By Michael Geruso, Timothy J. Layton, Grace McCormack, and Mark Shepard
National Bureau of Economic Research, September 2019

Abstract

Insurance markets often feature consumer sorting along both an extensive margin (whether to buy) and an intensive margin (which plan to buy). We present a new graphical theoretical framework that extends the workhorse model to incorporate both selection margins simultaneously. A key insight from our framework is that policies aimed at addressing one margin of selection often involve an economically meaningful trade-off on the other margin in terms of prices, enrollment, and welfare. For example, while a larger penalty for opting to remain uninsured reduces the uninsurance rate, it also tends to lead to unraveling of generous coverage because the newly insured are healthier and sort into less generous plans, driving down the relative prices of those plans. While risk adjustment transfers shift enrollment from lower- to higher-generosity plans, they also sometimes increase the uninsurance rate by raising the prices of less generous plans, which are the entry points into the market. We illustrate these trade-offs in an empirical sufficient statistics approach that is tightly linked to the graphical framework. Using data from Massachusetts, we show that in many policy environments these trade-offs can be empirically meaningful and can cause these policies to have unexpected consequences for overall social welfare.

From the Introduction

Some of the most important problems in health insurance markets stem from adverse selection, or the tendency of sicker consumers to exhibit higher demand for insurance. Concerns about adverse selection have motivated a variety of regulatory interventions in the U.S. and around the world, including insurance mandates, penalties for being uninsured, subsidies for purchasing insurance, risk adjustment transfers, benefit regulation, and reinsurance. Policy discussions about how to address adverse selection have become salient in the U.S. as many public programs have shifted toward providing health insurance via regulated markets.

But, a deeper look reveals that not all policies combating adverse selection are targeted at the same problem. Policies such as mandates and subsidies combat selection on the extensive margin (or “against the market”). This type of selection is characterized by sicker people being more likely to buy insurance. It leads to higher insurer costs and higher consumer prices and causes some healthy people to opt out. Policies such as risk adjustment and benefit regulation, on the other hand, combat selection on the intensive margin (or “within the market”). This type of selection is characterized by sicker people being more likely to purchase more generous plans within the market. Intensive margin selection drives up the price of generous plans relative to skimpy ones and results in too many consumers choosing skimpy plans. In some cases, selection within the market may be so strong that generous contracts cannot be sustained, and the market for them unravels entirely.

In this paper, we generalize the canonical insurance market framework to address both margins simultaneously. The benefit of doing so is not merely a technical curiosity. It has first-order policy importance in settings like the ACA Marketplaces where both the generosity of coverage and rates of uninsurance are serious concerns. To see why, consider an insurance mandate—a policy that aims to correct extensive margin selection by bringing healthy marginal consumers into the market. Our framework shows how a mandate that succeeds in increasing rates of insurance coverage will likely worsen selection on the intensive margin. Intuitively, the mandate brings more healthy/low- cost consumers into the market. Because these new consumers tend to select the lower-price (and lower-quality) plans, the risk pools of those plans will get even healthier. In equilibrium, these plans will further reduce prices, siphoning additional consumers away from higher-quality plans on the intensive margin, causing prices for high-quality coverage to spiral upwards. These two offsetting effects (improving take-up and inducing within-market unraveling) represent a clear example of the intensive/extensive margin interactions that are the focus of our paper.

Our insights about cross-margin interactions are relevant for active policy debates in the ACA and other insurance settings. For example, recently states have been given increasing flexibility to weaken ACA Essential Health Benefits or risk adjustment transfers (intensive margin policies)—with the stated goal being to lower plan prices and reduce uninsurance (a cross-margin effect). On the other hand, state efforts to simplify enrollment, auto-enroll certain consumers, or enact mandate penalties (all extensive margin policies) may create unintended consequences on the intensive margin. More broadly, our model is also relevant to other settings with two selection margins, including the Medicare program (with its Medicare Advantage option), employer programs with a plan choice decision and a participation decision (e.g., CalPERS), national health insurance systems with an opt-out (e.g., Germany), other insurance markets such as auto insurance and long-term care insurance where both the intensive and extensive margins may be important, and other non-insurance markets like consumer credit where there is evidence of both extensive and intensive margin risk selection.

