An Actual Bipartisan Plan
Political polarization has largely paralyzed Washington, which is why the Bipartisan Policy Center’s new health reform plan is both notable and important.
The lead authors of the plan are former Senate Majority Leaders Tom Daschle and Bill Frist and former Administrators of the Centers for Medicare and Medicaid Services (CMS) Andy Slavitt and Gail Wilensky. They were joined by five co-authors, with vastly divergent views on most questions. Alice Rivlin, the original Director of the Congressional Budget Office (CBO), was an influential and valued participant before passing away last year.
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The U.S. has a complex public-private health system. The federal and state governments play active roles in regulating it, and also sponsor large public insurance plans. But the government does not run everything. There is room for private actors (for-profit and not-for-profit), along with market competition and consumer choice.
Public polling indicates that Americans have deep concerns about health care, centered mainly on rising costs. However, a plurality does not want dramatic, one-party reform. Most voters would prefer if Republicans and Democrats worked together to improve the existing system rather than start from scratch. In other words, they would like to see Congress approve something along the lines of the BPC plan.
There is no panacea for the many and varied problems that need attention, but the BPC proposals include ideas that would lower costs, stabilize insurance coverage, and improve the quality of care provided to patients.
The following is a partial list of the plan’s major reforms:
- Reinsurance: Several states, including Maryland and Minnesota, have demonstrated that the use of reinsurance in the individual insurance market lowers premiums for consumers. Reinsurance covers expenses above specified thresholds, reducing the risk that insurers will experience an unusual numbers of high-cost cases. The consulting firm Avalere estimates reinsurance has reduced premiums in the states that have adopted it by an average of nearly 20 percent annually. The BPC plans calls for a federally-financed program that will ensure consumers in all states will pay lower premiums for coverage in the individual market.
- Automatic Enrollment: The vast majority of Americans who are uninsured already qualify for subsidized coverage. The BPC plan authorizes states to experiment with automatic enrollment programs that place qualified individuals into coverage for which no additional premium is required.
- Premium Assistance: A persistent problem in the individual market has been its high premiums for households with incomes above the threshold for federal assistance. The BPC plan proposes to allow families with incomes up to 600 percent of the federal poverty line to qualify for premium credits, and it establishes a new minimum credit of $750 per person in households with incomes below that higher threshold.
- Medicare: The plan calls for revamping and simplifying the annual enrollment process for Medicare beneficiaries to allow easier cost comparisons among Medicare Advantage (MA) plans, Accountable Care Organizations, and traditional fee-for-service. Consumers would choose to enroll in ACOs instead of being assigned to them. For prescription drugs, the plan would reform part D coverage to provide stronger incentives for lower list prices for the products used by patients with high expenses.
- Price Competition in the Hospital Market: Hospitals in markets with excessive consolidation would face limits on what they could charge private insurance plans. One option would be to cap their payment rates at a percentage of what MA plans pay for the same services. The reform is intended to encourage hospital systems to proactively adjust their holdings to ensure sufficient price competition in their markets.
- Medicaid: The plan reforms Medicaid to shift away from reliance on supplemental payments toward an emphasis on outcome-based investments. Further, the plan would allow states to provide continuous 12-month coverage to adults qualifying for enrollment.
- Price Transparency: Consumers have great difficulty shopping for common medical procedures and services today in large part because pricing remains opaque. Under the BPC plan, all providers would be required to post “walk-up” prices for procedures and services on a standardized list developed by the Secretary of Health and Human Services (HHS). Standardization of what is being prices will allow consumers to readily make apples-to-apples price comparisons.
- Elimination of Surprise Billing: The plan echoes reforms under consideration in Congress to eliminate the practice of surprise billing. Providers would be forced to work with insurers to come to terms on in-network rates or accept a limitation on out-of-network billing at the median payment amount in the relevant market.
The BPC plan is a genuine compromise, which means neither party will be happy with it. It is the kind of plan that could pass but only after both parties conclude that they are better off passing something rather than nothing. Most voters would welcome it, not least because it would represent solid progress over the status quo.
James C. Capretta, one of the nine co-authors of the BPC plan, is a columnist for State of Reform and holds the Milton Friedman Chair at the American Enterprise Institute.