Medicare ‘Buy-In’: All Roads Lead To Single-Payer

By Sally C. Pipes

Many Democratic politicians believe bigger government will solve America's healthcare woes. But some centrist Democrats worry full-fledged "Medicare for All" will spook independents.

So they've unveiled seemingly moderate plans that would allow people to buy into Medicare before they turn 65. Lawmakers insist these proposals wouldn't abolish private insurance or force everyone into a federal health plan. They'd simply offer another option.

Voters shouldn't buy this. Medicare buy-ins would eventually lead to single-payer. Government rationing and long waits for care would follow.

Last month, Sens. Tammy Baldwin, Debbie Stabenow, and Sherrod Brown introduced the Medicare at 50 Act, which would let Americans 50 or older buy a privately administered Medicare plan through Obamacare's exchanges.

They claim "Medicare at 50" is more feasible than Medicare for All because it would be less expensive and wouldn't force anyone to switch plans.

That's true in the short term. But in the long run, the proposal would lead to Medicare -- and only Medicare -- for everyone.

Medicare's reimbursement rates are lower than those for private insurance. That's part of the appeal of expanding government-run coverage. Proponents argue that Medicare's massive customer base gives the program negotiating leverage to extract better prices from healthcare providers.

But Medicare's payments don't cover the cost of treating its beneficiaries. For every dollar hospitals spent treating Medicare patients in 2017, they received 87 cents in reimbursement. Hospitals balance their books by charging private insurers more.

Supporters of Medicare for More also boast that Medicare doesn't need to turn a profit. Medicare spent more than $700 billion on reimbursements and administrative expenses in fiscal year 2018 but collected $123 billion in premiums, copays, coinsurance, and rebates.

Because Medicare can swallow huge losses and make providers accept cut-rate reimbursements, it could market plans at lower prices than private insurers. As people migrated to cheaper Medicare plans, providers would shift additional costs onto private insurers. That would drive premiums up further.

Medicare plans would become even more appealing. The cycle would repeat until everyone over the age of 50 had opted for Medicare. Exchange customers under the age of 50 would find themselves paying ever more for coverage. Eventually, Congress would sweep the wreckage of the private insurance market into the ballooning Medicare system.

Some House members have proposed an even more ambitious buy-in scheme. The "Medicare for America Act" would automatically enroll the uninsured and those who currently buy coverage in the individual market in Medicare. It would also make Medicare more generous by slashing deductibles and capping out-of-pocket spending, among other things.

Large employers would have to provide benefits comparable to the new plan or contribute 8 percent of their annual payroll to a new Medicare trust fund. Employers typically spend more than 8 percent of payroll on health benefits. Many would choose to cut costs by dumping employees onto the government plan.

Consequently, Medicare for America would lead to de facto single-payer, if not de jure.

Doctor shortages, long waits for treatments, and low-quality care would follow. In the United Kingdom's single-payer system, one-quarter of residents are waiting for some sort of medical appointment or treatment. Under single-payer in Canada, patients waited a median of 19.8 weeks for specialist treatment after being referred by a general practitioner last year.

Medicare buy-ins sound harmless. But these plans would inevitably lead to single-payer -- and the rationing that accompanies it.

Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is The False Promise of Single-Payer Health Care (Encounter 2018). Follow her on Twitter @sallypipes.