As bits and pieces come out from the Senate’s health care compromise, it’s probably best to be prudent and wait for every detail before piling on. Nevertheless, we know enough about the contours to know what to look for.

• The public option is triggered. And that trigger is designed to basically not fire. As I understand the proposal, insurance companies – or possibly just one insurance company – will have to offer a non-profit nationwide plan monitored by the federal government’s Office of Personnel Management on every state-based insurance exchange. The OPM would negotiate with the insurance companies on rates and coverage. If the insurers fail to provide an affordable plan (which I guess the OPM decides), a nationwide public option gets triggered. So as long as one company offers this non-profit plan, there is no public option.

The meaning of “affordability” is obviously key here, but I wouldn’t expect it to be that big a hurdle for the insurance companies. Remember, there are lots of “non-profits,” particularly Blue Cross affiliates, currently offering insurance. This has done little to bring down prices for consumers.

One potential positive outcome of this is that it gives the federal government some oversight of the insurance exchanges, which in the Senate bill are confined to the states (in the House bill it’s a nationwide exchange). The OPM will regulate these non-profit plans, which can scale up because they’d be offering one product nationally. But whether or not that will end up looking like a public utility depends on the enforcement mechanism. As I understand it, the OPM doesn’t have a police force or even much of a budget to regulate the insurance industry. I’m dubious that this will look like “the semi-private insurers that function well in Germany, Sweden and the Netherlands” – we don’t have a lot of success tightly regulating private industry in this country.

• The Medicare buy-in. Again, the devil is in the details. People aged 55-64 would be able to buy in to Medicare, paid for with their own premiums. But we don’t know some key details. When would it start? The best guess is 2011, which is good. Who would be eligible? It could be everyone in that age range, or just those without employer-based insurance, or even just those in high-risk pools who cannot get insurance on their own. Whether this makes sense depends a lot on those details.

In the beginning, between 2011 and 2014, the Medicare buy-in would not be subsidized – when the exchanges get running, people aged 55-64 could use their subsidies to buy into Medicare. The Wonk Room explains:

According to a CBO analysis of a similar Medicare buy-in for uninsured Americans between 62 and 64 — that group would have to pay a premium plus an administrative fee of 5 percent — “the annual premium for single coverage in 2011 would be about $7,600 (that figure includes the cost of Part D coverage).” The CBO assumed that the Medicare buy-in policy would increase outlays for Social Security retirement benefits “because the availability of the Medicare buy-in program would induce some people to retire sooner than they otherwise would have (because they would no longer need insurance from their employer).” Significantly, the buy-in could also extend the solvency of the Medicare trust fund by bringing in premium dollars from younger beneficiaries and reduce Medicare’s spending for those individuals after they turned 65.

The most important part of this is that the exchanges are set to expand. What’s crucial is how they expand. If businesses are allowed into the exchange, they couldn’t buy in to Medicare for their entire business. But if individuals ages 55-64 could buy in to Medicare through their exchange-eligible employer (and their employer would probably be happy to offload older workers onto Medicare, lowering their premiums in the process), that could be significant. When the employer-based system collapses – and it’s coming – offering Medicare buy-in will be a crucial way for the United States to transition to a newer, saner, more humane system.

• Medical loss ratio. If Politico has this right, it’s enormous: Insurers would have to spend “at least 90 percent of premium money on medical care, rather than on administrative costs or profits.” That medical loss ratio would mean a hell of a lot for consumers. However, details matter here as well. Is that medical loss ratio for every insurer, or just the ones participating in the exchange? Is it for the whole exchange, or just the nationwide non-profits administered by the OPM? Is that for the life of the bill, or just for a few years until the exchange get up and running? We don’t know any of this yet.

• What are the politics of this? It’s fun to watch Mitch McConnell and friends change their tune over the course of a day, from staunch defenders of Medicare, to opposers of opening it up to the 55-64 market. By contrast, Howard Dean calls this a “positive step” (no surprise, Medicare buy-in was one of his ideas), and Joe Lieberman is making encouraging noises (UPDATE: and not so encouraging ones). Among stakeholders, Health Care for America Now doesn’t seem to like it.

“Using nonprofits to replace a public option won’t work,” a coalition of left-leaning groups said Tuesday in a joint statement coordinated by Health Care for America Now. “In fact, with half of people in private insurance currently enrolled in nonprofit plans, they are part of the problem.”

The hospital industry and the AMA really don’t like it. They would have to take a haircut on those 55-64 individuals buying into Medicare, which pays lower provider rates. It just gives them less money while customers pay less for services. There are not all that many people aged 55-64 able to take this opportunity, at least at first, but the threat of expansion is what scares the bejesus out of the providers.

There’s also the House of Representatives, and House progressives have called this a “whitewash”.

I think there are a lot more questions than answers right now (Jon Cohn has ten more), and until the CBO score comes back, we won’t get those answers.

UPDATE: Jon Walker has a similar post and he also mentions the possible expansion of Maria Cantwell’s Basic Health Plan concept to 300% of FPL. He likes the idea but says there are some big design flaws.

David Dayen

David Dayen

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