Margot Sanger-Katz is covering Medicare for All/More/Many/Any plans that are emerging from Democratic presidential campaigns and liberal aligned think tanks. She raises a point that I’m very concerned about:
In my recent conversations with single-payer advocates, several have said they don’t think it will be a big challenge convince people that M4A will be better than private insurance, given the declining comprehensiveness of private insurance. We’ll see!
— Margot Sanger-Katz (@sangerkatz) January 29, 2019
When thinking about Medicare for All/More/Anyone plans, I think about loss aversion. Right now, the standard Medicare benefits package has about an 84% actuarial value (Medicare A, B and D) that covers hospitalization, physician and professional services and drugs without an out of pocket maximum. Medicare Advantage covers about that level of costs or slightly higher with caps. Recent Department of Labor studies have employer sponsored insurance having an average actuarial value in the high 80s. Actuarial value of on-Exchange plans is in the low 80s or the high 70s.
Both employer and exchange plans have wide variance. Some people have very low actuarial plans with $5,000 or $7,500 deductibles. Some people have very high actuarial value plans with deductibles of $200 or $300 with very little cost sharing above that.
I think that on average, the typical person can be no worse off and likely to be better off on net. But that is not a universal statement. There are few Pareto improvements available in the world. Usually someone will lose relative or absolute ground.
People who have low actuarial value plans and high visible premiums will easily see an improved value of Medicare accessibility at highly subsidized premiums.
People who have low actuarial value plans and low/no visible premiums may or may not see improved value. Healthy folks who are broke might not want to pay $135 a month to get Medicare.
However the group that I think could be a major point of political opposition to mandatory/universal plans are folks who have high actuarial value plans with broad networks. These folks have damn good insurance already. A 95% AV plan is most likely to be concentrated among either union members or very well compensated professional class workers. Moving to Medicare as currently configured or even Medicare Advantage is an increase in likely visible costs in premiums and a lower level of coverage with more out of pocket costs.
Professionals who have good health insurance because they have high paying jobs know how to scream in a way that will be listened to by politicians. They’ll have an honest complaint if there is a mandatory system that moves towards a Medicare for All program with premiums and cost sharing that look anything like current Medicare or Medicare Advantage. And if we move to no payments at the point of service nor any visible monthly premiums, this class will be paying far more in taxes for very little improvement in their personal coverage. It will make the “If you like it, you can keep it” problem look minor.
Almost every policy that produces winners will also produce losers.
I think that is something that must be kept in mind especially if the policy pathway is narrow.
Baud
I think most of the plans will improve Medicare along with making it universal. If they don’t improve Medicare, then I think they most they can accomplish is a Medicare buy-in.
Republicans will scream about people losing their doctors, and that’s something people do care about more than their insurance policy. I haven’t yet heard an answer to that yet.
Also, too, the AMA has been pretty quiet, no? If the doctors scream, I don’t see how we succeed. Yet, once again, no one talks about that problem.
Roger Moore
It’s not just about actuarial value, either; it’s also about familiarity. There has always been a large constituency for the devil you know just because people are afraid of change and suspicious of politicians’ promises. And that’s assuming an environment without a competing political party willing to lie about all your plans to scare people into opposing them. I expect the biggest opposition to M4A to come from current Medicare patients who are afraid expanding Medicare will ultimately come at the cost of making their care worse, and the Republicans will be happy to tell them that will happen.
lahke
This is why having an opt-in plan is the most politically feasible plan. If that gets adopted, are there market effects to look out for?
ETA: I’m wondering if the transition could look rocky because only folks with low-value plans sign up, for example.
Major Major Major Major
I’d be concerned with the government (or any organization) competently managing an insurance scheme of this size over the first few years. Maybe something like a buy-in followed five years later by abolition of private insurance would work better and inspire more confidence. (This may be what Sanders’s bill calls for I don’t remember.)
dnfree
I agree. Why not start with an opt-in plan and not try to disrupt everything at once? See how it works, work out the kinks, let others see how it works.
I have Medicare with a supplement plan and it’s great coverage but it costs money for the premium.
Baud
@Major Major Major Major:
This is from 2017. I don’t know if there is a newer version. Doesn’t look like there’s a ramp up.
https://www.healthaffairs.org/do/10.1377/hblog20170914.061996/full/
Another Scott
@lahke: Agreed that making M4A “opt-in” the default is the way to go. Kinda like the glorious “Public Option” of a decade or more ago…
But Anderson-Mayhew is right that there will be push-back from high-AV people if M4A is suddenly made mandatory (without some sort of sweetener).
Haven’t we already seen the power of the people with high-AV plans?
