By Richard Slusky
The coronavirus pandemic has brought to light the many fractures in the U.S. health care system, particularly the inadequate access that many low- and middle-income people have to health care services when they are most needed, and their dependence on employer-sponsored health care plans. Perhaps it’s time to reconsider the concept of universal coverage for all Americans under “Medicare for All.”
Unfortunately, the mention of Medicare for All brings forth a firestorm of objections from the hospitals, the insurance industry, conservative Republicans, and lobbyists determined to protect their own self interests. They argue that Medicare for All costs too much, will result in millions of Americans losing their private health insurance coverage, will add trillions to the national debt, will result in tax increases for the middle class, and will bankrupt hospitals and hospital health systems. Here are some responses to these arguments that you might want to consider before dismissing Medicare for All.
The cost is too high
It is true that growth in national health care expenditures continues to exceed inflation, and total health care costs, if left unchecked, are on track to far exceed $30 trillion over the next 10 years. Despite these national expenditures on health care, the United States is the only industrialized country in the world that does not provide universal health care coverage to its citizens; over 65% of bankruptcies in the U.S. are related to medical costs; and the United States ranks last on some of the most important measures of health care quality, including maternal mortality and life expectancy.
Medicare for All offers the opportunity to guarantee universal coverage to all Americans, increase benefits, and eliminate deductibles and copayments. It could also significantly reduce costs by centralizing the provider payment system, establishing a nationwide fee schedule, reducing administrative costs and the cost of pharmaceuticals, and eliminate the billions of dollars in profits that the insurance industry takes out of the health care system every year.
Millions of Americans will lose their private health insurance coverage
Yes, millions of Americans will lose their private health insurance, but, instead, will be covered under the Medicare for All program. Employer-based health care plans often come at the cost of reduced wages, ever-increasing cost sharing, and are dependent upon continued employment. On the other hand, Medicare for All would offer guaranteed coverage, better benefits, and would reduce or eliminate copayments and deductibles.
Unlike most private insurance plans, Medicare does not place limitations on physician choice; does not require prior approval for referrals or testing; and would reimburse providers for all services according to a national fee schedule, based on the cost of services provided, not on the negotiating leverage of hospitals and for-profit health care systems.
The deficit will increase, as will taxes on the middle class
Medicare for All would put the United States in line with every other industrialized nation in the world by guaranteeing universal health care coverage. However, it will require that the federal government assume the responsibility of funding over 60% of our health care system now being funded by states, insurance companies, and individuals. In order to pay for that transfer of costs, the federal government will need to establish Medicare for All premiums and/or raise taxes on almost all Americans, including those in the middle class. However, the cost of these premiums and taxes would be offset by the elimination of premium payments and out-of-pocket expenses currently being paid to private insurers.
It will be up to Congress to structure these premiums and taxes so that the net cost to lower- and middle-class Americans would be less than they are paying now in private insurance premiums.
Payments to hospitals will not be sufficient
Medicare pays hospitals, on average, about 85% of costs for the services they render. Medicaid pays less. In order to offset these shortfalls in payments, a recent Rand study noted that “commercial insurers pay 167% of the Medicare rate for hospital services and 125% of the Medicare rate for physician services.” Rand estimates that “the all-payer average rate under the Medicare for All plan in 2019 would be 124% of current Medicare rates for hospital payments and 107% of current Medicare rates for physician payments.”
Although payments under Medicare for All would need to be higher than the rates that Medicare currently pays, establishing a national fee schedule, with regional exceptions, under Medicare for All could save costs by eliminating variations in payments, and establishing a payment system based on cost and value, not the negotiating leverage of the hospitals and large health care systems. A national fee schedule would also pave the way toward a payment system based on the value of services provided, not the volume.
It has taken me a long time to get to this place, but, as Winston Churchill once said, “Americans can be counted on to do the right thing – after trying everything else.” Perhaps this is the time to do the right thing.
Richard Slusky, of South Burlington, was the CEO of Mt. Ascutney Hospital in Windsor 1982-2010, and was director of payment reform for the Green Mountain Care Board until 2016. He now owns Slusky Consulting.
