Medicare for All and Its Rivals | Annals of Internal Medicine | American College of Physicians

Richard’s Note: A shout-out to Don McCanne for posting this today from the Annals of Internal Medicine, which is providing the full article for free. The authors, Steffie Woolhandler and David Himmelstein, both MDs, should be familiar to readers as two of the authors I covered in my review of the Waitzkin, et al. book, Health Care Under the Knife: Moving Beyond Capitalism for Our Health. In the spirit of the AIM, I am posting the entire article below with link to the original. It is that important.

Medicare for All and Its Rivals: New Offshoots of Old Health Policy Roots

The leading option for health reform in the United States would leave 36.2 million persons
uninsured in 2027 while costs would balloon to nearly $6 trillion (1). That option is called the
status quo. Other reasons why temporizing is a poor choice include the country’s decreasing life
expectancy, the widening mortality gap between the rich and the poor, and rising deductibles
and drug prices. Even insured persons fear medical bills, commercial pressures permeate
examination rooms, and physicians are burning out.
In response to these health policy failures, many Democrats now advocate single-payer,
Medicare-for-All reform, which until recently was a political nonstarter. Others are wary of
frontally assaulting insurers and the pharmaceutical industry and advocate public-option plans
or defending the Patient Protection and Affordable Care Act (ACA). Meanwhile, the Trump
administration seeks to turbocharge market forces through deregulation and funneling more
government funds through private insurers. Here, we highlight the probable effects of these
proposals on how many persons would be covered, the comprehensiveness of coverage, and
national health expenditures (Table).

Table. Characteristics of Major Health Reform Proposals as of March 2019

Medicare for All

Medicare-for-All proposals are descendents of the 1948 Wagner–Murray–Dingell national health
insurance bill and Edward Kennedy and Martha Griffiths’ 1971 single-payer plan (2). They would
replace the current welter of public and private plans with a single, tax-funded insurer covering
all U.S. residents. The benefit package would be comprehensive, providing first-dollar coverage
for all medically necessary care and medications. The single-payer plan would use its
purchasing power to negotiate for lower drug prices and pay hospitals lump-sum global
operating budgets (similar to how fire departments are funded). Physicians would be paid
according to a simplified fee schedule or receive salaries from hospitals or group practices.
Similar payment strategies in Canada and other nations have made universal coverage
affordable even as physicians’ incomes have risen. These countries have realized savings in
national health expenditures by dramatically reducing insurers’ overhead and providers’ billing-
related documentation and transaction costs, which currently consume nearly one third of U.S.
health care spending (3). The payment schemes in the House of Representatives’ Medicare-for-
All bill closely resemble those in Canada. The companion Senate bill incorporates some of
Medicare’s current value-based payment mechanisms, which would attenuate administrative
savings. Most analysts, including some who are critical of Medicare for All, project that such a
reform would garner hundreds of billions of dollars in administrative and drug savings (4) that
would counterbalance the costs of utilization increases from expanded and upgraded coverage.
Reductions in premiums and out-of-pocket costs would fully offset the expense of new taxes
implemented to fund the reform.

 

