Feb 20, 2020 - Health

Democrats' quiet proposal to cut health care costs

Illustration of a donkey with a stethoscope on a $100 dollar bill

Illustration: Eniola Odetunde/Axios

Yet again, the 2020 Democrats debated last night without devoting much attention to their very interesting ideas for controlling health care costs. But whether they talk about it or not, they've laid out a broad range of ideas for this incredibly pressing issue.

The big picture: Democrats' ideas run the gamut, from taking control over all health care purchasing to plans that would directly regulate a slice of the market, attempting to put pressure on the rest of it.

The newest entrant to the debate stage, Mike Bloomberg, has proposed a plan that similar to Pete Buttigieg's.

How it works: Bloomberg and Buttigieg's plans would only directly regulate how much providers can charge patients whose insurance they don't accept. They would only allow out-of-network charges up to 200% of the rates Medicare pays.

  • "Caps on out of network prices would sort of nudge the whole system to make it more affordable," said the Kaiser Family Foundation's Larry Levitt. "It’s kind of price controls lite."
  • Today, providers use the threat of big out-of-network bills as leverage to get better rates from insurers. These proposals would flip those incentives, giving insurers more leverage.

Details: Bloomberg's cap is limited to hospital charges, while Buttigieg's applies to most health care providers.

  • This kind of cap would likely have more of an impact on emergency rooms, where many big out-of-network bills come from, experts said.
  • "This type of policy could drive a significant reduction in prices for a moderate-sized slice of health care spending," Brookings' Matt Fiedler said.

Moderate Democrats have also proposed a public insurance option, competing alongside private insurance.

  • Part of the rationale for a public option is that, by attracting more people into a Medicare-like program, it could help create competitive pressures that would drive down prices across the board.

Then there's Medicare for All, which would make the federal government the only entity that pays for health care, giving it complete control over how much all providers get paid.

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