Don’t be taken in by a ‘Medi­care for all’ fan­tasy

Lodi News-Sentinel - - OPINION - Peter D. Salins is a pro­fes­sor of po­lit­i­cal sci­ence at Stony Brook Uni­ver­sity in New York.

Sen. Bernie San­ders’ once-quixotic cam­paign to abol­ish pri­vate health in­surance in the U.S. — most of it em­ployer-spon­sored — in the name of “Medi­care for all” has now be­come the lead­ing pro­gres­sive lit­mus test for any­one seek­ing the Demo­cratic Party’s pres­i­den­tial nom­i­na­tion. Twelve of the re­main­ing can­di­dates sub­scribe to it, in var­i­ous ver­sions.

Un­for­tu­nately, the pro­gres­sives’ ea­ger­ness to up­end the en­tire $3.5 tril­lion U.S. health care sys­tem while can­cel­ing the cur­rent health in­surance of 217 mil­lion Amer­i­cans is based on some se­ri­ous mis­con­cep­tions.

It dis­re­gards what other coun­tries ac­tu­ally do to achieve near-uni­ver­sal ac­cess to health care; it un­der­es­ti­mates the fi­nan­cial con­se­quences for Amer­i­cans of such rad­i­cal re­struc­tur­ing; and it fails to rec­og­nize how much eas­ier it would be to achieve the same — or bet­ter — health care out­comes by build­ing on, rather than dis­man­tling, the Af­ford­able Care Act.

While San­ders is cor­rect that most ad­vanced coun­tries guar­an­tee health care ac­cess to nearly all their res­i­dents, they do not nec­es­sar­ily do this through a sin­gle-payer na­tional pro­gram like Medi­care.

Most no­tably, some of the rich­est Euro­pean coun­tries like the Nether­lands, Switzer­land and Ger­many have what might be called “Health care.gov for all,” the cen­tral fea­ture of the Af­ford­able Care Act. They de­liver ac­cess to health care by man­dat­ing that all house­holds pur­chase pri­vate or non­profit (not gov­ern­men­tal) in­surance poli­cies, and sub­si­dize the cost based on in­come — an ap­proach iden­ti­cal to what the ACA does through the on­line in­surance ex­changes.

Canada has what might be called Med­i­caid for all, pro­vin­cial pro­grams that vary in ben­e­fits of­fered. Prov­inces are re­im­bursed by the na­tional govern­ment based on lev­els of pro­vin­cial need and re­sources, much like our states are with re­spect to Med­i­caid. This ap­proach is em­bod­ied in the Af­ford­able Care Act’s Med­i­caid ex­pan­sion pro­gram that — in the 36 states that im­ple­mented it — made mil­lions of Amer­i­cans newly el­i­gi­ble for Med­i­caid by al­low­ing peo­ple with higher in­comes to qual­ify.

England has the equiv­a­lent of the U.S. Vet­er­ans Af­fairs health care pro­gram “for all,” with hos­pi­tals and health care providers di­rectly sup­ported by the na­tional govern­ment.

Fur­ther, ev­ery coun­try so ad­mired by the Demo­cratic pro­gres­sives guar­an­tee­ing uni­ver­sal ac­cess to health care also has a large role for pri­vate in­surance. In Canada, twothirds of all house­holds buy com­ple­men­tary pri­vate in­surance to cover ad­di­tional ben­e­fits and bet­ter care (much of it de­liv­ered across the bor­der in the U.S.), as do al­most 50% of Aus­tralians and 40% of Dan­ish house­holds, ac­cord­ing to a May 2017 re­port by the Com­mon­wealth Fund. In Ger­many, more than 10% of house­holds opt out of the govern­ment pro­gram al­to­gether and pur­chase un­sub­si­dized pri­vate in­surance. (In fact, most Amer­i­cans on Medi­care have sup­ple­men­tal cov­er­age to fill Medi­care gaps.)

The fi­nan­cial un­der­pin­nings of Medi­care for all rest on the as­sump­tion that great sav­ings will be achieved by abol­ish­ing the prof­its and ad­min­is­tra­tive costs of the pri­vate in­surance in­dus­try and that its to­tal cost will be less (or at least not more) than cur­rent com­bined pub­lic and pri­vate ex­pen­di­tures. Some ad­vo­cates claim that any in­creased taxes re­quired will be off­set by sav­ings in out-of­pocket health care ex­pen­di­tures and health in­surance pre­mi­ums.

Each as­sump­tion is un­founded.