From the Conclusion

Adverse selection in insurance markets can occur on either the extensive (insurance vs. uninsurance) or intensive (more vs. less generous coverage) margin. While this possibility has been recognized for a long time, most prior treatments of adverse selection focus on only one margin or the other. This focus misses important cross-margin trade-offs inherent to many selection policies.

Specifically, (1) strengthening uninsurance penalties can help some consumers by getting them into the market while hurting other consumers by inducing them to enroll in lower-quality coverage, and (2) strengthening risk adjustment transfers can help some consumers by inducing them to enroll in higher-quality coverage while hurting other consumers by forcing them out of the market. Additionally, we find that price-linked subsidies for low-income consumers can weaken some of these trade-offs (i.e. effects of risk adjustment and benefit regulation) but not others (i.e. mandates/uninsurance penalties). Finally, we show that trade-offs related to risk adjustment are often more pronounced when the advantageously selected plan has a cost advantage.

Because many policies lead to coverage gains on one margin and coverage losses on the other, in some cases the unintended effects of policies are first-order with respect to welfare. We show cases in which the welfare losses from coverage losses on the unintended margin exceed welfare gains from coverage gains on the intended margin. This happens most often with a penalty for choosing to be uninsured.

The issues we highlight here are relevant for future reform of the individual health insurance markets in the U.S. Many have observed that the overall quality of coverage available to consumers is low in these settings, with most plans characterized by tight provider networks, high deductibles, and strict controls on utilization. Additionally, others have observed that take-up is far from complete, with many young, healthy consumers opting out of the market altogether and choosing to remain uninsured. These two observations are consistent with adverse selection on the intensive and extensive margins, respectively. Our framework highlights the unfortunate but important conceptual point that budget-neutral policies that target one of these two problems are likely to exacerbate the other due to the inherent trade-off between extensive and intensive margin selection. This point is often absent from discussions of potential reforms by policymakers and economists, and our intention is to correct this potentially costly omission.

https://www.nber.org…

---

Comment:

By Don McCanne, M.D.

Okay, this is another one of those mundane technical papers from academics in the policy community. But you really don’t have to wade through the intricacies of their treatise to understand the important point they make.

They consider the interactions of two margins in insurance markets: 1) the extensive margin that guides people on whether or not to buy insurance, and 2) the intensive margin that guides individuals on which plan to buy. Adverse selection, which concentrates higher cost individuals into segregated risk pools, can occur at either margin: 1) being insured or uninsured, or 2) having more generous versus less generous coverage. They show that a favorable shift in either margin can result in an unfavorable shift in the other. That is, efforts to expand the number of people insured at one margin can result in less generous coverage for those act the other margin. Likewise, efforts to expand benefits at the other margin can result in more people remaining uninsured.

It is easy to see that these adverse consequences are a direct result of our politicians and the policy community insisting on maintaining our highly fragmented system of financing health care through a plethora of private and public insurance programs. Currently their support of employer-sponsored plans and private Medicare Advantage plans are prime examples. Imagine if we had one single universal risk pool; adverse selection disappears. Automatically including everyone in an improved Medicare program means that nobody would be left uninsured and that everyone would have the same comprehensive package of essential health care benefits.

It is perplexing that these economists state that their their intention is to correct the potentially costly omission in the failure to recognize the inherent trade-off between extensive and intensive margin selection, almost as if they are saying, “deal with it, stupid, take your choice.” Yet they remain totally silent on the obvious solution of the single payer model of Medicare for All, in which you could have both truly universal coverage and comprehensive benefits for all.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

By Sarah Thomson, Jonathan Cylus, Tamás Evetovits
World Health Organization

The Role of Voluntary Health Insurance (VHI)

In most countries, VHI exacerbates inequalities in access to health care rather than reducing them, because VHI is consistently more likely to be taken up by richer households.

