There has been a flurry of liberal health wonk reform proposals this week.
— Joanne Kenen (@JoanneKenen) July 11, 2016
— HuffPost Politics (@HuffPostPol) July 10, 2016
I want to see details just exactly what is meant by the Clinton proposal as it can range from aggressive administrative action small ball (as we talked about in February) to another whack at the legislative pinata. Anything that passes would probably be a net improvement on the status quo. I am curious if any insurer will attempt to hack the exchanges to manipulate quasi-monopolistic offerings to create a large gap between the least expensive and the benchmark determining second least expensive Silver plans. If they do, individuals who receive subsidies in those regions could be worse off, but from the publicly insured side and the public finance side, more competition, on net, is better.
But before I do a long wonk dive, I just want to re-iterate a very simple point. Most liberal health policy goals have a very simple summary: get more people on insurance that pays providers rates that are closer to Medicare rates than commercial large group rates. Large group rates pay providers between 40% and 100% more than Medicare for physical health service. Moving the entire employer sponsored coverage universe to paying Medicare like rates would knock 30% off of the current bill.
We see this in Exchange. There is significant configuration convergence caused by both the subsidy formula and the risk adjustment formula. Plans that are profitable tend to be paying providers Medicare plus a little bit while offering narrow networks. We see this in the proposal to move the Medicare buy-in age to 55. We see this in the proposal to have a public option. The 2009 House public option was pricing out at Medicare plus a bit. All of these efforts are just different ways to achieve an underlying goal of reducing provider compensation by lowering the average payment per service by having more people move from high payment to provider coverage to Medicare based pricing.
Everything else is details. Those details matter a lot but the core policy thrust is fairly simple.