Am I misremembering that Obamacare had a surtax on high AV plans that was supposed to take effect and has instead been put off and put off (or maybe even killed entirely by the Teabaggers?) The idea was to prevent companies from giving management Diamond and Ruby plans (and writing them off, somehow) that covered just about everything with little or no direct payments from the patient. Unions that had good health plans were in the same bucket (even if their benefits weren’t as high), and they pushed back, also too.
I don’t know how one squares the circle to get everyone in a M4A (or similar) unless it’s done gradually via an opt-in because of these high-AV legacy issues. And if it’s opt-in, you know that employers will do everything they can to push people into it to cut their costs, so thinking about what that means in terms of total compensation (“We can’t afford the BC-BS or Kaiser plan you’ve been on, so we’re dropping it (and not paying part of the costs any more). You’re free to go on the Exchange and sign up for M4A. (We won’t pay any of the premiums. Enjoy your $1000 a month pay cut). Have a nice day. – Regards, Your Human Resources Department.”) is really important as well.
It is going to be interesting to see how the various candidates talk about these issues and how detailed their proposals are. I’m going to be pissed if Phase 2 is filled with magic asterisks that the plutocratic media can fill with monsters that are going to kill us all in our beds….
Cheers,
Scott.
Baud
The other thing to keep in mind is that 68% of American households have pets. So a health plan that covered your pets for the first time is more likely to garner broad appeal. And only one candidate in this race is bold enough to have a plan that proposed Real Change to the current human-only system.
Just sayin’.
Cheryl Rofer
Not having to deal with insurance companies is a big plus.
Cathie from Canada
Yes, this type of complaint did happen here when Canada introduced Medicare in the 1960s. But more prevalent then were complaints by doctors who wanted to figure out some way to charge patients more than what Medicare permitted them to charge. It took several decades to work out all of the problems and ramifications of our version of “medicare for all”.
lee
@Baud:
That is certainly one version of the M4A. Probably the least palatable of all of them. Even the UK with the NHS doesn’t prohibit private insurance.
The opt-in option is probably the most palatable and most attainable. My wife & I are very well paid professionals. Even we are starting to see the diminishing coverage and increasing cost that everyone else has already been experiencing.
Cathie from Canada
@Cheryl Rofer: Yes, I thought it was so clever of Kamala to reply to the media whine “but what about people who want to keep their insurance?” with “nobody likes insurance companies”.
Major Major Major Major
@Baud: right, thanks. as I recall this was one of the several reasons I could tell it was political grandstanding and not an actual policy proposal (at least if you’re the sort of neolib sellout who believes policy proposals should be enactable).
Barbara
@Baud: Medicare has been a largely successful program but it has led to incredible fragmentation of care because of the way it was built, to be siloed between professional and institutional services, and to, essentially, encourage a high volume of services multiplied by low (relatively) unit costs. The RBRVS physician reimbursement system is practically designed to encourage gross overconsumption of procedures, especially diagnostic tests, and grossly undervalues diagnostic evaluation (do you actually need that procedure?). A lot of the differences we see between American health care and what is done in other countries is directly attributable to the way Medicare prices and pays for professional care. You might hate your insurance company, but commercial benefit plans are much more rationally designed than the Medicare program. And that, really, is because Medicare is frozen in time — it reflects the status quo of Blue Cross plans circa 1965.
For the good, Medicare reimbursement for hospital services, both outpatient and inpatient, is truly innovative. But much of what people love about Medicare is really that the government cares about Medicare beneficiaries enough to keep the program running in their favor. Other models of care that reflect that same sentiment would also do well.
Kylroy
@Cathie from Canada: Also, that was happening literally half a century ago, when medicine was markedly less complicated and lucrative than it is now.
I’ve always thought the least painful way to reform healthcare in the US would be to gradually lower the Medicare age over a decade or two until the entire adult population is covered by it. But with the GOP determined to wreck anything that Dems do, no proposal will get more than 1-2 years to get entrenched before the government itself tries to sabotage it.
MattF
My own situation is particularly bad– I have secondary insurance subsidized (at 75%) from my former employer. It includes a drug benefit and covers co-pays. It’s quite obvious that Medicare-For-All would increase my premiums and my taxes. I guess the argument is that I can afford it– but, tbh, I’d rather not.
p.a.
Pls expound on the Canadian process/experience. Also, how did the Medicare rollout work. At the time, ’65 IIRC, I bet there were lots of union retirees with health insurance for life as part of their retirement package. How did that work out?
Baud
@Major Major Major Major:
The other reason is that it was sponsored by Sanders.
OzarkHillbilly
@Baud: You just got Woof’s and Percy’s votes.
