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.
