Dems Floats ‘Public Option’ As Solution To Obamacare Woes

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Robert Donachie Capitol Hill and Health Care Reporter
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Democratic Sen. Brian Schatz of Hawaii is floating a Medicaid-for-All proposal as a potential solution to the problems with Obamacare, a proposal that looks similar to the public option pushed by many Democrats during the creation of the Affordable Care Act.

Schatz spoke with Vox to explain a new bill he is drafting that would expand the public health insurance program Medicaid to allow for anyone, not just low-income Americans, seeking coverage to opt-in. The senator’s bill would grant states the option to open up their Medicaid programs to uninsured consumers who want to obtain coverage.

Schatz’ proposal would not touch how Medicaid is structured for low-income consumers, but would allow for those who make annual salaries greater than the federal standard for Medicaid to pay a fee to join the program. It would also allow consumers who qualify for Obamacare tax credits to use them to opt-in.

Those who buy-in to the program would reportedly have altered benefits packages than those who already qualify for the program, and it would be on a state by state basis.

States would have to opt-in to the program. Buy-in consumers would get insurance plans that cover Obamacare’s 10 essential health benefits, but would not get the other benefits given to traditional Medicaid recipients, like a transportation stipend for a doctor appointment.

The senator also purports to somehow raise the payment rates that Medicaid doles out to hospital systems and physicians, but how he would do so remains unclear.

What Schatz is proposing boils down to a public option for Obamacare, wherein consumers, who do not qualify for government subsidized health insurance, could opt-in and purchase a significantly cheaper plan. (RELATED: Obama, Health Official Say Public Option Is The Fix For Obamacare)

There are a few fiscal concerns presented in Schatz’s bill.

The first is, in providing those who do not otherwise need financial assistance to freely obtain health insurance, the bill has the potential to upend the private insurance marketplace. If consumers, regardless of socio-economic status, are able to opt-in to the taxpayer subsidized program, it could greatly reduce enrollment in the private insurance marketplace, as consumers choose the cheaper, subsidized option over private health plans.

Under this scenario, private insurers would be forced to compete for consumers who would have the option of a cheaper government insurance plan.

Schatz is not concerned with this outcome, believing that if the program cripples the private marketplace, it wasn’t meant to survive. The senator’s office did not respond to questions from The Daily Caller News Foundation, but he did reveal his thoughts on the matter to Vox.

“I’m agnostic what that may do to the private insurance market,” Schatz told Vox. “If the private insurance market can survive, in a context of a public option, good for them. But if they can’t, then that will tell you something about the nature of the market.”

The second lies with Schatz undisclosed plan to equalize Medicaid and Medicare reimbursement rates to physicians and hospitals.

Schatz is talking about having Medicaid, as part of this deal, pay as well as Medicare, which has some troubling implications. Health Care policy expert for The Heritage Foundation, Ed Haislmaier, explained how Shatz proposal could be rather hard to enact on a state by state basis.

“In Nevada, Medicaid pays about 95 percent of what Medicare pays. So the price of someone buying Medicaid in Nevada, if you were paying on your own, is not that much higher than the per person cost of Medicaid is for acute care services,” Haislmaier told TheDCNF. “Here is your issue: in the places that tend to be rural states, they pay Medicaid very well because they have a rural access issue, but they don’t put everyone on the program. You have limited enrollment those states, but you can find a doctor.”

In states that have increased Medicaid enrollment, they have done so through cutting physician reimbursement rates. Haislmaier explains that to increase enrollment, in a state like Shatz’s home state of Hawaii, one of two things would need to happen.

“You would keep the payment rates, in which case it would be unattractive for people because of limited access to providers who are willing to take those rates,” Haislmaier told TheDCNF. “Or, you would raise the payment rates to make it attractive, in which case the state is going to have to cough up much more money to cover the higher reimbursement rates for providers.”

Essentially, the senator has a difficult problem to solve that appears to have no easy solution.

Even if Schatz was able to successfully equate the reimbursement rates, which are 28 percent less for Medicaid versus Medicare, it would still likely make the cost of care (and health insurance premiums) for Medicaid increase.

Another concern is that Medicaid resources were never intended to help those with the means to purchase health insurance, or those who can pay for their own health care. Medicaid was instituted to provide coverage for consumers whose income and resources are not sufficient for them to pay for health care.

The one thing that is blatantly clear in Schatz proposal is that Democrats are locked in to the idea that health insurance is a right that should be mandate by the government, if not provided.

A public option, similar to the one Schatz is crafting, is not a new idea for Democrats.

Former president Barack Obama and former top Obamacare official Dr. Ezekiel Emanuel have put forth the idea of a public option as an answer to the seemingly inevitable collapse of Obama’s landmark health care legislation.

For his part, Emanuel wrote a piece for the Washington Post in 2016 in which he acknowledged there were problems with Obamacare and provided a five-prong solution to fixing them. Most important of these solutions, a public option to the healthcare exchanges. He says that “we should consider a public option,” because “consumers should never be subject to the whims of insurer withdrawals or withdrawal threats.”

Emanuel’s sentiment was an echo of Obama’s own words in a 2016 piece for the Journal of the American Medical Association. He said the path to continued progress is through “continuing to implement the Health Insurance Marketplaces and delivery system reform, increasing federal financial assistance for Marketplace enrollees,” and by “introducing a public plan option in areas lacking individual market competition.”

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