April 02, 2019

Cardin and Democratic Colleagues Reintroduce Medicare-X to Provide Low-Cost, High-Quality Insurance to Every American

The plan would build on the Medicare framework to establish a public insurance option.

WASHINGTON – U.S. Senator Ben Cardin (D-Md.) joined with Senators Michael Bennet (D-Colo.), Tim Kaine (D-Va.), Amy Klobuchar (D-Minn.), Patrick Leahy (D-Vt., Tina Smith (D-Minn., Debbie Stabenow (D-Mich.), Kamala Harris (D-Calif.), Cory Booker (D-N.J.), Gary Peters (D-Mich., and Dick Durbin (D-Ill.) today to reintroduce legislation that would create Medicare-X, a public plan that would offer families, individuals, and small businesses additional, low-cost health insurance choices and create more competition in the marketplace. The updated Medicare-X Choice Act of 2019 further lowers premiums and increases coverage for Medicare-X consumers and those in the individual market.

"Greater choice and competition within the health care market will help ensure that all Americans will have access to the quality, affordable health care that they need. A public option - which describes who designs and manages the plan and not who provides the medical services - would be the easiest way to provide an affordable, quality choice plan for those not otherwise covered by private insurers and help keep private insurers in check by serving as a low-cost competitor consumers," said Senator Cardin.

Despite the success of the Affordable Care Act, too many Americans still live in areas with limited competition and unaffordable health care costs. In 2019, 17 percent of those enrolled on the exchanges lived in an area with just one insurer.

The plan would build on the Medicare framework to establish a public insurance option. Medicare-X initially would be available on the individual exchange in areas where there is a shortage of insurers or higher health care costs due to less competition—including rural communities in Colorado and Virginia. By 2024, Medicare-X would expand to every ZIP code in the country. By 2025, the public plan would be added as another option on the Small Business Health Options Program (SHOP) Marketplace. 

Medicare-X would use Medicare’s network of doctors and providers and guarantee the essential health benefits established in the ACA, such as maternity care and mental health services. Additionally, it would ensure access to affordable prescription drugs by offering prices negotiated in conjunction with the Medicare Part D program.

The legislation includes several key updates to further lower costs and increase coverage. It eliminates the subsidy cliff for Americans above 400% of the Federal Poverty Level (FPL), ultimately ensuring individuals do not pay more than 13 percent of their income toward their premium for a benchmark plan. It also increases the tax credit for individuals below 400% FPL, authorizes $30 billion over three years for a national reinsurance program, and establishes a grant program to integrate social needs in the delivery of health care services.

The bill text is available HERE. A summary follows.

The Medicare-X Choice Act of 2019

Although the Affordable Care Act expanded health insurance coverage to an additional 20 million Americans, established critical protections for patients with pre-existing conditions, and created a standard for essential health benefits, too many Americans still live in areas with limited competition and high health care costs in the individual market.

The Medicare-X Choice Act builds on the Medicare framework to establish a public option on the individual and small business exchanges. 

Establishment and Plan Availability. In 2021, the Bennet-Kaine Medicare-X plan would be available in areas with one or fewer options on the Exchange. The plan would also be available in rating areas with a shortage of providers or a lack of plan competition, including HPSAs and rural areas. By 2024, the plan would be available in all rating areas. In 2025, it would be available on the Small Business Health Options Program Exchange.

The bill allows the HHS Secretary to contract with outside entities to process claims or administer additional components of the plan. This includes contractors that currently administer certain functions for Medicare. The bill also directs the Secretary to gather data from State Insurance Commissioners in order to set adequate premiums.

Benefits. The plan would cover essential health benefits to align with other plans on the Exchange. Benefits like maternity and newborn care, as well as pediatric services, are optimally suited for Americans under 65, making it practical for families. The bill directs the Secretary to create options in the silver and gold tiers with flexibility to add bronze and platinum options. Advance Premium Tax Credits and Cost-Sharing Reduction payments would be available to enrollees.

Elimination of the Subsidy Cliff by Expanding Eligibility for Premium Tax Credits. The bill would eliminate the subsidy cliff by extending eligibility for the premium tax credit to those at and above 400% FPL. Individuals at 400% FPL would pay 9% of their income toward the “benchmark plan,” increasing to 13% of their income at 600% FPL and above.

Enhancing Premium Affordability for Those Earning Less Than 400% FPL. For Americans below 400% FPL, the bill would reduce the percentage of income one is expected to contribute to the benchmark plan by 0.5 percentage points. These enhancements would promote affordability and encourage more families to get covered.

Reinsurance. The bill authorizes 3 years of funding for a national reinsurance program at $10 billion per year, which would reduce premiums.

Provider Network Reimbursement Rates. Providers who participate in Medicare and/or Medicaid would also accept Medicare-X patients. The bill directs the Secretary to enroll additional providers, such as pediatricians and OB/GYNs. The bill reimburses providers at Medicare rates, with flexibility for the Secretary to reimburse up to 125% of Medicare rates for hospitals and physicians located in rural areas.

Prescription Drugs. The bill gives the Secretary authority to negotiate drug prices under Part D and permits the public plan to participate in those arrangements. The Secretary is encouraged to utilize value-based payment arrangements for prescription drugs.

Delivery System Reform for an Enhanced Health Plan. The bill directs the Secretary to use outcomes-based alternative payment models that are aimed at care coordination for patients with chronic conditions. Providers would use innovative technology, such as telehealth and remote patient monitoring, and integrate social services like food, housing, and transportation. The bill additionally authorizes the Secretary to establish a grant program that would allow for broader experimentation with accountable communities for health, in order to integrate social needs in the delivery of health care services.

Funding. The bill would set premiums to cover the full actuarial cost of the plan, including administrative costs.

Traditional Medicare. The bill would have no effect on benefits offered through Medicare Fee-for-Service (FFS), Medicare Advantage, or the Medicare trust fund.