By Ryan Cooper
The Week, August 16, 2018
Medicare-for-all is getting some real momentum behind it, with several more supporters winning congressional primaries on Tuesday night. The medical industry — drug companies, insurance companies, medical providers, and others — has thus been gearing up to preserve the fat profits they enjoy under the horrendous status quo. They’ve formed a group called The Partnership for America’s Health Care Future (PAHCF) to run a propaganda campaign against universal health care.
Their main argument is pretty clearly going to be centered around loss-aversion. “Most Americans support commonsense, pragmatic solutions that don’t interrupt the coverage they rely upon for themselves and their families,” PAHCF spokesman Erik Smith told The Hill. (Jonathan Chait and Paul Krugman have made similar points.)
But this argument is garbage. Medicare-for-all would mean vastly more people enjoying good health care, and dramatically fewer people getting kicked off their insurance overall.
For starters, the status quo system leaves about 30 million people uninsured. Those people don’t get to rely on the “commonsense, pragmatic solutions” of our current system, they just go without health care, or die of preventable diseases, or are driven into bankruptcy by wildly overpriced treatment. Incidentally, the first thing most medical lobby clients do to uninsured patients is bleed them of every last penny by charging them immensely higher prices than insured ones. Many can’t pay, of course, meaning others end up being charged more to cover the difference.
But let’s examine the core of the case — the roughly half of the non-elderly population that is on employer-sponsored insurance. It is true, of course, that there would be an enormous one-time switch where those people are transferred from their current plan onto Medicare (under the Sanders bill, actually several smaller switches as the program is gradually rolled out over four years). After the program is fully implemented, private insurers would be forbidden from offering benefits that duplicate those of Medicare, effectively finishing off private health insurance since the new program would be so generous. Eventually everyone would end up switching over. But contrary to the deceptive implication of Smith that there would be some interruption in coverage — implying a period of no insurance — Medicare would kick in immediately, and permanently.
More importantly, the status quo system is constantly kicking people off their insurance. Just consider the life cycle of the average person. Children typically get coverage through their parents (if they are insured, that is), now up to age 26 thanks to ObamaCare. But once that birthday is reached, they get kicked off. If they are lucky enough to have a job with insurance benefits at that point, then they can be enrolled in a new plan. But if they ever lose that job or find a new job, then they get kicked off again, and once more every time they move jobs. Even people who remain in jobs can end up switching plans, as employers often shop around for a better deal.
There is enormous churn in the labor market, with about 60 million net job separations in 2016. Suppose half those jobs came with benefits — a conservative estimate, because while only 53 percent of firms offer health benefits to some of their workers, virtually all large employers do, and they employ the bulk of workers, meaning 89 percent of total workers are in firms that offer at least some benefits. That means something like 150 million net insurance loss events every five years.
And if people end up on ObamaCare exchanges, they routinely get kicked off their coverage if plans change at the end of the year, or their insurer withdraws from the exchange. Some exchange enrollees have even lost their coverage every single year since 2014, as exchanges have shed insurers (or even lost them completely).
Then there is Medicaid — a godsend to tens of millions of poor and working-class Americans to be sure, and the single largest insurer in the country. But because of Medicaid’s strict eligibility requirements, people routinely lose coverage if they make too much money. Millions of people bounce in and out of the program every year. Finally, there is the last insurance switch every American hits at age 65 when they become eligible for existing Medicare.
Speaking personally, I am 32 years old and have already been forced to switch insurance six times — or six-fold as many occasions as the Dread Medicare Enrollment would cause. There’s at least one more coming up when I hit old age, and realistically a lot more than that absent policy changes.
What’s more, Sanders’ Medicare-for-all program would be immensely superior to virtually all private insurance. The average family premium for an employer-sponsored plan has increased 55 percent since 2007, while average workers contributions have increased 77 percent. Some 81 percent of private plans now have a deductible (which must be paid before insurance kicks in for most care), at an average of $1,505. For primary care, 71 percent have co-pays (a flat fee) and 22 percent have co-insurance (a percentage charge), at $25 and 19 percent respectively. All those cost-sharing trends — and many others for specialty and emergency care, surgeries, and hospital admissions — have been getting steadily worse over time. Insurance networks are also narrowing over time, making it harder to find providers that will accept one’s coverage.
By contrast, Sanders’ Medicare-for-all would cover nearly all areas of medical treatment (including vision, dental, and hearing, though not long-term care) with no cost-sharing except for prescription drugs. Even that limited cost-sharing would be limited to $250 per year. And it would certainly be accepted by virtually every provider in the country — with the entire population in the program, they would have little choice (indeed, over 90 percent of primary care physicians already accept existing Medicare due to its large enrollment base of 59 million, and that is only about 18 percent of Americans). Worries about out-of-network coverage would vanish. Switching onto that plan would be cause for wild celebration for the vast majority of people, not some uncomfortable burden.
To sum up: Not only is the medical lobby’s argument mistaken, it is the exact opposite of true. Medicare-for-all would eliminate uninsurance, drastically curtail the number of people losing their coverage, and to the extent people would be forced to switch, it would be an enormous and permanent upgrade in quality.
So why is the medical lobby mobilizing against this bill? It’s simple: money. America’s total health expenditures are roughly twice that of the OECD average — nearly 5 points of GDP (or about $900 billion) higher than Switzerland, the second-most expensive country. A great deal of that spending comes in the form of big corporate profits, pointless administrative busywork, and hugely excessive doctor salaries (especially for specialists). Sanders’ Medicare-for-all bill would pay for expanded coverage and increased treatment access by wringing out some of those inefficiencies — on net, provider payments would be cut by about 11 percent.
This medical lobby effort against the idea is nothing more than greed.