Experts: Public Plan Proposals Are All Bad News for Insurers

By Leslie Small

With some analysts expecting Democrats to win back some power in the upcoming elections, Medicare-for-All — a system in which a single, federal government-administered program would provide coverage to all U.S. residents — is getting more and more attention.

Such a program would effectively eliminate all other forms of health coverage. However, some of the proposals floated by Democrats leave room for private insurers to still operate in some capacity. According to a Kaiser Family Foundation issue brief, those include:

✦ Three bills that would establish a public plan option to be offered alongside private insurance through the ACA marketplace;

✦ Two bills that would allow older adults to buy into the Medicare program and use ACA subsidies to help pay for it; and

✦ A bill that would give states the option of creating a Medicaid buy-in program that would be offered through the ACA marketplace alongside private insurance.

Industry experts tell AIS Health that neither Medicare-for-All nor its more incremental counterparts would do the health insurance industry any favors.

"Anything that's going to try to eliminate private insurers or make them compete with the public option is going to result in strong objections from the industry," says Caroline Pearson, a senior fellow at NORC at the University of Chicago.

Chris Condeluci, principal of CC Law & Policy, offers further explanation. "Even if there's a compromise or there's a slow ramp up to the program, the plain, bold-faced reality is, if you have a public program — or some sort of Medicare-for-All program — that pays rates [to providers] lower than private insurers, that over time will result in just that government program being there. The private insurers will not be able to compete and therefore will leave."

It's possible that some employers and insurers might support a Medicare buy-in option, as it could draw some sicker, older individuals out of their risk pools, Condeluci says.

"But the question then is, once you have this maybe less healthy, older-skewed population in this Medicare program, does that somehow need to be financed, and is it financed by employers and carriers?" he adds. "And do the employers and carriers look at that financing responsibility and say, 'That's not worth it to us, we would just prefer to have these older individuals in our risk pool'?"

From Health Plan Weekly

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