Hypothetical Mean

Commentary from an Actuarial and Economic Perspective

Should the Government Healthcare Plan Get a Free Ride?

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The Senate HELP committee is apparently changing their proposed mechanics for the public plan’s contracting:

In an important distinction, the Senate HELP committee’s plan would not use Medicare payment rates.

Instead it would set fees to doctors and hospitals using an average of what private insurers pay in each local area, according to the summary. That seemingly technical difference could help neutralize opposition from medical providers, who are wary that a public plan will translate into a significant pay cut for them. The health panel’s plan also stipulates that hospitals and doctors would be free to opt in or out.

1) I await with anticipation the large payments from the public plans to private plans to compensate the private plans for the expense of negotating and maintaining their voluntary networks;

2) This can only be calculated on a lag basis; will the reimbursement always be a couple of years behind?

3) What do you do in a geographic area where there are only a limited number of significant private players?

4) The public plans will have a significant actuarial advantage.  Presumably this will be structured by taking an average of last year’s fees and applying them to the next calendar year.  That means next year’s entire fee structure will be known in advance.  That’s a luxury few private plan actuaries have in the commercial market today.  Either we’ll have to get better, or the timing of all private payer contracts will be adjusted to neutralize this advantage.  That means hospitals who find themselves getting into a pickle will just have to wait.

It’s odd that those who believe so strongly in the efficiencies of the public plan have to keep finding ways to cook in advantages for them.

(Incidentally, I’m still waiting to see what sort of interest rates these plans will have to pay on their government start-up loans; smacks of “return to capital” i.e., profit to me)

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Written by Victor

July 1, 2009 at 12:55 pm

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