Private insurance is only shown to be protective at health system level where it explicitly covers user charges and also covers most of the population, including most poor people.

Only three countries in Europe (and indeed globally) meet these conditions: Croatia, France and Slovenia. Table 8 (in the report at the link below) shows how VHI covering co-payments in these countries achieves very high rates of take up, covering over 80% of those who have to pay co-payments in Croatia, around 90% of the population in France and around 95% of those with compulsory health insurance in Slovenia.

The experience of these three countries suggests that VHI covering co-payments is not an equitable or efficient way of improving financial protection. Equity in financing is undermined by the high financial burden imposed on poor households compared to rich households, even where VHI is free for very poor people. Efficiency is undermined not only by the high administrative costs incurred by private insurers in all three countries compared to entities providing compulsory health insurance, but also by the high – and sometimes hidden – transaction costs involved in regulating a complex market.

Key messages on the role of VHI

• VHI generally exacerbates inequalities in access to health services.
• It is only shown to enhance financial protection at health system level where it covers co-payments, is accessible to and affordable for all those who need it and is heavily subsidized by the state for poor households.
• Across countries it is not effective in reducing out-of-pocket payments, in contrast to public spending on health.
• VHI is also a more regressive means of financing the health system than public spending on health.

https://apps.who.int…

---

Comment:

By Don McCanne, M.D.

Yesterday’s Quote of the Day used this same WHO report to make the point that “even in Europe’s richest countries people are pushed into poverty” by the deficiencies in their health care financing systems. Today’s message is that European voluntary health insurance “exacerbates inequalities in access to health services;” “is not effective in reducing out-of-pocket payments, in contrast to public spending on health,” and it is also “a more regressive means of financing the health system than public spending on health.”

What is the lesson for the United States? A single payer Medicare for All program would provide all essential health care services for everyone while removing financial barriers to care. Instead we have a fragmented system that is dominated by voluntary plans including those in the individual market, the ACA marketplace plans, employer-sponsored plans, and the private Medicare Advantage plans. These perpetuate those deficiencies found in the European voluntary health insurance plans.

Right now there is an intensive effort to perpetuate our fragmented system of individual voluntary plans, and even expand it through private Medicare Advantage plans and ACA marketplace plans. That’s ridiculous when we could have an efficient, effective, equitable system that’s affordable for everyone by enacting and implementing Single Payer Medicare for All.

Yes, the Europeans have lessons for us, but we need to understand what they actually are and then apply them.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

By Sarah Thomson, Jonathan Cylus, Tamás Evetovits
World Health Organization

From the Forward

“One of the report’s key findings is that even in Europe’s richest countries people are pushed into poverty – and many already poor households experience financial hardship – as a result of having to pay out of pocket for health services. This indicates that all Member States can take steps to improve financial protection.” – Hans Kluge, Director of the Division of Health Systems and Public Health WHO Regional Office for Europe

From the Executive Summary

New numbers for Europe

Drawing on publicly available national household budget survey data, the report provides up-to-date numbers on financial protection for 24 high- and middle-income countries in Europe.

• The incidence of impoverishing health spending in the study countries ranges from 0.3% to 9.0% of households. There is wide variation among European Union (EU) countries (from 0.3% to 5.9%) and among non-EU countries also (from 3.6% to 9.0%).
• The incidence of catastrophic health spending ranges from 1% to 17% of households in the study countries. It varies widely among the 18 EU countries in the study, including wide variation among countries that joined the EU after 30 April 2004.
• Catastrophic health spending is consistently heavily concentrated among the poorest fifth of the population.
• Out-of-pocket payments incurred by households with catastrophic health spending are mainly due to outpatient medicines, followed by inpatient care and dental care.

