What Medicare For All Might Look Like If It Really Happened
Feb. 14--The concept of expanding Medicare coverage to not only seniors and disabled people but just about everyone, has recently shot up in popularity among Democrats and party activists at the national level.
Among proponents of so-called Medicare for All, there are varying ideas for how such a government-paid and government-administered health insurance system would work and how exactly it would affect patients, doctors, hospitals and insurance companies.
Still, there are key similarities in the proposals put out so far for either a national or one-state-only Medicare for All system:
They would all entail expanding insurance coverage -- and raising taxes a lot.
Yet they also could result in lower total health care spending across the private sector that could make up for all the new taxes. For instance, businesses and families could end up paying less for health care overall, even considering the additional health care taxes.
Some of the overall savings, however, could require cutting the pay of highly skilled doctors.
Using studies and interviews with health care experts, the Detroit Free Press analyzed the potential effects -- statewide and national -- of a direct expansion of Medicare to people of all ages.
The likely winners:
-- Uninsured Americans
-- Those with expensive premiums and/or high deductibles in their current insurance plan
The likely losers:
-- Highly paid doctors
-- Pharmaceutical companies
-- Some hospitals and clinics
Possible losers:
-- Those who really like their employer's health insurance
-- Insurance company employees -- if insurance companies are downsized or go away.
Support for Medicare for All has reportedly emerged as a litmus test of sorts for Democrats vying for their party's nomination for president in 2020.
It is considered one of the more practical ways to extend and beef up insurance coverage because Medicare already exists for those who are 65 or have certain disabilities, and expanding the program wouldn't entail a dramatic government takeover of hospitals.
Since the 1940s, there have been sustained efforts by Michigan congressional representatives to bring about a nationwide single-payer health care system. Recent legislation on that front was sponsored by former U.S. Reps. John Dingell Jr. and John Conyers Jr., both Democrats from metro Detroit.
U.S. Rep Debbie Dingell, D-Michigan, is a co-chair of the House Medicare for All Caucus that is expected to introduced a new Medicare for All bill in coming weeks.
On Wednesday, Stabenow introduced a "Medicare at 50" bill that would give people between ages 50 and 64 the option of buying into Medicare. It is an update of a similar bill she authored in 2017 with an age 55 Medicare buy-in.
"It will help strengthen Medicare, lower costs and improve care for millions of people," Stabenow said in a statement.
The idea of Medicare for All has done well in recent public opinion surveys, with 56 percent of Americans favoring it in a January Kaiser Family Foundation poll.
But support sharply dropped once the poll's respondents heard arguments that Medicare for All could mean higher taxes, the potential elimination of commercial insurance companies and potential delays in getting some medical tests and procedures.
The government price tag for the most widely known Medicare for All bill, belonging to U.S. Sen. Bernie Sanders, I-Vermont., could run as high as $32.6 trillion in the system's first 10 years, according to a study by the right-leaning Mercatus Center at George Mason University.
Obamacare comes up short
Democrats are still pushing for universal health insurance despite the 2010 passage of the Affordable Care Act, commonly known as Obamacare.
The act still left a percentage of people uninsured, and wasn't designed to address the rise of high-deductible plans that can require people to spend thousands of dollars before insurance kicks in.
High-deductible plans proliferate on the Healthcare.gov marketplace and are popular among employers looking to restrain health care costs.
"With the Affordable Care Act, I think people were very surprised by the out-of-pocket expense," said Laura Appel, a senior vice president at the Michigan Health & Hospital Association. "That's why Medicare for All probably sounds very attractive."
In Michigan, just over 5 percent of the population had no health insurance in 2017. Half of Michiganders receive insurance through their employer.
It is an open question whether Medicare for All could work in just one state or whether such an overhaul must happen nationwide to be practical.
So far, no state has attempted single-payer health care. Vermont came the closest several years ago, but the proposed new taxes -- 11.5 percent payroll tax on businesses, a new sliding-scale personal income tax up to 9.5 percent -- was seen as politically and economically infeasible.
Colorado voters in 2016 widely rejected a single-payer proposal by a nearly 4-1 margin.
"Vermont is the one that got the closest, and they couldn't get there," said Marianne Udow-Phillips, executive director of the Center for Health and Research Transformation in Ann Arbor. "The details matter, and once you start scoping out those details, it becomes clearer that people really aren't ready to support a big tax jump."
In Michigan, state Rep. Yousef Rabhi, D-Ann Arbor, introduced a single-payer health insurance bill last year that proposed covering all state residents with more generous benefits than Medicare's and with no premiums, co-pays or deductibles.
"I don't like using the term Medicare for All because it's not quite Medicare for All," Rabhi said this month. "My plan would be in many ways ... better insurance than what Medicare provides. It sort of takes the best of Medicare and Medicaid, combines them, and then adds additional care on top of that."
Rabhi's bill didn't receive a committee hearing and the House Fiscal Agency did not score its potential cost, he said.
Proponents of state-level single-payer bills note how Canada's national health insurance system, which is also called Medicare, started in 1962 in just the province of Saskatchewan but eventually spread across all the country.
Under the Canadian system, the government pays most medical bills with no patient premiums, co-pays or deductibles. Private insurance companies only sell insurance for things the government system doesn't cover, such as prescription drugs and dental coverage.
Potential savings
Some Medicare for All plans can result in lower total health care spending, even with new taxes to pay for them.
