it’s the candidates who can connect their plans and messages to voters’ worries about out of pocket costs who will reach beyond the activists in their base. And the candidates aren’t speaking to that much, at least so far.
That claim is based mainly on Kaiser polling, which finds that 48 percent of voters worry about paying their health care bills, and half of people who are sick have trouble paying their medical bills.
Bernie Sanders' Medicare for All bill, reintroduced last week, would reduce out-of-pocket costs all right -- to zero, for everyone. That includes for dental, vision and long-term care as well as for medical care and prescription drugs. But federal revenue would have to roughly double to cover the cost, and no one would get to keep their current insurance. New federal spending would be more than triple the current defense budget, according to the lowest of six estimates cited by New York Times Upshot. A payroll tax to cover the cost would probably have to be north of 20%,* in combination with a host of other tax increases on the wealthy.
The high taxes and complete revamping of the healthcare delivery system make Medicare for All an enormous political lift. In Kaiser Family Foundation polling, support for "Medicare for All" collapses from 56% to 37% when people are asked if they would support a program that raises most people's taxes or eliminates private health insurance companies. And that elimination would be unique in the world. While more than 30 countries provide universal coverage by various means -- all spending far less than the U.S. -- all of them preserve a role for private insurance, whether primary or supplemental. None offer coverage as comprehensive as the Medicare for All bills introduced in the Senate and House.
Every sector of the U.S. healthcare industry is united and primed for total war against Medicare for All. Most Democratic candidates for president have signaled openness to less radical reforms, some of which might transform our current system by degrees.
Healthcare reform 2.0: The spectrum of Democratic bills
More than a half dozen other Democratic bills aim to increase the ranks of the insured and lower individuals' healthcare costs. The extent to which these various bills address the demand for affordability can be viewed in two dimensions.
First is the degree to which they make coverage more affordable and reduce out-of-pocket costs for the ACA's original intended beneficiaries: those who lack access to other affordable insurance, mainly employer-sponsored insurance. Second is the degree to which they impact affordability for the 150-plus million current enrollees in employer plans (roughly 56% of the population under age 65).
A third question is the degree to which each bill reduces healthcare costs on a per person basis, including costs paid by government. Most (not all) Medicare expansion/public option bills increase the population enrolled in plans paying Medicare rates to healthcare providers, as opposed to much higher commercial rates. Most also establish some kind of drug pricing commission enabling Medicare to negotiate or regulate prescription drug prices.
Below, a quick overview of various bills establishing a new public option, generally deemed "Medicare," as well as "ACA 2.0" bills that increase subsidies in the ACA marketplace but don't establish a public plan per se.
Please click on the below bills to learn more.
"ACA 2.0" bills
The individual market for health insurance revamped by the ACA has made coverage available on equal terms to people with pre-existing conditions, but it's come up short with respect to rendering coverage affordable for all who lack access to employer-sponsored insurance or other insurance (such as Medicaid). Bills introduced in 2018 in the House by Rep Frank Pallone (D-NJ) and in the Senate by Elizabeth Warren (D-MA) would redress that.
Both would reduce the percentage of income required to buy a benchmark plan at every income level. Both would erase the ACA's "subsidy cliff,"capping premiums as a percentage of income for people at all income levels. Both bills would also raise reduce out-of-pocket costs for enrollees in the benchmark plan. The Warren bill would further reduce out-of-pocket costs at lower income levels by boosting the ACA's Cost Sharing Reduction (CSR) subsidies. The latest version of the Pallone bill dropped this provision, perhaps because Democrats hope to negotiate CSR separately with Republicans.
These bills would likely vastly expand takeup in the ACA private plan market, perhaps to levels originally forecast by the CBO (to 25-30 million, about double current enrollment). For the most part, however, people with access to employer-sponsored insurance would remain shut out, even if they find that insurance very expensive or otherwise unsatisfactory.**
Medicare at 50
The Medicare at 50 Act, introduced in February by Senator Debbie Stabenow (D-MI), allows people aged 50-64 to buy into either fee-for-service Medicare or Medicare Advantage plans. Those who qualify for ACA subsidies -- i.e., have incomes up to about $48,000 for an individual or $100,000 for a family of four and lack access to employer-sponsored insurance, Medicaid or other public insurance -- can apply those credits to the Medicare premium, as well as ACA Cost Sharing Reduction subsidies available to those with lower incomes (up to about $30,000 for an individual). Those with access to employer-sponsored insurance would have to pay full freight for Medicare, which isn't cheap. This bill would provide a new option for perhaps 5 million 50-64 year-olds and might improve the risk pool for younger enrollees in the ACA marketplace.
