With 12 Senate Democrats and Independent Joe Lieberman lined up against allowing an early buy-in into Medicare, the idea is basically dead.

When Rep. Anthony Weiner, D-NY, said it would be “the mother of all public options,” he called the Democrats’ hand. “Expanding Medicare is an unvarnished, complete victory for people like me who support a single-payer system,” Weiner boasted. “Never mind the camel’s nose – we got his head and neck in the tent.”

A Medicare buy-in has all of the problems of a public option, especially below-cost payment rates. Hospitals and doctors responded quickly and came out forcefully against the proposal. The Mayo Clinic sent a letter saying, “Any plan to expand Medicare, which is the government’s largest public plan, beyond its current scope does not solve the nation’s health care crisis, but compounds it.”

The Washington Post took on the idea in a scathing editorial last week. “The only thing more unsettling than watching legislative sausage being made is watching it being made on the fly,” the editors wrote. “The irony of this late-breaking Medicare proposal is that it could be a bigger step toward a single-payer system than the milquetoast public option plans rejected by Senate moderates as too disruptive of the private market."

And even without the proposed buy-in, Medicare Actuary Rick Foster said in his latest report released last week that the Senate bill would increase health spending, cause millions of people to lose their current coverage, and cause at least 20 percent of Medicare providers to go under.

Clearly senators heard from their constituents who told them that expanding Medicare is a very bad idea.

It is a clumsy response to a problem that needs a much more sophisticated solution. Subsidies should be targeted to those who need help in purchasing coverage. Those with lower incomes, limited options to obtain group coverage, and difficulty purchasing insurance because of health problems, whatever their age, should be the first focus of reform.

Allowing everyone from an age group to buy in to Medicare is a blunt approach that would cause a cascade of unnecessary distortions in the existing market. The goal should be to help people purchase coverage they can keep over time, with security that comes from ownership of the policy and a guarantee that it can be renewed at a fair price.

It has been 178 days since Democrats introduced the first version of President Obama's health plan, and a growing chorus of voices is demanding that the Congressional Budget Office reveal the full cost of Sen. Harry Reid's health care legislation -- including the cost of the private-sector mandates.

• Philadelphia Inquirer columnist Kevin Ferris writes: "Have the CBO score the entire Senate bill -- both on-budget expenses and off. Let senators and taxpayers see the real cost - before a vote is taken. Then decide what the nation can afford."
• Former New Jersey Governor and EPA administrator Christie Whitman -- who should know a little something about private-sector mandates -- writes: "the CBO estimates do not count the costs the private sector will have to pay to insurance companies as 'taxes,' even though they are surely costs for the system...I believe we need health care reform in this country. But we should start with honest accounting, responsible fiscal policies for the sake of our grandchildren, and a recognition of who is really going to shoulder the burden of this undertaking. Anything less is just more of the same."

I also had an oped in Sunday's Richmond Times-Dispatch where I argue that if Sen. Jim Webb (D-Va.) really meant what he wrote to Majority Leader Harry Reid back in October about holding an open and honest debate, Webb should insist on a complete CBO cost estimate -- including the cost of the private-sector mandates -- before the bill moves any further.

(Cross-posted at Cato@Liberty.)

It’s amazing how desperate Harry Reid and his colleagues have become. We are getting a radically new idea every other week. This one is a nonstarter.

If people have to pay the full (unsubsidized) premium, no one will enroll in Medicare. As explained at my blog post this morning, compared to insurance sold in a health insurance exchange, Medicare will be overpriced and offer inferior coverage.

Paul Ginsburg is correct on this point.

America’s hospitals strongly support health care reform, especially a much-needed expansion of health care coverage. That is why the field in July agreed to reductions of up to $155 billion in future hospital reimbursement in exchange for covering 97 percent of those legally residing in the country. But this latest proposal could overwhelm a financially shaky program seniors depend on and raise costs for the rest of us.

One key reason health care costs are higher for everyone is that Medicare does not pay its fair share of the cost of care. Reform should end this “cost shift” not make it worse. The Medicare Payment Advisory Commission (MedPAC) underscored this point last week, reporting that hospitals’ Medicare margins dropped from negative 6 percent in 2007 to an historic low of negative 7.2 percent in 2008. With Medicare making up about 40 percent of hospitals’ revenues – and for many hospitals, it is much more – this could significantly affect hospitals’ ability to provide the services communities depend on such as trauma care, emergency care and disaster preparedness. Making millions of non-seniors eligible for Medicare at the same time that millions more baby boomers are reaching retirement age will further weaken the program and put many hospitals at tremendous risk.

Health care reform is critical, and we are closer than ever. But reform that expands a program facing already tough financial challenges is not true reform.

Senator Harry Reid’s late night announcement to open Medicare enrollment to individuals aged 55 – 64 would represent a dangerous and costly move that would send the U.S. healthcare system spiraling toward a single-payer model. Even the Washington Post editorialized last week that this was a bigger step toward a single-payer healthcare system than the public option.

Prominent Senators like Joe Lieberman (I-VT) and Olympia Snowe (R-ME) have already expressed concerns about the back room deal (the details of which are even being disputed among the 10 Democratic senators present for the negotiation). These concerns likely include not only the step toward single-payer, but the long-term solvency of Medicare. It is a fact that the program will be broke in seven years, and shifting millions of the highest utilizers of medical care from the private system into Medicare would likely cripple the system. Minority Leader Mitch McConnell was exactly right when he said, “If your goal was to come up with a plan for financial ruin, you couldn’t come up with a better idea than cutting a program by $500 billion and simultaneously expanding the number of people it is required to cover.”