Gaps in coverage

People are exposed to out-of-pocket payments and unmet need when there are gaps in coverage. Gaps in coverage arise from weaknesses in the design of three policy areas: the basis for population entitlement leaves some people without access to publicly financed health services; the range of services that is publicly financed – the benefits package – is narrow, or there are issues relating to the availability, quality and timeliness of these services; and there are user charges (co-payments) in place for services in the benefits package.

Weaknesses in coverage policy undermine equity and efficiency by creating financial barriers to access; shifting the financial burden of paying for health care on to those who can least afford it – poor people and regular users of health services; and encouraging inefficient patterns of use.

Acting on the evidence

To be effective, changes to coverage policy should be supported by an adequate level of public spending on health. Countries in which the out-of-pocket payment share of current spending on health is relatively high will need to invest more publicly in the health system to reduce out-of-pocket payments. Simply increasing public spending might not be enough to improve outcomes for those most in need, however. The sequencing of policy is therefore important. Some countries will need to redesign coverage policy at the same time as seeking additional public investment in the health system.

There is a wealth of good practice in Europe. Lessons can be learned from countries with strong financial protection and countries where financial protection is weak overall but steps have been taken to protect poor people.

https://apps.who.int…

---

Comment:

By Don McCanne, M.D.

It is often said that we can learn much from Europe on how to more effectively and equitably finance health care in the United States. What is often not said is that we can learn a lot on how not to do it. As WHO’s Hans Kluge states, “One of the report’s key findings is that even in Europe’s richest countries people are pushed into poverty.”

It is not as if we don’t already know how to do it. PNHP’s Physicians’ Proposal for Single-Payer Health Care Reform would address the deficiencies that result in the failure of European systems to provide adequate financial protection for absolutely everyone.

Rather than advocating for a European-style health care financing system, we can do better. By enacting and implementing a well designed Single Payer Medicare for All, we would have a better than European or Canadian-style system – we would have the best health care system in the world.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

By Jonathan Oberlander
The Milbank Quarterly, September 15, 2019

Excerpts

“Medicare for All” has emerged as a major flashpoint in American politics. Its unexpected rise is, in part, a reaction to a decade of the Affordable Care Act (ACA, also known as Obamacare) — an ironic development given that the ACA embodies a reform model that builds on private coverage and Medicaid.

Yet, just as Medicare for All is moving to center‐stage in US health care debates, supporters of the idea are fighting over where to define its boundaries.

This essay traces the evolving language of health reform in the United States, clarifies the various meanings of Medicare for All, and explores what the debate over the label and other Medicare‐related expansion plans, including the pubic option, reveals about health care politics.

The Shifting Language of Health Care Reform in the United States

As Canada managed to insure all its citizens while spending much less on medical care than the United States, reformers in this country increasingly began to call for adopting Canadian‐style national health insurance. By the 1990s, “single payer” had become the term of choice for American reformers, including Physicians for a National Health Program, who advocated replacing our mix of public and private coverage with one government insurance program.

Single payer accurately described how medical services would be financed in a Canadian‐like system—hospitals and doctors would be paid for covered services by one insurer. Still, single payer was ultimately a technical term that generated little public appeal, public understanding, or political momentum.

Reformers’ recent invocation of Medicare for All reflects a significant change, and undoubtedly an improvement, in political strategy. Medicare for All immediately connects proposals for government insurance to a popular, familiar, and entrenched program that already exists in the United States rather than to a confusing financing label or a mostly unfamiliar and often vilified foreign insurance plan.

Polling data support the labelling change: Americans are much more likely to register support for Medicare for All (or universal health coverage) than single‐payer health insurance. The turn to Medicare for All also reflects the improved performance of Medicare, whose relative success (compared to private insurers) in moderating spending growth since the 1980s and maintaining low administrative costs has bolstered the program’s reputation among reformers and policy analysts. Medicare is often portrayed not merely as an equitable platform through which to provide all Americans with insurance, but as a symbol of administrative efficiency and cost control. Medicare for All is thus seen as the key to making health care a universal right, eliminating the problems of the uninsured and underinsured, reining in spending and regulating prices in the world’s most expensive health care system, and reducing the prolific waste and administrative costs generated by convoluted billing and insurance arrangements.

