Buttigieg’s Health Plan Gets One Big Thing Right

His proposal explicitly calls out hospital and provider prices as a critical driver of health care costs.

by Max Nisen – Sept 19, 2019 (Bloomberg.com)

Mayor Pete Buttigieg of South Bend, Indiana, jumped into the Democratic presidential primary’s most contentious issue on Thursday with the release of his “Medicare for All Who Want It” outline. A particularly bold part of his health plan tackles a key issue largely avoided by the other candidates. 

Buttigieg’s proposal would retain the private insurance market, create a public health insurance option with limited auto-enrollment and boost subsidies for lower-income Americans. Buttigieg’s proposal explicitly calls out hospital and provider prices as a critical driver of health care costs. His plan would cap out-of-network provider charges at double what Medicare would pay for the same service. Many providers charge substantially more than that, but even Democratic presidential candidates tend to avoid the issue and focus on easier political targets like insurers and drugmakers.

Hospital care and physician and clinical services accounted for more than half of America’s $3.5 trillion in health care spending in 2017. Provider prices have been rising more rapidly than inflation for years, which helps explain why the U.S. spends so much more than other developed countries. For example, the average cost of bypass surgery in the U.S. was $78,318 in 2014. The same surgery cost $34,224 on average in Switzerland that year and $24,059 in the U.K. That sort of gap is not unusual.

In addition to already inflated pricing and spending, there are countless individual examples of abusive pricing and behavior from providers.

Buttigieg’s willingness to openly address the issue is a refreshing step forward in the health policy debate and boosts the appeal of his plan. His proposal would retain many of the current system’s flaws, even with the addition of a public option. But the cap has the chance to improve matters substantially. On top of cutting outlier prices, it would bolster negotiating leverage for the public option and private plans by making it less lucrative for providers to refuse to join insurance networks. It could bring the cost of insurance and care down and expand access in a less disruptive manner. 

In many ways, his plan still falls far short of single-payer options. Medicare for All could do far more to bring costs down by folding people with private insurance into a national plan and would provide substantially more generous coverage to many more people.

The cost of such a plan and voter concerns about eliminating private coverage means it’s not guaranteed to pass even if Democrats take back the White House and Senate. In that light, it’s refreshing to have a more moderate alternative that at least acknowledges and attempts to tackle one of the health system’s biggest issues. 

[read in full at Bloomberg.com]

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