Major Major Major Major
@Baud: mostly it lacks a funding mechanism so it can be all winners and no losers, get cosponsors, and become the only feasible plan for the democratic primary…
But I don’t know that this thread needs to be about picking apart an obviously untenable proposal.
WereBear
Once again, all bets are off when someone has a chronic illness. The best insurance is the one you don’t use, of course, but the most recent wrinkle is Mr WereBear, on disability from his government job, is on Medicare and went to Medicare Advantage… because he was lied to.
Now he is locked into any number of “required” diagnostic tests, which he doesn’t need, which often require him to mess up the delicate balance that keeps him in as good a shape as he can be, and the insurance company overrides our doctor about. All with lots of unnecessary stress and expense from him.
Private insurance is deeply, deeply involved in extracting net worth. Nothing else.
sherparick
@Baud: I wonder if Sanders ran this by any health economist and insurance experts. Now the DoD would sing hosannas to be relieved of TRICARE, which is been eating the DoD’s budget (10% and rising). Also, about half of Medicaid goes to long term nursing care and care for the disabled, so I have wonder how that will work. At the same time, States should sing hosannas as they would no longer be putting up substantial sums to match Federal Medicaid payments. I wonder if Bernie ran this by any of the unions. I expect the craft and trade Unions and the still viable industrial unions (UAW, Machinists, and United Steelworkers (who as the result of mergers with declining industrial unions represent workers across much of the country). Unions are important if we want any kind of permanent progressive politics in this country, so they have to worked with even if a lot of them are run by SOBs.
Also, from the political optics stand point, as well as equity, there would have to be provisions where the employer’s insurance contribution, along with the employee’s match, show up in the employee’s paycheck (WITH HIGH VISIBILITY) as additional income. I would only increase Medicare taxes slightly, if at all. I would recommend that it be paid for with a Wealth Tax, Estate Tax Increase, a VAT, a carbon tax, and plain old fashion MMT debt..
Finally, with an aging population, medical costs are going to increase and the whole society is going to have to accept that and not freak out.
Major Major Major Major
How could we safeguard M4A against sabotage regarding women’s health, LGBT health, and other “social” issues?
OzarkHillbilly
@Major Major Major Major: Kill all the Republicans?
joel hanes
Transitioning to M4A from a good employer-provided plan would be one thing if it meant that my employer raised my salary by the amount corresponding to their former cost of insuring a 65-year-old man. I could use those dollars to purchase supplemental.
But I think we all know that if employers are relieved of the expense of insuring their employees, ordinary employee compensation will remain almost unchanged, and the free’ed up cash will go to increased compensation of directors and above, or perhaps to shareholders.
Fair Economist
No abolition of private health care or even anything like it is going to pass a Senate where the critical vote is Sinema or King. Sander’s plan is designed to cause trouble for the Democrats no matter what they accomplish in 2021, not as a serious proposal. It is not even an Overton window push, since it comes with poison pills unpalatable even in countries that did socialize medine.
Kay
David, perhaps you have done this and I missed it, but could you look at this company and report on whether it’s a giant scam or not?
My health insurer charges people more if they won’t self-report all this “wellness” info. I assume they’re shelling out big bucks to this (IMO) scammy contractor who adds no value, in addition to driving their supposed “customers” crazy filling out forms.
People are just making shit up on these forms. They’re checking boxes to get the discount.
dnfree
@WereBear: When we went on Medicare, I went to the Medicare Advantage salesman’s presentation (there is only one plan in our area). He even said during the meeting, “IF you have known health conditions and IF you can afford it, standard Medicare plus a supplement plan is better for you.” We have had significant health conditions arise in retirement, and have paid almost nothing out of pocket and been able to see doctors almost anywhere we want to.
tobie
From what I hear, doctors hate our insurance system and complain constantly about the fee schedules that private companies have introduced to mimic Medicare and Medicaid. Any insurance overhaul will have to account for the cost of medical school as one of the many cost drivers in our healthcare system.
Redesigning the entire healthcare system from ground up and moving 177 million people from private to public plans will be hard. I have to say I was disappointed that Kamala Harris was so flip about this issue. Slogans are good but I’d like to hear a candidate acknowledge complexity and figure out ways to work with it.
OzarkHillbilly
@dnfree: Which supplemental plan/type did you go with? I’m trying to figure out which is best for me and I’m going nuts.
gene108
@Major Major Major Major: @Baud:
The fact Bernie Bros Made M4A a litmus test, because of Bernie’s grandstanding, is something which will hurt us.
Bernie’s plan was mostly wishful thinking. You pay more in taxes and then there will be no more out-of-pocket costs.
