By Reed Abelson and Margot Sanger-Katz
The New York Times, March 23, 2019
At the heart of the “Medicare for all” proposals championed by Senator Bernie Sanders and many Democrats is a revolutionary idea: Abolish private health insurance.
Proponents want to sweep away our complex, confusing, profit-driven mess of a health care system and start fresh with a single government-run insurer that would cover everyone.
But doing away with an entire industry would also be profoundly disruptive. The private health insurance business employs at least a half a million people, covers about 250 million Americans, and generates roughly a trillion dollars in revenues. Its companies’ stocks are a staple of the mutual funds that make up millions of Americans’ retirement savings.
Such a change would shake the entire health care system, which makes up a fifth of the United States economy, as hospitals, doctors, nursing homes and pharmaceutical companies would have to adapt to a new set of rules. Most Americans would have a new insurer — the federal government — and many would find the health insurance stocks in their retirement portfolios much less valuable.
“We’re talking about changing flows of money on just a huge scale,” said Paul Starr, a sociology professor at Princeton University and author of “The Social Transformation of American Medicine: The Rise of a Sovereign Profession and the Making of a Vast Industry.”
“There’s no precedent in American history that compares to this,” he said.
Most other countries with single-payer systems allow a more expansive, competing role for private coverage. In Britain, for example, everyone is covered by a public system, but people can pay extra for insurance that gives them access to private doctors. Most countries in Europe don’t have single-payer systems, but instead allow private insurance companies to compete under extremely tight regulations.
Legislators writing the bills acknowledge that people in the health insurance industry would lose their jobs. Proposals in the House and Senate would set aside large funds to help cushion the blow to displaced workers, offering them training, benefits, and income supports.
The health insurance industry is now composed of a mix of for-profit and nonprofit companies of various sizes. About 155 million Americans get private health coverage through an employer, but the reach of the industry extends into publicly funded insurance programs.
A third of Americans enrolled in Medicare, which insures older and disabled people, and four-fifths of those in Medicaid, which covers the poor and disabled, now get their benefits from a private insurer.
Many supporters of this approach see elimination of private insurance as a key feature, not a bug, meant to improve the program’s efficiency and equity by streamlining the health care system and weakening profit motives. With a single insurer covering every patient, hospitals and doctors could spend less time and money complying with differing policies, negotiating contracts, and filing forms to get paid.
“It’s worth it,” said Adam Gaffney, the president of Physicians for a National Health Program, which supports single-payer health care and helped design Ms. Jayapal’s bill. “Because we are not going to get to true universal health care without the greater efficiency of a single-payer system.”
The concept, in broad strokes, appeals to many Democratic voters. But overall support diminishes by a third or more when people are told that the plan would involve eliminating private insurance, raising taxes, or requiring waits to obtain medical care, according to surveys from the Kaiser Family Foundation.
NYT Reader Comment:
By Don McCanne, M.D.
Before expressing concern about the loss of the private insurance industry, it is crucial to understand the single payer model of Medicare for All. It truly reduces administrative waste by hundreds of billions of dollars while using public policies to finally price our health care services appropriately. The funds recovered are more than enough to fill in the voids in coverage for the uninsured and underinsured. The Affordable Care Act with the public option Medicare buy-in models forgo that efficiency and still leave tens of millions uninsured or underinsured.
The insurance industry is very expensive, yet it interferes with care through restrictive provider networks, financial barriers to care, and prior authorization requirements, while providing no direct health care for the hundreds of billions of dollars it consumes. Reform models include job retraining and transitional compensation for displaced workers, so they can engage in more productive occupations of greater benefit to our economy.
In any other industry, accolades are awarded for disruption of a system with very high costs and poor value, when it is replaced by products and services of greater value. Our sympathy for the insurance industry will evaporate once we finally experience affordable health care for all.
By Don McCanne, M.D.
The promise of affordable care for everyone has helped to popularized the concept of single payer Medicare for All. However, those opposed either because of their conservative ideology or because of the disruptive impact this would have on the private insurance industry are now telling the public that this would take away the freedom to choose a private health plan, especially a plan offered through employment. The media has been particularly helpful to the insurance industry by making sure that people understand that Medicare for All threatens to take away their option to continue with the health plans they have.
What much of the public does not understand is that the single payer model of Medicare for All would recover close to half a trillion dollars of administrative waste – funds that when combined with the current spending level on actual health care would make it possible to pay for comprehensive health care for everyone. When they decide that they want to have the option of obtaining a health plan through work, they have a total disconnect with understanding the profound administrative waste that preserving such a health care financing system entails.
Keeping in place the private health plans forgoes this savings. The continued high costs would keep pressure on the payers to reduce spending which they do by erecting administrative and financial barriers to care (narrow provider networks, high deductibles, prior authorization requirements, etc.). Preventing people from getting the health care that they should have is the opposite of what a high performance health care system should be doing, and that is particularly shameful when we are paying the system so much more money for these intrusive measures that are superfluous to the provision of actual health care.
As I mentioned in my comment on the NYT website, “In any other industry, accolades are awarded for disruption of a system with very high costs and poor value, when it is replaced by products and services of greater value. Our sympathy for the insurance industry will evaporate once we finally experience affordable health care for all.”
Disruption is good if it’s beneficial disruption.
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