Medicare expansion idea raises healthcare reform hopes

Reporting from Washington and Chicago — 

The new proposal for breaking the healthcare impasse in the Senate -- based on a large expansion of the Medicare program -- raised hopes Wednesday among Democrats that the way may be clearing to pass their massive bill by Christmas.

The deal, which emerged late Tuesday night after days of negotiations among a group of 10 Democratic senators, dropped the idea of a government-run insurance program. Moderates feared that such a program would be the first step toward a government takeover of the insurance system.

But by enlarging Medicare eligibility to Americans 55 and older, from the current 65 and older, the bill has attached itself to an existing government plan, the huge and hugely popular federal health insurance program for seniors. Potentially millions of Americans could sign up for a program that has been embraced by both parties as a safety net for the country’s retirees.

The notion that the Senate healthcare bill might have suddenly expanded its base of political support quickly took hold Wednesday. President Obama endorsed the compromise. Many liberals who had been disappointed in the derailing of a government-run plan, or so-called public option, to compete with private insurers hailed the Medicare expansion idea.

“Expanding Medicare is an unvarnished, complete victory for people like me,” said Rep. Anthony Weiner (D-N.Y.). “It’s the mother of all public options. We’ve taken something people know and expanded it.”

Even Rep. Lynn Woolsey (D-Petaluma), a leader of the Congressional Progressive Caucus and a strong proponent of a government-run plan, was cautiously optimistic.

“It doesn’t have to be a public option,” Woolsey said. What matters is that the healthcare bill increases competition, affordability and the number of people insured, she said.

Several key centrist Democrats also endorsed the proposal.

“It is a very good idea,” said Sen. Mary L. Landrieu (D-La.), one of the Democratic negotiators who had said that she would not vote for a bill that included an entirely new government insurance plan.

Despite the enthusiasm, the proposal must clear at least one big hurdle: cost. The nonpartisan Congressional Budget Office has not yet analyzed the idea, and its conclusions could be a major factor -- positive or negative -- in determining whether the compromise opens the way for final Senate action on healthcare.

Senate Majority Leader Harry Reid (D-Nev.) still has to find 60 votes to pass the bill under Senate rules. The 58 Democrats and two independents who caucus with them would be enough, but several are still undecided.

Senate Democrats did not release details Wednesday of how the Medicare expansion could work -- including the extent of subsidies that could be provided to those who sign up, a provision that could be key to the proposal’s political fate.

Without subsidies, people signing up for Medicare could face premiums exceeding $600 a month, according to an earlier estimate by the Congressional Budget Office.

Still, the idea opened up some potentially game-changing possibilities.

Todd Swim, a partner with the health benefits consulting firm Mercer, said that a Medicare expansion could have profound effects on employers and their workers.

“This is the biggest news in this whole reform thing,” he said. “Those 55 to 65 are the most expensive for employers to cover, and they pay the most if they have to buy coverage on their own. . . . Access to medical care is one of the biggest inhibitors to retiring early, and a lot of people are going to be looking at that as an option.”

Although Americans in this age group are more likely to have insurance than those in their 20s or 30s, they often have a difficult time getting coverage if they change or lose jobs because of preexisting medical conditions.

Depending on how an expansion is structured, Medicare could offer many of these people a relatively affordable alternative to commercial insurance, he said. Next year, most Medicare beneficiaries will pay a monthly premium of just $110.50, although people who make more than $85,000 a year pay higher rates. Many Americans on Medicare also buy supplemental coverage and drug plans.

“The price point will be much more affordable than any option they have,” Swim said.

That is one of the reasons that earlier proposals for Medicare expansion were very popular. Three in four Americans surveyed earlier this year by the nonprofit Kaiser Family Foundation said that they backed the idea.

A Medicare expansion also could potentially help contain healthcare costs because the program typically pays providers less than commercial insurers.

In contrast, in plans included in the House healthcare bill that passed last month, the government would have to negotiate its own rates with providers. The nonpartisan Congressional Budget Office concluded that those government plans would end up charging more than commercial competitors.

The compromise that emerged Tuesday night in the Senate would allow the government to contract with private nonprofit insurers to provide coverage for Americans who could not obtain it through their employers. The government would not run the plans, but would ensure that they met standards for quality and affordability.

Some on the left remained disappointed by the compromise.

“We’re glad that there is a strong public option for people between 55 and 64,” said Richard Kirsch, national campaign manager for Health Care for America Now, a coalition of liberal grass-roots groups and labor unions. “But the nonprofit plans are not a substitute for the rest of the population.”

MoveOn.org sent an e-mail to its membersWednesday charging that Democrats had “bargained away the heart of healthcare reform” and urging members to pressure lawmakers to create a new government insurance plan without age limits.

The bigger challenge confronting Democratic leaders now may be on the conservative side of their caucus.

Many lawmakers from rural states have long complained that Medicare’s complex payment formulas shortchange healthcare providers in their areas, a critique renewed this week by lawmakers including Sen. Kent Conrad (D-N.D.).

Others, including Sen. Joe Lieberman (I-Conn.), a key swing vote whom Democrats will probably need to pass a bill, said that he was concerned about ensuring that new beneficiaries are not a further drain on Medicare.

“We must remain vigilant about protecting and extending the solvency of the program, which is now in a perilous financial condition,” Lieberman said. Medicare is now expected to begin running a deficit in seven years.

The move to expand Medicare also drew fire from doctors and hospitals, which have been key allies in Democrats’ bid to reshape the nation’s healthcare system. Many providers also worry about how much Medicare pays.

But Wednesday, it seemed to be sinking in that the popular appeal of Medicare might change the healthcare equation on Capitol Hill.

Weiner, the New York congressman, marveled at the strange turn of events.

“This is the weirdest Kabuki dance,” he said. “To get conservative Democrats, we have to expand the Medicare program.”

noam.levey@latimes.com

bjapsen@tribune.com

Staff writer Janet Hook in the Washington bureau contributed to this report.