Could this be **THE** template for a grand bipartisan compromise reform of Medicare? Thanks to this consolidated DMCB summary, readers will not only get to ponder that question, but contrast their health market and business acumen with non-DMCB coworkers and colleagues with self-serving and career-advancing questions like "So Barry, do you foresee any business opportunities related to the annual risk review audit envisioned in the Wyden Ryan plan?"
Without further ado, here are the facts:
Persons who are currently age 55, i.e. become Medicare eligible on or after January 2, 2022, can choose to be enrolled in either
2) a competing commercial plan with "premium support" funding provided by Medicare. This option includes either old fashioned Medicare Advantage or a fee-for-service plan. Either would be required to provide a benefit package that is "actuarially equivalent" to standard Medicare.
Beneficiaries are given a voucher to pay for Medicare advantage or the fee-for-service plan.
What is the value of the voucher? It depends on a competitive bidding process. Competing commercial plans would have to submit premium bids to CMS. For any service area, the second lowest bid would serve as the local benchmark. If a beneficiary chooses that plan, they would be given a voucher that pays the bid i.e. the full cost of the insurance. Beneficiaries are free to chose other plans that submitted a losing bid, but the beneficiaries pay the difference. If a beneficiary chooses that plan with the lowest bid, Medicare will rebate the difference.
If the beneficiary is older or sicker than average, the amount in voucher will be "risk-adjusted" upward. Lower risk beneficiaries would have their voucher adjusted downward. This is designed to compensate insurance plans for the increased risk of enrolling sicker patients. Participating plans would be required to accept anyone who applies for coverage. That means there would be no underwriting, i.e., no cherry picking i.e. there would be guaranteed issue.
Once enrollment is complete, plans would be subjected to an "annual risk review audit." Those with an excess of low risk enrollees would pay a fee to make up for a more profitable book of business, while those with an excess of high risk enrollees would get a rebate.
If, despite the introduction of competition described above, Medicare's nationwide costs exceed the growth of the U.S. gross domestic product (GDP), Congress would be "required" to act with a suite of options including reducing provider payments or requiring richer seniors to pay more (i.e., means testing).
Competing plans would be listed in an exchange. They would also be closely overseen by CMS.
Beneficiaries could switch plans during an open enrollment period
Medicare's Part A and B deductibles would be combined and a cap that limits out of pocket spending.
So what is the DMCB's take:
"Medicare Advantage" and fee-for-service plans for Medicare beneficiaries are not new. What's new is the introduction of vouchers. The DMCB predicts critics will view vouchers as a political Trojan Horse ultimately intended to undo traditional Medicare.
The plan relies on competitive bidding to drive down costs. It's unclear if bidding will be the "tail" that wags the "dog" of an aging U.S. population that wants the best and a health care-technology industrial complex that wants to sell their goods at the highest price point they can justify.
Recall all those past protests from the insurance industry over the prospect of competing with a publicly funded program? The DMCB thinks this is different because they will benefit from Medicare's price controls.
Ingredients for commercial insurer voucher success will include actuarial smarts over the details of prospective risk adjustment and retroactive claw backs, neutralizing the pernicious effects of variation with high enrollment and not only making money but doing right by the beneficiaries with a higher level of service. If all they do is return value to their investors, Congress will shut 'em down.