In 2017, ac­cord­ing to the Cen­ters for Medi­care and Med­i­caid Ser­vices, the cost of ad­min­is­tra­tion and profit per pri­vately in­sured in­di­vid­ual ($618) was ac­tu­ally less than what govern­ment in­surance pro­grams (Medi­care, Med­i­caid, VA and the Chil­dren’s Health In­surance Pro­gram) spent on ad­min­is­tra­tion alone ($921).

Even San­ders ac­knowl­edges that the cost of Medi­care for all will be stag­ger­ing. The Ur­ban In­sti­tute, a pol­icy re­search or­ga­ni­za­tion, es­ti­mates that the ap­proach would add $2.54 tril­lion an­nu­ally to the fed­eral bud­get. Even if that were en­tirely off­set by elim­i­nat­ing ex­pen­di­tures on pri­vate in­surance (cur­rently $1.68 tril­lion), that leaves $860 bil­lion per year to be shoul­dered by fed­eral tax­pay­ers. Com­pletely elim­i­nat­ing as­so­ci­ated out-of­pocket costs (cur­rently about $170 bil­lion) would still re­quire tax­pay­ers to pay $690 bil­lion.

What is most sur­pris­ing about the Democrats’ ad­vo­cacy of Medi­care for all is their re­jec­tion of the Af­ford­able Care Act as a far more real­is­tic foun­da­tion for as­sur­ing uni­ver­sal ac­cess to health care.

Not only does the ACA in­cor­po­rate el­e­ments of other coun­tries’ ap­proaches to uni­ver­sal health care cov­er­age, it has pro­vided health in­surance to 20 mil­lion more Amer­i­cans, cut­ting the unin­sured rate by over 40%, ac­cord­ing to a re­cent study by the Kaiser Fam­ily Foun­da­tion.

The ACA has also pro­tected mil­lions with pre­ex­ist­ing health con­di­tions from los­ing cov­er­age, en­abled young adults to be cov­ered by their par­ents’ in­surance, and made the scope of ben­e­fits more com­pre­hen­sive and con­sis­tent for most Amer­i­cans. And — in a fea­ture that even the Trump ad­min­is­tra­tion sup­ports — it has en­abled states to test ways to use their Med­i­caid grant al­lo­ca­tions to de­liver more ef­fec­tive health care.

Un­less it is over­turned by a pend­ing court chal­lenge, the ACA is still the law, and can be strength­ened to close the cov­er­age gap both by ex­ec­u­tive or­der (un­do­ing re­cent ac­tions to weaken it) and a few rea­son­able amend­ments.

First, re­store en­force­ment of the re­quire­ment that all Amer­i­cans have health in­surance and re­in­state the sub­si­dies that en­abled unin­sured mid­dle-in­come in­di­vid­u­als to af­ford pri­vate in­surance of­fered on fed­eral and state on­line in­surance ex­changes. More than 14 mil­lion more Amer­i­cans can gain cov­er­age this way and it would have the ad­di­tional ben­e­fit of broad­en­ing the in­surance risk pool, low­er­ing the cost of in­surance pre­mi­ums for ev­ery­one.

Sec­ond, im­prove in­cen­tives to get the 14 states that de­clined to join the Med­i­caid ex­pan­sion pro­gram to opt in. This would im­me­di­ately in­sure an ad­di­tional 2.5 mil­lion Amer­i­cans. Fi­nally, to get to uni­ver­sal cov­er­age, make a low-cost pub­lic health in­surance op­tion (as ad­vo­cated by for­mer Vice Pres­i­dent Joe Bi­den) avail­able for the 10 mil­lion Amer­i­cans who can’t af­ford even sub­si­dized pri­vate poli­cies, but have in­comes too high to qual­ify for Med­i­caid.

These fixes to­gether would cost an es­ti­mated $200 bil­lion an­nu­ally, much of it in fore­gone taxes.

All Amer­i­cans de­serve ac­cess to health care equal or su­pe­rior to that of other ad­vanced na­tions. How­ever, this does not re­quire mas­sively dis­rupt­ing an in­dus­try that ac­counts for one-fifth of the U.S. econ­omy, or leg­is­la­tion that has no real­is­tic chance of pas­sage, or a wildly ex­trav­a­gant in­crease in the fed­eral bud­get. The ACA has al­ready moved the U.S. a long way to­ward uni­ver­sal ac­cess. Build­ing on it with some em­i­nently fea­si­ble re­forms can fin­ish the job.

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