A Twist on Medicare For All

Medicare Access and Reform

The debate on healthcare access and management in the United States is at a crossroads. While the American public has long been resistant to European-style healthcare delivery and payment models, the cost of healthcare to the average consumer has continued to rise. This reality, coupled with public acquiescence to certain portions of the Affordable Care Act of 2010, have created a political environment in which public health and advocacy experts believe more comprehensive government-based healthcare payment proposals are politically viable.   

As costs to both healthcare providers and patients continue to rise, but reimbursement rates from Medicare and other payers flatten out or contract, reformers to the American healthcare system continue to work on policy changes.

Current Healthcare Systems

Healthcare policy officials and organizations have long sought to find a solution to the problem of how to expand healthcare coverage in society without making large sacrifices to quality and accessibility.  The National Health Service in the UK, for example, is a single-payer, single-provider system. That is to say, the UK government both finances (out of general taxation) and delivers most healthcare services in Great Britain. This means that all citizens in the UK can visit the doctor or the hospital for medical services without direct cost to the patient.

However, because NHS also administers healthcare delivery, the UK government takes significant measures to control access to care, as well as cost of care. These measures include paying healthcare providers less, having fewer facilities, and capping access to certain services, otherwise known as rationing. NHS struggles to meet the demands of high-intensity patients, and has a poor track record on the treatment of uncommon diseases and afflictions. Examples of commonly capped or limited healthcare services at NHS include post operative therapy hours, therapeutic radiation visits, and palliative care.

The United States has an essentially tiered healthcare system. The American government offers Medicare to citizens over the age of 65 and Medicaid to low-income citizens.  Although these programs have some important differences, they essentially offer basic coverage and healthcare access to select segments of society. Access to healthcare services for the remainder of the population is generally limited by healthcare or insurance coverage, not by the American government itself. Insurance coverage is commonly offered through an employer in this system.

In an attempt to limit this disparity, the American government created a new system under the Affordable Care Act in 2010. This act required most Americans to secure healthcare insurance, provided parameters and requirements around what the insurance market could offer, and offered subsidies to individuals who may not have been Medicaid-eligible. This had the positive effect of reducing the amount of uninsured individuals in the US, eliminating lifetime caps to coverage, and expanding Medicaid coverage parameters in many states.

However, the cost of offering the plans by the private insurance companies was high, and the ACA heavily taxed some of the existing healthcare plans. The need for an affordable monthly premium and the expanded minimum coverage requirements lead to the creation of ultra-high deductible plans, which many Americans currently utilize. Many plans under the ACA system had deductible amounts of $10,000 or more.

In addition, Congress has attempted to drive down the administrative costs of Medicare by limiting provider payments and establishing new payment protocols for certain types of services.

Numerous policy alternatives have been suggested, as many lawmakers and citizens find the status quo intolerable.

Republican plans generally focus on eliminating regulatory burdens on healthcare insurance providers, which they argue will lead to lower costs and expanded coverage. Republicans have also proposed some ACA alternatives with some of the coverage floors and requirements stripped out, thereby reducing overall costs.

Democrats have countered with a variety of proposals, from expanded subsidies for ACA plans, deductible assistance programs, to profit guarantee plans to insurance providers. Most press coverage, however, is directed at various “Medicare for all” proposals.

The common objection to most Medicare for all proposals is cost and delivery. Most existing proposals have murky cost analysis and undetermined payment mechanisms. These proposals generally plan to rely on general taxation or a redirection of certain revenue to finance the startup of a national insurance program.

Medicare-For-All, with a Twist

Most new proposals on healthcare dramatically expand current Medicare coverage parameters, while leaving small roles for private insurers.  One such bill, called the Medicare for America Act, is cast an alternative to single-payer health care, by giving all Americans the option to purchase Medicare plans instead of forcing them into a single government-run system.

That’s the twist. This proposal lets you buy into Medicare, regardless of your age or health condition. You don’t get it for free (most of you), just like a private insurance program.

Employers could still offer comparable health coverage to workers, or they could fund Medicare plans for employees. Newborns and uninsured individuals would automatically be enrolled in Medicare in 2022, and the Medicare program would negotiate drug prices directly.

The Nitty Gritty

  • Employers would have the option of offering employer-sponsored care, as they do today, but the coverage parameters would have to meet the requirements of the top end ACA plans. (The “Gold” plans)
  • Employers can also direct their contribution towards the employee’s Medicare premium.
  • Long term care and disability care would be added Medicare benefits.
  • Premiums are tied to household income, capped at 9.69%.
  • Subsidies are available for families at certain income levels; those near poverty would have no premium.
  • MFA rates will be equal to current Medicare rates.
  • Medicare would be able to engage with prescription drug companies directly on drug pricing.
  • Plan deductibles are low ($500 maximum), with a capped out-of-pocket expense at $5,000, depending on family size.

Matters of Finance

Although Medicare would be collecting substantial premiums from the general population, additional revenues would be required to sustain the program. H.R. 7339 proposes rolling back recent tax cuts, a 5% surtax on adjusted gross income over $500,000, and a general increase in the existing Medicare payroll tax.

In general however, H.R. 7339 is depending on Medicare premiums to finance the delivery of healthcare services, in similar fashion to how private insurance companies operate today.

Political Viability

Although this proposal has some similarities to other MFA proposals, a few key details set it apart and may make it more palpable to the general population.

This proposal isn’t a direct giveaway, as most Americans will have to buy the service. As in all political proposals the offered coverage costs are a negotiation point. Thus, the deductible caps, subsidies, and out-of-pocket maximums would all be modified in a final proposal.

This proposal is also not attempting to control the inputs on the system, so there is no rate control, no rationing, no provider reimbursement reduction, and no attempt to limit access other than what is already built into the Medicare system. This is only possible because of the required individual premium contributions.

Additionally, since MFA in this case is a market product, private companies will have the opportunity to compete in certain market spaces. Private plans would, then, need to match or exceed Medicare coverage parameters to compete in the space. The authors of this proposal. argue that this is good for both Medicare and private industry, as competing against each other will make each better, more efficient, and less expensive.

In truth, there is a large distance between the two major political parties in the US on the issue of healthcare financing and delivery. There was not one Republican vote to pass the ACA in 2010, and there was not one Democrat vote to repeal all or portions of the ACA in 2017. Significant work is left to be done to come to a consensus, and perhaps a proposal offering Americans the option to purchase a insurance product from a national health plan is a place to start.