Although the details have not been released, Majority Leader Harry Reid (D-NV) has floated yet another potential “compromise” to his health care bill. There appear to be two broad elements: a federal insurance plan run by the Office of Personal Management and a Medicare buy-in option for Americans over 55.

Don’t Be Fooled. There is nothing new or original about these ideas. Both these policies have been recycled from previously failed efforts. Senator John Kerry’s (D-MA) health care proposal from his 2004 failed Presidential bid included a federal plan run by the Office of Personal Management (OPM). The Medicare buy-in was proposed by President Clinton in 2000. Those ideas were bad when they were introduced and are no better today.

  • New Federal Insurance Plan. The compromise proposal appears to envision giving the Office of Personal Management the authority to contract with a private, non-profit to administer a special federal health plan. There are several key problems with such an approach. First, running a stand alone health plan, in effect, a public plan for the entire nation, will undoubtedly result in higher taxpayer costs. In other words, the size of government, once again will grow. Taxpayers can expect new demands for funding. Second, if OPM was given broad power to negotiate and determine services, benefits, premiums, etc., this federal plan would be no different than the older version of the “ public plan” that so many are bitterly opposed to; merely because the public plan is ”private” in name only doesn’t change a thing. Finally, shifting this public plan option to OPM means the Director of OPM could end up as the ultimate health care czar, reporting directly to the President.
  • Medicare Buy In. The compromise proposal suggests allowing individuals 55 to 64 to “buy-in” to the Medicare program early. This too has multiple problems. First, opening Medicare will lead to selection issues. As CBO points out, enrollees would likely be higher users of medical services which would be reflected in higher premiums. To address this, the government may likely subsidize these enrollees, adding more cost to the taxpayers. Second, it would also likely create a crowd-out effect, where the government buy-in option squeezes out the availability of private coverage, including retiree coverage from a former employer. Finally, Medicare is already fiscally unsustainable. This solution would only accelerate its doom.
  • Medicaid Expansion. While reports claim that the idea of expanding Medicaid even further beyond what is currently in the bill appears to be off the table, it should be noted that while the Senate bill includes a Medicaid expansion to 133% FPL, the House bill goes much further, raising eligibility to 150% FPL. Therefore, an even bigger Medicaid expansion may not be a dead deal.

Still Plenty Wrong With The Bill. Regardless of the merits of Majority Leader Reid’s latest attempt at a compromise, there is plenty wrong with the Patient Protection and Affordable Care Act – massive consolidation of regulatory authority over health care to the federal government; unintended consequences of the employer mandate; constitutional concerns over the individual mandate; inequities created through the subsidy structure; massive Medicaid expansion; Medicare “savings” shifted out of Medicare; and a flood of new taxes that impact Americans regardless of income – to name just a few.