“Medicare-for-More” Public Options

Public-option proposals, which would allow some persons to buy in to a public insurance plan,
might be labeled “Medicare for More.” Republicans Senator Jacob Javits and Representative John
Lindsay first advanced similar proposals in the early 1960s as rivals to a proposed fully public
Medicare program for seniors. This approach resurfaced during the early 1970s as Javits’
universal coverage alternative to Kennedy’s single-payer plan and gained favor with some
Democrats during the 2009 ACA debate.
Policymakers are floating several public-option variants, most of which would offer a public plan
alongside private plans on the ACA’s insurance exchanges. Although a few of these variants
would allow persons to buy in to Medicaid, most envision a new plan that would pay Medicare
rates and use providers who participate in Medicare. Positive features of these reforms include
offering additional insurance choices and minimizing the need for new taxes because enrollees
would pay premiums to cover the new costs. However, these plans would cover only a fraction
of uninsured persons, few of whom could afford the premiums (5); do little to improve the
comprehensiveness of existing coverage; and modestly increase national health expenditures.
The Medicaid public-option variant, which many states might reject, would probably dilute
these effects.
Medicare for America, the strongest version of a public-option plan, would automatically enroll
anyone not covered by their employer (including current Medicare, Medicaid, and Children’s
Health Insurance Program enrollees) in a new Medicare Part E plan. It would upgrade
Medicare’s benefits, although copayments and deductibles (capped at $3500) would remain.
The program would subsidize premiums for those whose income is up to 600% of the poverty
level, and employers could enroll employees in the program by paying 8% of their annual
payroll. The new plan would use Medicare’s payment strategies and include private Medicare
Advantage (MA) plans (which inflate Medicare’s costs [6]) and accountable care organizations.
Medicare for America would greatly expand coverage and upgrade its comprehensiveness but
at considerable cost. As with other public-options reforms, it would retain multiple payers and
therefore sacrifice much of the administrative savings available under single-payer plans.
Physicians and hospitals would have to maintain the expensive bureaucracies needed to
attribute costs and charges to individual patients, bill insurers, and collect copayments. Savings
on insurers’ overhead would also be less than those under single-payer plans. Overhead is only
2% in traditional Medicare (and 1.6% in Canada’s single-payer program [7]) but averages 13.7%
in MA plans (8) and would continue to do so under public-option proposals. Furthermore, as in
the MA program, private insurers would inflate taxpayers’ costs by upcoding as well as cherry-
picking and enacting network restrictions that shunt unprofitable patients to the public-option
plan. This strategy would turn the latter plan into a de facto high-risk pool.

The Trump Administration White Paper and Budget Proposal

Unlike these proposals, reforms under the Trump administration have moved to shrink the
government’s role in health care by relaxing ACA insurance regulations; green-lighting states’
Medicaid cuts; redirecting U.S. Department of Veterans Affairs funds to private care; and
strengthening the hand of private MA plans by easing network-adequacy standards, increasing
Medicare’s payments to these plans, and marketing to seniors on behalf of MA plans. A recent
administration white paper (9) presents the administration’s plan going forward: Spur the
growth of high-deductible coverage, eliminate coverage mandates, open the border to foreign
medical graduates, and override states’ “any-willing-provider” regulations and certificate-of-
need laws that constrain hospital expansion. The president’s recently released budget proposal
calls for cuts of $1.5 trillion in Medicaid funding and $818 billion in Medicare provider payments
over the next 10 years.
Thus far, the effects of the president’s actions—withdrawing coverage from some Medicaid
enrollees and downgrading the comprehensiveness of some private insurance—have been
modest. His plans would probably swell the ranks of uninsured persons and hollow out
coverage for many who retain coverage, shifting costs from the government and employers to
individual patients. The effect on overall national health expenditures is unclear: Cuts to
Medicaid, Medicare, and the comprehensiveness of insurance might decrease expenditures;
however, deregulating providers and insurers would probably increase them.
In 1971, a total of 5 years after the advent of Medicare and Medicaid, exploding costs and
persistent problems with access and quality triggered a roiling debate over single-payer plans.
As support for Kennedy’s plan grew, moderate Republicans offered a public-option alternative,
1 of several proposals promising broadened coverage on terms friendlier to private insurers.
Kennedy derided these proposals by stating, “It calms down the flame, but it really doesn’t meet
the need” (10). President Nixon’s pro market HMO strategy—a close analogue of the modern-
day accountable care strategy—ultimately won out, although his proposals for coverage
mandates, insurance exchanges, and premium subsidies for low-income persons did not reach
fruition until passage of the ACA.
Five years into the ACA era, there is consensus that the health care status quo spawned by
Nixon’s vision is unsustainable. President Trump would veer further down the market path.
Public-option supporters hope to expand coverage while avoiding insurers’ wrath. Medicare-
for-All proponents aspire to decouple care from commerce.

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