The Pure and Hybrid Models of Medicare for All

The pure model of Medicare for All seeks to establish a national insurance program operated by the federal government, prohibiting private insurance for services covered by the publicly funded government plan. In contrast, the hybrid model would allow private insurance plans that abide by federal regulations, including those sponsored by employers, to operate alongside and within a government‐run Medicare program.

The pure and hybrid models advance varying goals, embody different philosophies, and reflect different political calculations. The pure model, which is how the health reform community has until now generally understood Medicare for All, presumes that America’s various health care pathologies can only be remedied by eliminating private insurance as a major source of coverage. The goal is not simply to achieve universal health insurance but to do it through a government program and without relying to any meaningful degree on private insurers. Health security will never be achieved, from this perspective, unless private insurance is jettisoned because the corrosive effects of market forces are seen as the central problem in American health policy.

In contrast, the hybrid model is willing to leverage both public and private insurance to cover all Americans. It makes a concession to perceived political realities and attempts to lessen disruption by preserving a significant role for private insurers and employers. It also embraces the altered nature of Medicare, building on the preexisting Medicare Advantage component.

Advocates of the hybrid model believe that the goal of enacting universal coverage justifies the retention of private insurance. However, by preserving Medicare Advantage, such models also inherit its problems, including a record of federal overpayments to such plans.

A Medicare‐like Public Option

Adding to the confusion is a third health reform plan… Americans could join a new “Medicare‐like” or “Medicare‐type” public option or otherwise remain in their current health plan.

Such plans are not Medicare for All, nor are they even Medicare for More since they generally seek to establish a new Medicare‐like program rather than directly expand the current Medicare program.

Ultimately, public option plans aim to advance the rhetoric of choice while harnessing the benefits of association with Medicare without triggering the political liabilities of Medicare for All.

From the Conclusion

Medicare for All is now receiving more serious consideration from presidential candidates and lawmakers than at any time since the program’s enactment over five decades ago. The debate over what Medicare for All means and which model of Medicare (or Medicare‐like) expansion to pursue reflects persistent tensions in health policy between pragmatism and principle, incremental and systemic reform, and building on or tearing down the status quo.

The question is whether Medicare will endure beyond 2020 as a prominent reform model that defines the health care debate or whether we are witnessing an ephemeral development that presages US health policy moving in yet another direction.

https://www.milbank.org…

---

Comment:

By Don McCanne, M.D.

Jonathan Oberlander has provided an excellent description of how the “Medicare for All” label has been transformed from one representing the altruistic model of single payer reform that would ensure affordable, equitable health care for absolutely everyone into a confusing term that has different meanings for different advocates, but particularly has been used to ensure that the private health insurance industry continues to have a major role in marketing their insurance products and their administrative services for self-insured employers.

The concept is being sold that we can have Medicare for All while still allowing individuals to obtain private plans through their employers, or through the individual market, or through Medicare as private Medicare Advantage plans – that it really wouldn’t make much difference if choice of private plans remained an option. The nation really hasn’t grasped the concept that not only are private plans responsible for creating barriers to care (high deductibles and limited provider networks), but, most of all, they are also responsible for creating profoundly expensive administrative waste (hundreds of billions of dollars), and are responsible for the failure to control excessive prices in health care. The “pure” Medicare for All model recovers this waste and redirects it to filling in the voids in care for the currently uninsured and underinsured.

We can’t expect those in bed with the insurance industry to be responsible in their rhetoric, but those who really do care about the health care of all of us should have a better understanding of what is happening by reading Oberlander’s treatise on the subject.

Where are we going to get the money? In a pure single payer model, we’ll recover close to half a trillion dollars in administrative waste; we’ll use economic tools (global budgets, negotiation) to ensure that prices reflect value; and we’ll use separate budgeting to ensure appropriate capacity in the system.

