Clinton health 2.0

Medicare for more, caps on premiums and out-of-pocket spending,

Presumptive Democratic nominee Hillary Clinton’s health plan builds on ACA in several key ways, with an over-arching goals of providing more consumer choice and reduce the financial burden on consumers.

  • a tax credit of up to $5,000 per family to offset a portion of excessive out-of-pocket and premium costs above 5% of their income.
  • incease financial incentives for states to expand Medicaid
  • allow younger seniors to “buy-in” to Medicare

Let’s take these in order.

Tax credit

The Clinton plan’s tax credit is intended to address a growing concern; while premium costs aren’t zooming up (altho 2017 premiums look to be increasing at near-double-digit rates) deductibles, co-pays and coinsurance are becoming increasingly problematic.  The $5,000 tax credit is intended to offset some of these increases, and is coupled with a limit on total insurance and related expenses of 8.5% of family income and a mechanism intended to reduce costs for those earning more than 400% of the federal poverty level. (this last can make a huge difference, as costs for those just under 400% can be a fraction of what those earning just above 400% pay).

The subsidy isn’t limited to lower-income folks, and will certainly increase costs and concerns about affordability. However, indications are that take-up among the more affluent would likely be fairly low – and the subsidy pales in comparison to the favorable tax treatment currently enjoyed by those with employer-based insurance. Notably, there’s effectively a “fade-out” of the impact of the 8.5% cap for the truly affluent just because that 8.5% represents a pretty high figure for those with a lot of income.

Medicaid

Clinton proposes federal payment of 100% of the cost for any state that expands Medicaid for three years (declining to 90% thereafter).  Her plan also includes increased funding for education and enrollment activities for Medicaid-eligibles.

Medicare buy-in

The yet-to-be-finalized plan would allow seniors as young as 50 to buy in to Medicare. If enough seniors chose Medicare, rates for “regular” insurance on the Exchanges would likely decrease as the average age of members would decrease, thereby decreasing expected costs. And, insurance premiums for those seniors buying in would almost certainly be several thousand dollars lower than they can currently get via the Exchange. Clinton contends, with some justification, that adding more consumers to Medicare would reduce overall health care costs.

Medicare’s buying power and regulatory authority gives it much more control over health care price and utilization.  That, plus the sheer number of Medicare recipients, makes it the dominant force in the marketplace.  While providers may balk, many will find it necessary to go along – or lose a substantial chunk of their patient base.

However…Medicare is a mash-up of four separate and distinct parts, with different deductibles, treatment requirements, cost sharing, and treatment limits.  While it is well understood by practitioners, that’s only because it is THE dominant health insurer in every market.  Streamlining and rationalizing the benefit plan would make it much more palatable to under-65s.

Clinton has yet to dive into the details, but given the attention span and appetite for same among the eligible-voter population, those details are going to get attention from a very limited group of health care geeks (your faithful author included).

What does this mean for you?

Depends on whether a) Sec. Clinton is elected; b) the Dems take over the Senate; and c) the Dems make significant inroads in the House.

 

5 thoughts on “Clinton health 2.0

  1. What this really means for me is, as someone with employer-sponsored private insurance, my all-in costs will continue to rise unabated as more and more practitioners go concierge. Healthcare must be devolved to the local level because Federally sponsored care is unsustainable.

  2. No mention of the long-term unemployed, as usual, and probably the same IRS requirement for filing a tax return to get the credit. Still leaves a lot of folks out of health care.

  3. ” If enough seniors chose Medicare, rates for “regular” insurance on the Exchanges would likely decrease as the average age of members would decrease, thereby decreasing expected costs.”
    Not sure I completely agree with this presumption. Let’s start with the fact that Medicare “payment” to providers only covers about 85% of the cost to the provider. So, by lowering the age of Medicare eligible you are effectively increasing the “loss population”…or creating a larger margin required to be made up on the non-Medicare population just to break even. And with fewer non-Medicare eligible paying into the pool that needs to make up for this increased shortage, how are premium costs going to lower?

    • MV – thanks for the comment and questions. Couple thoughts.
      1. re Medicare reimbursing at 85% of provider cost, I’m not finding any sources that validate that statistic. In general, Medicare reimbursement is set to cover cost of care plus a very narrow margin If you have cites, they would be most appreciated.
      2. re lower premiums, when the risk pool is improved by removing older/riskier consumers, the average premium declines.

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