Medicare for All and Its Rivals: New Offshoots of Old Health Policy Roots
Authors: Steffie Woolhandler, David U. Himmelstein
Journal: Annals of Internal Medicine (2019)

Ideas and Opinions4 June 2019Medicare for All and Its Rivals: New Offshoots of Old Health Policy RootsFREESteffie Woolhandler, MD, MPH and David U. Himmelstein, MDSteffie Woolhandler, MD, MPHCity University of New York at Hunter College, New York, New York (S.W.)Search for more papers by this author and David U. Himmelstein, MDCity University of New York, New York, New York (D.U.H.)Search for more papers by this authorAuthor, Article, and Disclosure Informationhttps://doi.org/10.7326/M19-0780 SectionsAboutVisual AbstractPDF ToolsAdd to favoritesDownload CitationsTrack CitationsPermissions ShareFacebookTwitterLinkedInRedditEmail 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 2019Medicare for AllMedicare-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 OptionsPublic-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 ProposalUnlike 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.References1. Sisko AM, Keehan SP, Poisal JA, Cuckler GA, Smith SD, Madison AJ, et al. National health expenditure projections, 2018–27: economic and demographic trends drive spending and enrollment growth. Health Aff (Millwood). 2019;38:10-377. doi:10.1377/hlthaff.2018.05499 CrossrefGoogle Scholar2. Waldman S. National Health Insurance Proposals: Provisions of Bills Introduced in the 93rd Congress as of July 1974. DHEW Publication No. (SSA) 75-11920. Washington, DC: U.S. Department of Health, Education, and Welfare; 1975. Google Scholar3. Woolhandler S, Campbell T, Himmelstein DU. Costs of health care administration in the United States and Canada. N Engl J Med. 2003;349:768-75. [PMID: 12930930] CrossrefMedlineGoogle Scholar4. Pollin R, Heintz J, Arno P, Wicks-Lim J, Ash M. Economic analysis of Medicare for All. Research report. Political Economics Research Institute. 30 November 2018. Accessed at www.peri.umass.edu/publication/item/1127-economic-analysis-of-medicare-for-all on 5 March 2019. Google Scholar5. Congressional Budget Office. Add a “public plan” to the health insurance exchanges. 13 November 2013. Accessed at www.cbo.gov/budget-options/2013/44890 on 2 March 2019. Google Scholar6. Medicare Policy Advisory Commission. MEDPAC report to the Congress. 2018. Accessed at www.medpac.gov/docs/default-source/reports/mar18_medpac_entirereport_sec.pdf on 16 January 2019. Google Scholar7. Canadian Institute for Health Information. National health expenditure trends, 1975 to 2017. Data tables—series A. November 2018. Accessed at www.cihi.ca/en/health-spending/2018/national-health-expenditure-trends on 2 March 2019. Google Scholar8. U.S. General Accountability Office. Medicare Advantage: 2011 profits similar to projections for most plans, but higher for plans with specific eligibility requirements. GAO-14-148. 19 December 2013. Accessed at www.gao.gov/products/GAO-14-148 on 3 March 2019. Google Scholar9. U.S. Department of Health and Human Services. Reforming America's healthcare system through choice and competition. 2018. Accessed at www.hhs.gov/sites/default/files/Reforming-Americas-Healthcare-System-Through-Choice-and-Competition.pdf on 31 December 2018. Google Scholar10. Hodgson G. The politics of American health care: what is it costing you? The Atlantic Monthly. 1973;232:45-61. Accessed at www.theatlantic.com/past/docs/politics/healthca/hodgson.htm on 3 March 2019. Google Scholar Comments0 CommentsSign In to Submit A Comment Author, Article, and Disclosure InformationAffiliations: City University of New York at Hunter College, New York, New York (S.W.)City University of New York, New York, New York (D.U.H.)Disclosures: Disclosures can be viewed at www.acponline.org/authors/icmje/ConflictOfInterestForms.do?msNum=M19-0780.Corresponding Author: David U. Himmelstein, MD, City University of New York, 255 West 90th Street, New York, NY 10024; e-mail, [email protected]cuny.edu.Current Author Addresses: Drs. Woolhandler and Himmelstein: City University of New York, 255 West 90th Street, New York, NY 10024.Author Contributions: Conception and design: S. Woolhandler, D.U. Himmelstein.Analysis and interpretation of the data: S. Woolhandler, D.U. Himmelstein.Drafting of the article: S. Woolhandler, D.U. Himmelstein.Final approval of the article: S. Woolhandler, D.U. Himmelstein.Administrative, technical, or logistic support: S. Woolhandler.Collection and assembly of data: S. Woolhandler, D.U. Himmelstein.This article was published at Annals.org on 2 April 2019. PreviousarticleNextarticle Advertisement FiguresReferencesRelatedDetails Metrics Cited byThe legal violence of care: Navigating the US health care system while undocumented and illegible 4 June 2019Volume 170, Issue 11Page: 793-795KeywordsDisclosureDrug pricesHealth careHealth insuranceLife expectancyMedicareTaxesVision ePublished: 2 April 2019 Issue Published: 4 June 2019 Copyright & PermissionsCopyright © 2019 by American College of Physicians. All Rights Reserved.PDF downloadLoading ...