care providers at rates which will be no more than the average reimbursement rate paid by private plans offered through Gateways.” Under this arrangement, the new public plan would have to negotiate its own rates and play by the same rules as other private insurers within the Gateway (i.e. Exchange) — it “would follow the same rules as private plans for defining benefits, protecting consumers, and setting premiums.” What’s more, the public option would be responsible for attracting providers and would thus have to rely on competitive rates (instead of Medicare-like rates) to retain enough participants.
During its first few years of operation, the public plan would be protected from becoming a dumping ground for sicker and costlier patients. Under the outline, it would qualify for “risk corridor protections” to “offset or reclaim excessive losses and gains which could result during the start-up period (identical to those in Medicare Part D). Subsequently, its premiums would be set to make it self sufficient.”
On the whole, then, the plan follows Sen. Chuck Schumer’s (D-NY) level playing arrangement. Some of the public plan’s inherent advantages — i.e. its ability to use Medicare rates and Medicare leverage — are intentionally dulled. Still, the national option would be able, in due time, to build a strong market presence and use its size and market presence to inject competition in the insurance markets and drive down costs.