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Opening Medicare, Sooner the Better

The original idea of a public insurance option was to create a government-run plan, like Medicare, into which anybody could enroll. But those ambitions fell as the legislative process moved forward and the political opposition stiffened. The public option variant Harry Reid put in the bill now before the Senate would be available only to people buying coverage through the new exchanges, lack the pricing power that gives government programs their greatest cost-saving potential, and be available only in states that chose not to withdraw from it.

Public option advocates still thought it worthwhile, as a source of market discipline and security--and, perhaps at some future date, a foundation on which a stronger public plan could be built. But just as proponents remained convinced (or told themselves) the weakened public option was worthwhile, Joe Lieberman and Ben Nelson remained convinced (or told others) it was a threat to the public good.  Although they and a handful of similarly skeptical senators voted in favor of bringing Reid's bill to the floor, they made clear they would not vote to move it off the floor as long as that public option was still in there. Such resistance could effectively prevent reform from passing.

Now we have a new compromise on the table--one that would effectively give up on this incarnation of the public plan. Under this compromise, the Office of Personnel Management would oversee a network of national, non-profit plans that would market themselves in every state (except those that opted out). OPM is the same division that runs the network of plans available to federal employees. The idea is to make sure everybody can buy the same kind of coverage members of Congress get, although that's a bit of an exaggeration. My colleague Suzy Khimm explained why on Monday. 

More promising is a proposal that would allow older workers (perhaps ages 55 to 64) buying coverage through the exchanges* to purchase Medicare rather than a private policy. These workers, in other words, could pay for what is literally a government-run plan. It just happens to be plan that's already in existence, rather than one a reform would create anew.

Since exchanges wouldn't begin operating until 2014, at least under the Senate bill, the option wouldn't be available until then. And that's a long time to wait, particularly given the target population. People between the ages of 55 and 64 have a notoriously hard time buying coverage on their own, since their age and higher incidence of disease makes them the sorts of high medical risks insurers don't want to cover. 

The senators negotiating this deal understand this, according to senior staffers. And while no decisions have been made--indeed, this whole deal is in flux, with numerous moving pieces--the staffers say the senators are thinking about one more twist: Making Medicare available even before the exchanges start up, perhaps as early as 2011.

Making Medicare available before the exchanges are ready gets complicated, because the premiums will inevitably be more than many workers can afford. (The idea is to make the program pay for itself, rather than dipping into the pool of funds for retirees, so the money coming in has to cover the medical bills this relatively unhealthy group would generate.) As such, Senators are examining whether it's possible to offer discounted premiums for the first few years, and then charging higher premiums later on to make up for it. (At that point, subsidies from the exchanges would be available to offset the costs).

The idea doesn't come out of the blue; a Clinton-era proposal called for a similar shifting of premiums to make Medicare buy-in workable. But it might still mean finding some extra funds. (It's hard to know, again, without more details.)

Regardless, making Medicare available to older workers earlier would seem like a smart move, as policy (by helping people who genuinely need the assistance) and politics (by giving a particularly skeptical age group more reason to value reform). And, in a sense, it would bring the public option debate full circle.

Remember, the original notion was to create a program like Medicare. And what's more like Medicare than Medicare itself?

*Note: Because Medicare would be available only through the exchanges, I gather it would be available only to those workers who lack access to group insurance and are not eligible for other government programs. But I'm not absolutely certain about whether that's the conditions of both proposals--or whether, among the many ideas being discussed, there are variants on this.