The Pleasant Illusions Of The Medicare-for-All Debate
Reprinted with permission from Prospect.
Since campaigns for public, tax-financed health insurance began just over a century ago, they have followed a pattern. During the early phase, the advocates of transformative change are convinced that they have a winning cause, only to find out as the battle develops that they have less support and face more intense opposition than they expected.
Crushing defeat was the fate of the health insurance campaigns during the Progressive era and again under Franklin D. Roosevelt and Harry Truman. It was only when reformers retreated to a more limited program for seniors that Medicare passed in 1965, with Medicaid added almost as an afterthought.
The cycle was repeated in the late 20th century. Campaigns for national health insurance in the late 1960s and early 1970s and under Bill Clinton in the 1990s began amid a widespread conviction that Congress would pass a national program. But it was only when reformers retreated to a more limited measure under Barack Obama that the Affordable Care Act passed in 2010.
Now, the cycle is under way again as many people on the left believe that the moment has finally arrived for what has been rebranded as “single payer” or “Medicare for all.”
I’ve spent a good deal of my life writing about the history of health care and health policy and working for universal coverage, including the time I spent in the Clinton White House on it. I agree that at this point we ought to expand Medicare’s framework for health insurance, which works better than the ACA’s. But we also need to appreciate why the more aggressive proposals to expand Medicare are going to meet intense and likely devastating opposition.
Medicare-for-all can mean one of four substantially different alternatives, each with many variations. The Medicare program today consists of both a public Medicare plan and private “Medicare Advantage” plans. (One-third of Medicare beneficiaries choose a private plan.) So the first difference among Medicare-for-all proposals is whether they extend the public Medicare plan alone (“single payer”) or the Medicare program as a whole, including Medicare Advantage.
In addition, Medicare-for-all may mean making Medicare the exclusive framework for health insurance in the United States or making it available as an option to all who want to buy it (which could include employers as well as individuals who buy insurance on their own).
The table below shows these four alternative interpretations of Medicare for all.
These four different proposals vary in their political as well as policy implications. Single-payer would make three big changes that would be guaranteed to generate massive opposition:
- It would eliminate not only the private, employer-sponsored plans that cover a majority of Americans, but also the private plans within Medicare. If you like your insurance now, you will surely not be able to keep it.
- It would require that taxes be raised to replace the funds now raised through insurance premiums as well as nearly all out-of-pocket spending (at least in the version Senator Bernie Sanders has called for). To give a rough idea of the magnitudes involved, insurance premiums and out-of-pocket spending in 2017 amounted to $1.6 trillion, just about the same total as the personal income tax raised. So, even allowing for big savings, imagine raising even three-quarters of that in new taxes.
- It would subject all providers to Medicare payment rates, radically reducing revenues to health-care providers, many of which receive payment from the privately insured at much higher levels. Members of Congress could count on hearing from health-care leaders about the local hospital that will close, the cancer center that won’t be built, and the layoffs that will follow. And not all of this will be untrue.
The other Medicare-for-all alternatives would also generate intense opposition, though not as much as single-payer. A universalized Medicare program—number 2 above—would allow for private insurance options, but it would still disrupt existing employer-based coverage, require more or less the same tax increases, and sharply cut payment rates (although with somewhat more flexibility).
The two Medicare-available-to-all alternatives answer concerns about taking away people’s existing coverage. But, depending on the way the proposals are designed, they could also produce a problem known as “adverse selection” for the Medicare program. Medicare would become more expensive because of who enrolled. For example, the employers that opted into Medicare would likely be the ones with the oldest workers and highest health-care costs.
Much of the discussion about Medicare-for-all proceeds on the assumption that the opposition would come mainly from private insurers. But this grossly underestimates the likely opposition from a fully mobilized health care industry (representing nearly a fifth of the economy) and the protected public, including current Medicare beneficiaries. Seniors are the age group most consistently opposed to Medicare-for-all; many of them fear that in a program for the entire population, they would lose their privileged position.
Then there’s also the likely opposition of Democrats, including many progressives, who would be worried that the huge fiscal demands of Medicare-for-all will preclude raising revenue for all the other good causes they support.
Medicare-for-all does have one great advantage: The term is vague enough so that Democratic leaders who say they support it can downshift to more moderate versions of the idea. They can say that the purer Medicare-for-all alternatives are “aspirational” and that they support many different bills. When cost estimates start coming in and they see the implications for the rest of their agenda, they can downshift still further on the grounds that transitional steps are needed.
This is predictable. Please don’t be crushed when your favorite Democratic presidential candidate or the eventual nominee makes these adjustments. Democrats can do a lot of good by delivering Medicare-for-more without sacrificing everything else they believe in for the sake of Medicare-for-all.