A study last year by the Political Economy Research Institute at the University of Massachusetts Amherst predicted that Medicare for All would reduce U.S. total health care expenses by 19 percent.
Those savings would happen in part because Medicare reimburses medical providers at lower per-service rates than commercial insurers like Blue Cross Blue Shield.
Nationwide, Medicare payment rates have been about 75 percent of commercial payment rates, according to the Medicare Payment Advisory Commission.
There was no comparable figure available this week for just Michigan.
Many Michigan hospitals and medical providers can make a small net profit from Medicare rates. Others say that Medicare pays below their cost to treat patients.
A Medicare for All expansion would provide health coverage for the approximately 5 percent of Michigan's population that is uninsured. It also would upgrade coverage for the 19 percent of the population on Medicaid.
For the 50 percent of Michiganders who get health insurance through their employer, their health care would no longer be tied to their job. What they would pay in premiums, deductibles or co-pays would depend on the type of Medicare for All system that is adopted.
Some would find Medicare to be a step down in coverage from their current employer-sponsored insurance.
Traditional Medicare does charge premiums, deductibles and coinsurance that can vary based on household income.
Generally speaking, patients can be on the hook to pay 20 percent coinsurance for the 80 percent of costs Medicare picks up. That could amount to many thousands of dollars for those who fall ill.
Many seniors buy supplemental insurance from insurance companies, known as Medigap, that start at $135 or so per month and help to cover Medicare's expenses -- plus provide a financial backstop for big medical bills. Medigap plans can also cover things that traditional Medicare does not.
Those advocating for Medicare for All often have in mind a more generous level of coverage than traditional Medicare, a level more typically offered by Medicare and Medigap, according to Appel of the Michigan Health & Hospital Association.
"When people say 'Medicare for All,' they mean everyone is going to have coverage that is really good," Appel said.
Would commercial insurers go away?
The role -- if any -- for commercial insurance companies under Medicare for All also would depend on the details.
Insurers would undoubtedly oppose any plan that calls for their own elimination, which would mean the loss of thousands of Michigan jobs. For instance, Blue Cross Blue Shield of Michigan has more than 8,100 employees.
But all those insurers wouldn't necessarily have to wither away.
If Medicare for All was simply traditional Medicare, there would still be consumer demand for insurance companies to offer products such as Medigap
Health care experts have cited a "Medicare Advantage for All" strategy as one way to achieve the expanded coverage goals of single-payer health insurance without abolishing private insurers.
Medicare Advantage is a plan offered by commercial insurance companies that contract with Medicare to provide all Part A, Part B and Part D drug benefits in one plan. Roughly one-third of current Medicare recipients have Medicare Advantage plans.
They also have financial backstops against big medical bills.
"So you could see a system like that that could expand to cover more people," said Udow-Phillips of the Center for Health and Research Transformation.
Commercial insurance companies might also find a market selling private insurance to people seeking concierge-like medical services.
In England, about 11 percent of people reportedly buy private insurance to avoid the waiting times and coverage restrictions associated with the country's single-payer system, known as the National Health Service.
Most studies predict that Medicare for All would wring big administrative savings from the U.S. health care system.
That is, in part, because Medicare is considered more cost-efficient than commercial insurance.
Under the Affordable Care Act, insurance companies must pay out at least 80 percent of the premiums that they take in on claims, meaning that salaries and other administrative costs cannot exceed 20 percent.
Medicare's current payouts-to-administrative costs ratio is about 96 percent, according to a report last year on single-payer proposals by the Mercatus Center at George Mason University.
Medicare for All also would squeeze out savings by paying less to hospitals, doctors and medical clinics for each medical service or procedure. That is because Medicare reimburses at set rates that are below commercial insurance rates.
Many doctors -- specialists in particular -- would likely see a pay cut.
One analysis predicts that overall payments to doctors would fall about 7 percent, according to the Political Economy Research Institute report.
Pay cuts would be bigger for specialists, the report said, as they are currently paid significantly more than in countries with single-payer insurance systems. On the flip side, some primary care doctors may get a pay bump from seeing more of the newly insured patients.
"Our specialists in this country make a lot more than specialists in other countries," said Dr. Abdul El-Sayed, a former Democratic candidate for Michigan governor whose policy platform included Medicare for All. "But primary care doctors don't make much money ... and their pay would likely go up."
For medical providers, Medicare's lower reimbursement rates could be somewhat offset by the influx of new patients, a drop in bad debt from fewer uninsured patients and getting higher reimbursement from treating patients who were once on Medicaid.
Medicaid pays medical providers less per service or procedure than Medicare.
How would Medicare for All affect drugmakers?
The cost of prescription drugs is widely predicted to fall under Medicare for All. That is because the government's leverage in drug-buying negotiations would be significant.
Medicare in its current form is prohibited from bargaining for drug prices in the ways that commercial insurers do.
Right now, prescription drugs make up about 15 percent of total U.S. health care spending. A Medicare for All system could potentially cut the cost of those drugs by as much as 40 percent, according to the Political Economy Research Institute study.
"I hope we get it nationally, and if not, then I hope that leaders at the state level will take it on," said El-Sayed, who is currently writing a book about American politics to be called "Moral Medicine."
Contact JC Reindl: 313-222-6631 or [email protected]. Follow him on Twitter @jcreindl. Read more on business and sign up for our business newsletter.
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