Although Oberlander shows us how we moved away from the poorly understood, wonkish term “single payer” when we adopted the “Medicare for All” label, unfortunately we are going to have to distinguish the pure model from the others. Perhaps the easiest way is to salvage the single payer term by referring to “Single Payer Medicare for All.” Otherwise opponents will assign unfavorable attributes to “Medicare for All” and then use that to condemn the model.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

By Rachel Madley
The New York Times, September 17, 2019

Twenty minutes after I learned I had Type 1 diabetes — after narrowly avoiding a diabetic coma — a nurse pulled my parents away from my bedside and urged them to call our insurance company immediately. If they didn’t call right away, she warned, insurance would not cover the stay. At that moment — now 10 years ago — my parents had to choose whether to comfort their sick and frightened 14-year-old daughter, or spend hours on the phone with our insurer. Of course, they left me to make those calls, and my nightmarish relationship with the insurance industry began.

Type 1 diabetes is an autoimmune disease that destroys the body’s ability to produce insulin or maintain normal blood-sugar levels. There are no days off from this illness. Without careful monitoring and daily insulin injections, Type 1 diabetics risk blindness, kidney failure and death.

On top of the full-time job of monitoring blood sugar, American diabetics and their families have to work a second shift fighting insurance companies to cover their care. Even though my parents had insurance and both worked multiple jobs, the hospital bills, insulin and supplies drove them into debt, forcing them to forgo insurance, and medical care, for themselves.

When I turned 19, I was kicked off my parents’ plan. I took out thousands of dollars in extra student loans to buy insulin and diabetes supplies. After the Affordable Care Act passed, I was able to regain insurance, a high-deductible plan that cost me hundreds of dollars for each doctor’s visit and insulin refill.

So when I hear politicians talk about how much Americans love their private health insurance, I think: Really?

I am alive today not because of insurance companies but despite them. My insulin refills have been delayed countless times, not because of medical reasons, but because of what seem to be arbitrary insurance limits and requirements to continuously document my condition, which is permanent. Once, my insulin refill was delayed so long that I ran out, just when the insurance office closed for a three-day weekend. I was a student, away from home, with no other way to pay for my prescription. Terrified, I rushed to the pharmacy in tears. The pharmacist took pity on me and slipped me a vial of insulin without charge, saving my life.

The worst part about my story is that it isn’t unique, at least not in this country. Young adults with Type 1 diabetes suffer life-threatening diabetic ketoacidosis — a complication caused by insufficient insulin — at much higher rates in the United States than in Canada. Canada’s single-payer system provides seamless, lifelong coverage. But in the United States, diabetics must wage war with insurance companies to get the care we need, if we have insurance at all.

I’m glad that politicians are finally talking about health care reform. But those who only want to “protect” the Affordable Care Act or add a public option to our already byzantine mix of private and public plans are missing the point. Americans don’t “love” their private insurance, as many of them claim. They’re grateful for any coverage at all. Americans love their doctors, nurses and pharmacists, because those are the people who save our lives.

What diabetics — and all Americans — need is care that is lifelong and portable, covers all medically necessary services and drugs, and is accepted by all doctors and hospitals. Only a single-payer version of “Medicare for all,” in which care is publicly funded by one entity and privately delivered, would guarantee coverage to everyone in the United States, and eliminate the greed and administrative waste of private insurance.

It has been 10 years since my diabetes was diagnosed. I can’t help but think about the doctors and nurses who cared for me with such skill, my parents who sacrificed their needs for mine and the pharmacist who kindly slipped me that vial of insulin. I’m alive today because of them.

Will I have to live the next 10 years holding my breath through every doctor’s visit, praying that insurance will approve my medication, and in time? Will I ever be able to stop my endless fights with insurance middlemen? I know I’ll never live a day without worrying about my health. But maybe one day I, and millions of other diabetics in America, can live without worrying about how to pay for it.

Rachel Madley, a Ph.D. student at Columbia University Medical Center, is a student board member of the New York chapter of Physicians for a National Health Program.

https://www.nytimes.com…

---

Comment:

By Don McCanne, M.D.

