‘Medicare for All’ Isn’t Medicare

Democrats mislead voters by appropriating the name of a popular program they actually seek to abolish.

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More than 100 House Democrats have endorsed Rep. Pramila Jayapal’s Medicare for All Act of 2019. Fourteen Democratic senators have co-sponsored a similar bill from Sen. Bernie Sanders.

The title is deeply misleading. It implies that the current Medicare system would be extended to all Americans. In fact, Medicare for All differs from Medicare in fundamental ways—with much broader coverage, no cost sharing, and fewer choices of health-care plans. While America needs a debate about health care, it should be based on an accurate description of the alternatives.

Medicare for All would cover a panoply of dental, vision and mental-health services not covered by Medicare. Under the latest version of the House bill, the federal government would also pay for all long-term nursing and home care—estimated by the Urban Institute to cost roughly $3 trillion over the next decade.

The program would replace Medicare, Medicaid and the Children’s Health Insurance Program, as well as all employer-sponsored insurance and direct individual insurance (including the ObamaCare exchanges). It would cover not only uninsured American citizens but every U.S. resident—potentially including illegal as well as legal immigrants.

Despite this substantial expansion of coverage, Medicare for All would not require beneficiaries to contribute premiums, deductibles or copayments. By contrast, most parts of Medicare require some form of cost sharing by patients. Medicare Part B, for outpatient medical expenses, has a standard premium of $1,626 a year with an annual deductible of $185, plus a 20% copayment, according to the official Medicare website.

Because of the broad coverage of services and patients without cost sharing, Medicare for All would entail dramatically higher federal spending on health care than Medicare and other programs. There have been several estimates of the incremental cost over 10 years of Mr. Sanders’s 2016 proposal, which did not include long-term care—$27.3 trillion by the Center for Health and Economy, $28 trillion to $32 trillion by former Social Security and Medicare trustee Charles Blahous, and $24.7 trillion by Emory Professor Kenneth Thorpe. The Urban Institute estimate, which included long-term care, was $32 trillion over 10 years.

Proponents counter that the proposal would reduce federal health-care spending in three main ways—lower drug prices through government negotiations, lower reimbursement rates for medical services, and lower administrative costs by eliminating insurance companies. They also argue the proposal would increase federal tax revenue by repealing the deduction for employer-provided insurance. But these four factors are already built into the previous estimates. However you cut it, Medicare for All would inevitably lead to massive tax increases.

Neither the House nor the Senate bill includes much detail on financing higher federal spending. Mr. Sanders’s staff released a paper in April with revenue options—imposing a premium tax on employers and employees, increasing the top income-tax rate, imposing a wealth tax, closing tax loopholes and so on. But the paper does not address the budget implications of these options or the challenges of getting them through Congress.

Medicare for All would also replace Medicare’s current method of paying fees for services to every hospital, nursing home and other institutional provider. Instead, a new federal board would set an annual budget for each provider, which would receive one lump sum for current operations and another for capital expenditures. That board would be expressly forbidden by current Medicare for All bills from using quality metrics—which would be necessary to prevent providers from skimping on quality with lump-sum payments.

All this would force a radical change in the current business models of most hospitals and other Medicare providers. Although they would generally have discretion over how to spend their lump-sum payments, they could not use them to make “profit or net revenues.” Yet each provider would bear the risk if these payments were insufficient to cover actual costs. Many hospitals would limit the volume or scope of their services until they were sure they would break even for the year.

Finally, Medicare for All would eliminate the plan choices Medicare now allows. Elderly Americans don’t have to get outpatient or drug coverage from the government. Some opt to stay with their employer plans and others choose private providers through Medicare Advantage. Medicare for All would prohibit any insurer or employer from privately offering any services covered by this legislation—which means essentially all medical services.

Medicare for All allows even less in the way of plan choice than other single-payer systems. In the United Kingdom, patients may purchase private insurance for medical services even if they are available through the National Health Service. Canada does not cover dental, vision or long-term care, so two-thirds of Canadians purchase these services through private health insurance.

In the coming debate over health care, the label “Medicare” should be reserved for proposals that are built on the existing structure of this successful program. Whatever else “Medicare for All” may be, it isn’t Medicare.

The Difference Between a ‘Public Option’ and ‘Medicare for All’? Let’s Define Our Terms

Various proposals are floating around, each of which would change the health care system in distinct ways. Some, like one from Senator Bernie Sanders, would do away with all private health insurance. Some would make small expansions in existing public programs. Some would try to cover all Americans through a mix of different insurance types.

It can be mystifying when people call all of these ideas “Medicare for all,” as some in the debate have been doing.

.. Private plans handle Medicare drug coverage, and you can choose among options. You pay premiums each year, and you pay deductibles and co-payments when you use medical services.

Because the program’s out-of-pocket spending has no limits, most Medicare beneficiaries also buy private supplemental insurance to limit those costs. That insurance doesn’t cover medical services outside the Medicare system, but it helps pay the patient’s share of the bill when a person goes to the doctor or hospital.