It sounded good in a stump speech, but the fact other countries with universal healthcare have out of pocket costs, makes me believe Bernie wasn’t thinking beyond a sound bite.
And over promising, like Bernie’s plan has done, and under delivering will really turn people off.
I don’t see how we can extricate ourselves from Bernie’s wishful thinking plan to something more grounded in reality, without turning people off to you
Jim, Foolish Literalist
@joel hanes: @Fair Economist: I worry about the weaponization of a slogan (and not just this one) while waving away any economic, to say nothing of political, challenges as cowardice or cynicism or hypocrisy or some combination of all three.
Jim, Foolish Literalist
one of the things that drives me crazy about this debate is people conflating universal health care with single-payer. Most of the people who do this are forgivably fuzzy on the details. I don’t think much of Sanders’ intellect, but I think he knows the difference, which he elides to get from “every rich, industrialized nation has some form of the UHC”, which is broadly true, with “there is no reason we can’t have single payer in this country”, which is not.
daveNYC
I don’t think we should overestimate the number of people who are happy with their insurance and would fight any changes. Certainly there are some people with great insurance who won’t be happy, but when I was in the states the one constant about our insurance plan, and these were very good plans, was that each year they would get worse. The co-pay would increase, then they would add a co-insurance bit, then the deductible would increase. Not to mention that the cost the employee had to pay kept increasing every year.
A universal coverage plan is likely to make some people worse off, but as is I think most people are already dealing with their insurance getting worse and worse year after year, so any hit caused by the government program isn’t going to be compared to some situation where everything was going to be unicorns and moonbeams.
JMS
Seems like the devil is in the details. If a new system works efficiently, people will get over it. If it’s an even worse mess than now, they won’t. As for keeping the rich and noisy from complaining, is there an economic reason they can’t opt out? Like people who pay property tax but still send their kids to private school. From a political standpoint, offering an out for those who already have what they want and need to separate themselves from the masses seems like a no brainer. Don’t other countries with universal healthcare deal with their wealthy folk somehow?
wenchacha
My spouse is a GM/UAW retiree. Our coverage has bumped around a little since the auto industry crisis, but the union has improved it every year,and we are satisfied. We are 61 and 62, so Medicare is around the corner, and I will have to do some research on what we need. My preference is the least painful method of transitioning from private to public, and good explanation of possible plans.
Another Scott
@JMS: There are always corner-cases in the real world – even in “single payer” places like Canada. Take Sen. Rand Paul going to Canada for hernia surgery:
“Slavery for thee but not for me!!!1”
:-/
Oh, and they take public insurance, of course:
So much for it being a “private hospital”.
It’s just words to the Teabaggers. They’ll say anything to get what they want.
Grr…
Cheers,
Scott.
NJSOB
The details will matter, including the extent to which a role is preserved for employer sponsored coverage. For example, if the adopted public program requires meaningful out-of-pocket spend by individuals or excludes important services, can ESI supplement the public program? If MA is maintained in some form (see, e.g., the DeLauro bill), can employer-sponsored MA deliver the core benefits and top them up for active employees as is done for retirees now (see, e.g., so-called MA employer group waiver plans)? If so on either count, it may affect how workers and their family members feel about a particular proposal.
jl
Just seems like an argument for gradually adopting Medicare for all by incrementally expanding coverage.
Decreasing eligibility age to 55 seems like a no-brainer.
But David sometimes lurches towards the ‘fearful plumber’, or obsessed accountant, view of things, and overemphasizes costs and problems, doesn’t highlight benefits and advantages enough, IMHO.
Seanly
I’m one of those well-paid professionals with a decent medical plan in terms of coverage, but the company only offers high deductible plans. If I end up having a lower paycheck but don’t have to worry about a max out of pocket of $10k each year then I think I would be better off.
My wife was able to get over $1.2 million in care for her leukemia and blood stem cell transplant plus ICU and rehab hospital time when she got a terrible lung infection that almost killed her and then C.Diff in the hospital. Some poor guy in the middle of nowhere has to just die in a ditch. That’s terribly unfair and I hate it. So a little higher taxes and maybe my net takehome pay is less in a trade-off for more people getting the care that they need? That’s fine with me.
And actually, my pay isn’t super high so I might do better. On paper, I make over 6 figures, but our adjusted gross income is still 5 figures.
laura
@jl: here, here! If Medicare age dropped to 60, and then 55, and then 50 over a number of years that would be a great thing in my opinion. Everyone I know who’s working is trying to hang on til 65. The rush to the exits would free up so many jobs for so many young workers.
I’d be able to retire this year, and would be glad to do so.