Love your private health insurance?

People do not love facing a high deductible that may make health care unaffordable.

People do not love not being able to go to the physician or hospital of their choice because the insurer limits care to restrictive provider networks.

People do not love the instability of coverage due to factors such as loss of employment, change of residence, or change in qualification for subsidized plans.

People do not love paying high COBRA premiums to maintain insurance after termination of employment at a time that income has ceased.

People do not love paying outrageous drug prices set by pharmaceutical firms and pharmacy benefit managers.

People do not love the uncertainties of delays or denials due to prior authorization requirements of the private insurers.

People do not love tolerating their flat incomes because potential wage increases are diverted to increases in employer-sponsored insurance premiums instead.

People would not love contributing to half a trillion dollars in recoverable administrative waste if they realized they were doing that.

All of these and much more would be resolved by enacting and implementing a single payer model of Medicare for All. Now that would be a program that people really can love.

---

We are very grateful for the efforts of the author of this op-ed, Rachel Madley, and the many other student members of Physicians for a National Health Program (PNHP) and the student arm – Students for a National health Program (SNaHP) – for advancing the cause of health care justice for all. The future of health care is in their hands.

The 2019 PNHP Annual Meeting and Leadership Training sessions will be held in Philadelphia November 1st and 2nd. It is particularly important for the future of health care to see that we have a great turnout of students and residents. Donating to the Nicholas Skala Student Activist Fund can be particularly gratifying because of the knowledge that the funds will be directed to helping students master the policies and politics of effective, equitable health care reform for all:

Nicholas Skala Student Activist Fund
https://pnhp.salsalabs.org…

2019 Annual Meeting and Leadership Training
https://pnhp.org…

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

By Matt Bruenig
People’s Policy Project, September 12, 2019

The Census released its annual income, poverty, and health insurance statistics earlier this week. The summary report shows that 8 million of the nation’s 42.5 million poor people would not be poor if they did not have to pay medical out-of-pocket (MOOP) expenses like deductibles, copays, coinsurance, and self-payments. Medicare for All (M4A) virtually eliminates these kinds of payments, meaning that these 8 million people (18.8 percent of all poor people) would find themselves lifted over the poverty threshold if M4A were enacted.

This headcount poverty measure actually understates how significant MOOP expenses are to poverty in this country. According to this same data, in 2018, the total poverty gap stood at $175.8 billion. This figure is derived by calculating how far each poor family’s income is below the poverty line and then adding those calculations together to get an aggregate amount. MOOP expenses make up $38.2 billion of that total gap, meaning that Medicare for All would cut poverty by about 22 percent.

Coincidentally, MOOP expenses also chew up about 22 percent of the income of poor people. That’s right: more than 1 in 5 dollars received by the nation’s poor goes towards out-of-pocket medical expenses. For families with incomes above 400 percent of the poverty line, the same figure is only 4.6 percent.

What this means is that, by eliminating medical out-of-pocket expenses, Medicare for All would reduce headcount poverty by 19 percent, reduce the overall poverty gap by 22 percent, and increase poor people’s incomes by 29 percent. Indeed, M4A’s elimination of MOOP expenses would contribute more to the incomes of the poor than the Earned Income Tax Credit currently does. This makes M4A one of the most potent anti-poverty programs proposed thus far in the current presidential race.

https://www.peoplespolicyproject.org…

---

Comment:

By Don McCanne, M.D.

Besides the obvious advantage of single payer Medicare for All in making health care affordable for everyone, Matt Bruenig shows us that it would also “reduce headcount poverty by 19 percent, reduce the overall poverty gap by 22 percent, and increase poor people’s incomes by 29 percent.” It “would contribute more to the incomes of the poor than the Earned Income Tax Credit currently does,” making it “one of the most potent anti-poverty programs proposed thus far in the current presidential race.”

Who could be opposed to that? (Don’t answer.)

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.