.. Mr. Sanders, who prominently featured such a plan in his 2016 presidential platform and just announced he has joined the 2020 race, uses this term a lot. His plan would both expand traditional Medicare to cover all Americans, and change the structure of the program, to cover more services and eliminate most deductibles and co-payments. So the Medicare everyone would be getting would differ in crucial ways from the Medicare older people get now.

Europe’s Alternative to Medicare for All

A Fraser Institute study published in November examined 28 universal health-care systems across 45 indicators of performance. After adjusting for differences in the proportion of seniors, Canada ranked among the top spenders—fourth-highest as a percentage of gross domestic product and 10th-highest per capita. Yet it had less medical resources available for patients and painfully long wait times for specialists. Canada ranked 26th out of 28 for number of physicians, 22nd out of 27 for MRI units, and 25th out of 26 for hospital beds.

In Commonwealth Fund data comparing 11 developed countries, Canada reported the most patients waiting more than four weeks for a specialist appointment (56%), vs. only 22% for Switzerland and 23% for the Netherlands, the top performers. The proportion of patients waiting more than four months for elective surgery was 18% for Canadians, 2% for the French and zero for Germans. Canada performed well on only five of the 12 indicators of clinical performance and quality included in the Fraser Institute’s study. Its performance on the other seven—including obstetric traumas and diabetes-related amputations—was poor or average.

Overall, Canada performs worse than other universal-coverage countries, particularly Switzerland, the Netherlands and Germany. Why? Unlike Canada’s single-payer system, the Swiss, Dutch and German systems rely on private insurers, whether nonprofit or for-profit. Government helps the needy make premium payments.

German enrollees can use a public system composed of 145 competing independent nonprofit “sickness funds” or buy insurance from 43 companies or nonprofits. In the Netherlands and Switzerland, residents must select a standard insurance package from private insurers, of which both countries have dozens.

Unlike the U.S., with Medicare and its massive trillion-dollar unfunded liabilities, these countries cannot pass unreimbursed current expenses onto future generations. If the expenses of private insurers exceed their revenues, they face bankruptcy.

The relatively successful universal health-care systems also rely on private hospitals and physicians. As of 2012, 42% of German hospitals were for-profit, almost all of them open to patients with public insurance. These regulated for-profit vendors can readily access private capital to fund medical innovations—unlike government-run systems, which need bureaucratic approval to use tax revenue.

Consumers and the private sector drive the health-care systems in these countries, which accomplish exactly what Mr. Sanders and his supporters say they want—universal coverage, controlled costs, high quality and ready access. In contrast, Canada’s experience shows the dangers of the Medicare for All model.

‘Medicare for All’ Will Terrify Voters

It sounds good until people realize it means losing their existing plans.

Medicare for All becomes less popular when people hear more about its possible effects. Support dropped to 37%, with about 60% opposed, when respondents were told it would “eliminate private health-insurance companies” or “require most Americans to pay more in taxes.” Support fell to 32% when respondents were alerted it would “threaten current Medicare.” And it crashed to 26% if those polled heard it would lead to “delays in people getting some medical tests and treatments.”

.. Names matter, too. A November 2017 Kaiser poll found that, without mentioning negative effects, “Medicare for All” drew a 62% favorable rating. But labeling the same idea “single-payer health insurance” dropped support to 48%. Calling it “socialized medicine” produced a nearly even split, 44% favorable to 43% negative.

Medicare for everyone may sound good to voters at first. But after sustained reflection—and Republican attacks—it will likely be soundly rejected. Most Americans do not want to surrender control of their health-care decisions to an impersonal bureaucracy in Washington.

.. And the $32.6 trillion figure could be low. Mr. Blahous says the tab may “be substantially greater,” since his analysis accepted both the “significant administrative and drug cost savings” estimated by Medicare-for-all advocates and reimbursement rates 40% less than what private health insurance pays today, on average. Mr. Blahous, a former public trustee for Social Security and Medicare, believes the savings would not materialize fully and the cuts in reimbursements are unsustainable.
.. Congressional supporters of the plan fear that nearly doubling the federal budget could sink their proposal. That’s why Sen. Bernie Sanders, the father of Medicare for All, refuses to say how much it will cost.
.. Still, Republicans could lose the public-opinion battle unless they prepare an organized offensive. This will require the persistent involvement of a White House that has shown itself ill-prepared for extended campaigns of explanation and persuasion. It also requires Republicans to highlight the proposal’s weaknesses. For example, they should find a way to stage a Senate vote on abolishing private health insurance to show how few Democrats are willing to back that—isolating that party’s hard-core Sandernistas.
.. Nor can Republicans merely stand on opposition to Medicare for All; it’s hard to beat something with nothing. The GOP also must lay out ideas to make health care better, more affordable and more accessible with choice, competition and markets.The rush by Democratic presidential candidates to embrace Medicare for All—and measures like “free” college, guaranteed jobs and universal basic income—may make the 2020 election a contest between promise-them-anything democratic socialism and free enterprise. The stakes don’t get much higher than that.