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Tuesday, October 27, 2009
Pelosi's Plan Could Boost Premiums
By Michael Coleman
Journal Washington Bureau
WASHINGTON — A majority of New Mexico's congressional delegation prefers a public health insurance option in which doctors and hospitals negotiate payment rates with the government-run plan rather than tying their reimbursements to Medicare.
But none said he would oppose a broader health care overhaul bill simply because provider payments were linked directly to Medicare rates — a key component in what is described as a "robust" public option and pushed by House Speaker Nancy Pelosi.
Meanwhile, one of New Mexico's largest insurers and hospital administrators warned Monday that tying payment rates to Medicare would drive up premiums for those who remain on private insurance.
Jim Hinton, president and CEO of Presbyterian Health Services in New Mexico, told the Journal that approach in New Mexico would prompt people to flee private insurance and sign up for the public option — which could offer lower rates because it would be able to pay doctors and hospitals less for the same services.
That, in turn, would force private insurers to raise their rates, he said.
"The more people who go into a plan that underpays us, the higher the premiums are going to be for commercial groups who stay outside of the public system," Hinton said.
"What's the end point of that — that everyone goes into the public option? Is that what we're trying to do? The president said that 80 percent of the people have health insurance and are happy with what they have and this won't impact them. Well, I'm not so sure."
New Mexico's all-Democratic delegation discussed the issue Monday in interviews with the Journal as House and Senate leaders prepared to bring major health care overhaul legislation to the floors of both chambers in early November.
The so-called public option, or government-run health plan, was widely declared dead in late August after some Americans rallied against the idea at contentious town hall meetings across the country. But that proposal has come roaring back in recent weeks.
On Monday, Senate Majority Leader Harry Reid said he would include a public option in legislation he brings to the Senate floor, while allowing states to opt-out of participation if they desire. No payment formula has been specified.
Sen. Jeff Bingaman and Reps. Martin Heinrich of Albuquerque and Harry Teague of Hobbs told the Journal that a public option in which the government plan negotiates payments with doctors and hospitals is preferable in New Mexico because the state's Medicare reimbursement rates are among the lowest in the nation.
"For states like New Mexico that are currently stuck in this regional disparity problem with Medicare, it would actually be better for our docs to have a negotiated rate in the public option," Heinrich said.
Pelosi is pushing a plan that would pay health care providers the amount of money they currently get for services under government-run Medicare, plus 5 percent. So far, it appears she does not have the votes to pass that plan in the House.
Many health care providers say they already lose money on Medicare patients and make up for it with higher rates for private health insurance companies.
Health industry officials in New Mexico say private commercial insurance plans pay as much as 40 percent more for the same services than Medicare does.
Rep. Ben Ray Luján of Santa Fe said he strongly supports Pelosi's plan because the Congressional Budget Office has estimated it could save the federal government as much as $110 billion over 10 years. However, news reports now say the actual costs would be much higher than the earlier CBO estimates.
Sen. Tom Udall said he is still analyzing which reimbursement scenario he prefers, but said his decision will come down to which is best for consumers — not insurance companies.
"'I'm trying to stay focused on which public option puts subscribers' interests paramount rather than just shareholders, which happens with insurance companies," Udall said.
Bingaman, a key negotiator on the Senate health bill, said the Senate legislation includes a provision that would prohibit employed Americans with access to certain large health plans from signing up for the public option, which is designed to prevent an exodus.
But Bingaman also said negotiated rates are preferable for New Mexico medical providers.
"There is something of a legitimate objection when you tie another significant health care program to a Medicare rate," Bingaman said. "Many providers believe Medicare rates are not adequate today.
"The fairer approach would be to say if we're establishing a new nonprofit, then let's let them negotiate for the rates they have to pay providers, just as private companies have to negotiate."
However, Bingaman also pointed out that Medpac — an independent agency charged with suggesting Medicare rates to Congress — has contested the notion that Medicare rates are too low.
"Medpac says they are reasonable," Bingaman said.
Heinrich and Bingaman said neither of their respective chambers appears to have the votes to pass a health care bill with a public option tied to Medicare reimbursement rates.
Bingaman called it "very unlikely" in the Senate, and Heinrich said: "I suspect in the long run there is probably more consensus around negotiated rates in both the House and the Senate. I'm fairly optimistic that's where it will end up."
Meanwhile, Teague, who has been the lone member of the New Mexico congressional delegation to withhold support even for the concept of a public option, said Monday that he might support a bill that includes one.
"I'm not opposed to a package that has the public option in it if it brings down the cost and allows people to keep the doctors they have now," Teague said. "If it does those things, then I don't think the public option would be a killer."
But he also said any public option should not mandate that doctors and hospitals accept current Medicare payment rates plus 5 percent.
"The negotiated rate would be the best deal because, I think, what they're calling the robust public option is not good for New Mexico," Teague said.
Luján said the concern about low Medicare reimbursement rates in New Mexico could be addressed by a proposal currently floating in the House. The proposed amendment to a House health care bill would provide for a study of Medicare reimbursement disparity with a mandate to make them more equitable within a year of the bill's passage, Lujan said. Udall also said the Medicare reimbursement disparity must be addressed by Congress.
"I would like to see us move forward with the robust public option on the House side," Luján said. "That's what I've been advocating all along, and I'll continue to work hard for that."
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