The American people deserve common sense health reform with deliberate, thoughtful, and public debate—not decided by a group of 10 Democratic senators in a back room of the Capitol. The Center for Health Transformation continues to create and advocate for intelligent reform that will improve quality and lower costs for every American. Senator Reid’s latest plan will do just the opposite and should be rejected.

A Medicare early buy-in for 55-64 year olds is not a new idea. It has been previously proposed as a useful incremental step in extending coverage to people who otherwise have great difficulty obtaining health insurance in the current system. In the context of broader health care reform, however, the role of an early buy-in would be different than the one conceived by its proponents in years past. This does not mean it is a bad idea; quite the contrary – it could serve a valuable role in a reformed health care system. But maximizing the effectiveness of an early buy-in raises several key questions that are yet to be answered.

In the past, an early buy-in was seen as a way to get coverage to 55 to 64 year olds for whom the existing health insurance system does not work. Early retirees are especially vulnerable to being uninsured when they leave their employer and lose their connection to employer-sponsored coverage. People ages 55-64 are actually less likely to be uninsured than those ages 19-34 and 35-54 (only 12 percent of those 55-64 are uninsured, compared to 17 percent for ages 35-54 and 28 percent for ages 19-34, according to the Kaiser Family Foundation). Those who are uninsured, however, are much more likely to be in fair or poor health than their younger uninsured counterparts (25 percent for ages 55-64, compared to 16 percent for ages 35-54 and 6 percent for ages 19-34, again according to the Kaiser Family Foundation).

These sicker, older adults who have no access to group coverage face substantial and sometimes insurmountable burdens when they try to obtain insurance in the existing private individual market. They often have pre-existing conditions that insurers will not cover. They are usually subject to underwriting and age rating that increase premiums well beyond what an individual can afford. The policies they can afford often have large omissions in coverage. And in some cases, insurers may refuse to cover someone with pre-existing conditions at any price. In the absence of other health reform, a Medicare early buy-in has been seen as a relatively simple, incremental way of getting help to people who have few other viable options

Today, however, we are on the brink of major reforms to our health care system. A Medicare early buy-in would exist within a new framework built around a well-regulated marketplace or exchange. Health insurance plans will be subject to much stronger consumer protections, including prohibitions on exclusions for pre-existing conditions and strict limits on age-rating and other underwriting. Lower-income people will be eligible for subsidies to assist them with premiums and out-of-pocket costs. Creating an early buy-in within this new system is by no means a bad idea – it could in fact work very well. But including an early buy-in in the reformed system raises important questions about how these parts would work together. Key questions include:

1. Subsidies: Both the House and Senate bills recognize that subsidies are necessary to make health coverage and care affordable for people with low to moderate incomes (up to 400 percent of the poverty level). In Medicare the federal government subsidizes about 75 percent of the Part B and D premiums for most beneficiaries and most beneficiaries pay no Part A premiums because they have paid sufficient payroll tax. Because the remaining premiums and cost-sharing can still be quite substantial, an array of additional subsidies are available for those with incomes up to 150 percent of the poverty level. It is currently not clear what subsidies would apply to a Medicare early buy-in. Congress will have to ensure that an early buy-in option is affordable and determine what combination of policies to use to accomplish this goal.

2. Benefits: Medicare has, in many respects, an excellent benefits package, but it is also incomplete. Notably, it has no annual or lifetime out-of-pocket limits. Plans in the exchange will be required to have such limits. Congress will need to determine how the out-of-pocket limits would apply to a Medicare early buy-in.

3. Risk pooling: It is unclear who would be most interested in joining an early buy-in. On average, 55 to 64 year-olds are healthier than people with Medicare, and so including the buy-in population with the existing Medicare risk pool could strengthen Medicare’s fiscal status. On the other hand, if the early buy-in attracts a disproportionate share of those in poorer health, it may make more sense to create a separate risk pool to avoid an adverse impact on existing Medicare beneficiaries.

None of these questions creates insurmountable obstacles to a Medicare early buy-in. Including such an option in health care reform legislation could be a useful and valuable component of a reformed health care system. But Congress needs to recognize that designing an early buy-in that works well to serve older adults who need help the most will require some careful planning.

The idea of a Medicare buy-in for the near elderly has long been discussed as a way to augment the rate of insurance coverage for that population. But it becomes a totally different idea in the context of the House or Senate health reform bills. These bills already include solutions for the near elderly’s insurance coverage problems. Those with the lowest incomes would be eligible for Medicaid. Others can go to an insurance exchange, obtain a subsidy if they are eligible, and enroll in a private plan at a very attractive premium. I call the premium “attractive” because under the 3:1 or 2:1 modified community rating, the near elderly will be subsidized by younger people in the pool. In addition, they will not face medical underwriting. So where does a Medicare buy-in fit? Given these alternatives, a Medicare buy-in will not be attractive to many near elderly without a very substantial (and expensive) subsidy. Lower hospital and physician payment rates will not be enough. The idea strikes me as simply an ideological statement about the role of public plans, Medicare specifically, in our future. I know how important these politics are at the moment, but in the context of the reform legislation, Medicare buy-in today strikes me as redundant.