Saturday, November 14, 2009

Health Care Subsidies vs. a Public Option

Another no brainer.

The fight for the public option is inseparable from the fight for better subsidies and affordability. The weaker public option selected by the House saves the government $25 billion. If the House had been able to pass the public option tied to Medicare rates it would have saved $110 billion. To give you an idea, only $602 billion will be spent on exchange subsidies and related spending. Including the weaker public option basically allowed Pelosi to increase subsidies by 4%. If progressives had been successful in getting the robust public option it would have increased subsidies by 18% — a sizable increase.

Despite some incorrect reporting to the contrary, just over half of the people on the exchange will get affordability tax credits. Some people on the exchange will make over 400% of the FPL and roughly a third will be getting employer provided vouchers, not government subsidies, to buy their health insurance on the exchange. Increasing the size of subsidy levels will not help them. A public option, which the CBO said will reduce premiums across the board, will help them. (I suspect CBO is underestimating the ability of the public option to reduce all premiums on the exchange, but that is a different matter.)

The issue of subsidies is important but it is not as important as the public option.

1 comment:

  1. Its not all bad, A functional single payer system pay rates would be more like a negotiated pay rate scheme anyway(for things not covered by bulk payment or in global budgeting).

    The AMA will be less inclined to complain about removal of restrictions on entry to the public option, meaning it will be easier to expand a negotiated rate public option.

    Hopefully community rating, making rescission illegal and removing preexisting conditions will declaw the insurance industry enough that a real reform can be passed later on.