Politics

Would the Senate's Proposed Medicare Expansion Lead to Single Payer?

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In exchange for dropping the public plan, Senate liberals got a couple of big concessions in the health care bargain made with Democratic moderates. One part was the creation of a nationwide network of non-profit plans administered by the Office of Personnel Management. As I noted earlier today, there are a lot of problems with that component. 

The other major component is an expansion of Medicare that would allow anyone age 55-64 to buy into the Medicare system — initially at full price, and, starting in 2014, using taxpayer-funded insurance subsidies for those who fall below 400 percent of the federal poverty line.

Rep. Anthony Weiner likes this component because he thinks it might "get us on the path to a single payer model." That's probably not the talking point he was supposed to use, and I certainly don't think that single-payer is an immediate likelihood. But given that incremental single payer was the original hope for the public plan, and that Medicare-for-all has long been a slogan used by single-payer supporters, Weiner's take isn't actually all that surprising. 

In fact, the Medicare expansion a pretty great deal for liberals — despite losing the public plan, they'd be getting quite a bit out of this arrangement (should it actually come to pass). But to my mind, expanding a creaking, unwiedly program that's already $50-100 trillion in debt seems like rotten idea. Indeed, the American Spectator's Phil Klein says that it may be worse than the weakened public option proposal it's replacing:

Expanding Medicare would go further to advance the original aims of liberals than the watered down version of the public option. By definition, the Medicare option (which would eventually be offered on the exchange to those over 55) would set reimbursement rates at Medicare levels, thus putting the squeeze on doctors and offering lower premiums that would make it more difficult for private insurers to compete. As with the public option, liberals will try to argue that the Medicare expansion will be funded by the premiums it collects, but it will benefit from the taxpayer-funded infastructure that is already in place to support Medicare -- not to mention potential subsidies down the road.

The CBO has not yet evaluated the current proposal, but according toa recent Kaiser Family Foundation study, there are about 4 million uninsured Americans between the ages of 55 and 64 — so that would probably be the minimum amount of people eligible to buy into the expanded Medicare program. Yet according to Census data, the entire 55 to 64 population is 33 million, so there's plenty of room for growth if future lawmakers open the exchanges to more people.

Nor would expanding Medicare be cheap. According to the Wall Street Journal

CBO estimated last year that offering a Medicare buy-in to people age 62 to 64 would cost the government $1.2 billion over 10 years, largely due to the fact that more people would retire early and start drawing Social Security. The analysis assumed people would be charged a premium that covered the average cost of benefits, plus an administrative fee of 5%. Those could be some pretty steep premiums given the age group and the likelihood that the program would attract a disproportionate number of sick people who find it particularly hard to find private insurance.

Not surprisingly, big medical industry groups hate the idea: Insurers, doctors, and hospitals have expressed strong opposition. 

The proposal is also proving troublesome for Republicans, many of whom have been relying on the politically advantageous but problematic argument that Medicare must be protected. Yet, of course, they're against expanding it here — meaning that after spending the last few weeks defending Medicare from reform's proposed cuts, they're back to attacking it. 

Regardless, it's a proposal that deserves serious scrutiny: Growing a troubled but politically popular program like Medicare is likely to be less politically difficult than instituting a new government program. But it's still worrying: As with most of the rest of the major reforms being proposed, the Medicare buy-in expands a failing system, locking more people in — and making true reform ever more difficult.