Medicare-X
The Medicare-X Choice Act of 2019, introduced by Senators Bennet (D-CO) and Kaine (D-VA), creates a strong public option in the ACA marketplace -- that is, a plan that pays healthcare providers at Medicare rates and requires providers who accept Medicare to accept the new plan. It also lifts the ACA cap on subsidy eligibility, ensuring that even high income enrollees don't pay more than 13% of income for a benchmark silver plan, and slightly boosts premium subsidies at lower incomes. It does not, however, enable people with access to affordable employer insurance to qualify for subsidies. It phases in a buy-in for small businesses, and in that way it could extend access to affordable coverage, potentially expanding the "small group" market, which enrolled an estimated 13.6 millionpeople in 2016.
By conforming to current ACA subsidy structure, Medicare-X runs into the ACA paradox: measures that reduce unsubsidized premiums do not improve affordability for those who receive subsidies. In fact, premium reductions often reduce discounts by compressing price spreads between the benchmark plan, which determines the size of premium subsidies, and cheaper plans, to which the subsidy can be applied. But lifting the cap on subsidy eligibility will boost enrollment among more affluent enrollees, which dropped by more than 2 million as premiums soared in 2017 and 2018.
The Choose Medicare Act
The Choose Medicare Act introduced by Senators Jeff Merkley (D-OR) and Chris Murphy (D-CT) last April (summary here) cracks the door wider between employer insurance and the individual market than does Medicare-X, allowing businesses of all sizes to buy into a public option. It also raises the cutoff for subsidy eligibility in the ACA marketplace from 400% to 600% of the Federal Poverty Level -- that is, from about $49,000 annual income for a single person or $100,000 for a family of four to about $73,000 for an individual/$151,000 for a family of four. It also raises the coverage in an ACA benchmark plan from silver level to gold, reducing out-of-pocket costs. It further boosts the ACA's Cost Sharing Reduction (CSR) subsidies and extends them to higher incomes than at present.
Like the ACA 2.0 bills, Choose Medicare could double the size of the individual market. It might also draw some employers into the public plan. On the cost control front, however, the bill has a serious weakness: it doesn't pay Medicare rates to providers, but leaves those rates to be negotiated. The ceiling is average rates paid by commercial insurers in the exchange. The rates actually negotiated might determine how attractive the plan is to employers, who generally pay almost twice Medicare rates to hospitals and about 25% more to physicians.
The Medicare for America Act
The Medicare for America Act, introduced last December by Reps Rosa DeLauro (D- CT) and Jan Schakowsky (D-IL) and soon to be reintroduced, is a halfway house to single payer. This is the one bill other than Medicare for All bills that truly bids to give all Americans access to an affordable public plan, in that it allows employees to buy in on a subsidized basis if their income qualifies them for subsidies, even if their employer offers affordable private insurance. It also allows all employers to buy in by paying an 8% payroll tax instead of offering their own plans.
Medicare for America (summary here) creates a revamped Medicare that auto-enrolls all children born in 2022, folds in Medicaid and absorbs existing Medicare. It preserves a role for private insurance, via Medicare Advantage and the remaining option for employers to provide private insurance. It also covers long-term care -- a huge hole in the U.S. healthcare system. It seems not to be designed to cause employer insurance to wither on the vine, in that it stipulates that healthcare providers must accept the public plan's payment rates (set somewhat provisionally at 110% of current Medicare, with some variations) from private insurers.
Like Choose Medicare, Medicare for America raises the value of the benchmark plan in the individual market (where Medicare for Advantage competes with the new public plan). The public plan pays 80% of enrollees' incurred costs up to a low out-of-pocket maximum, and 100% of costs for chronic disease management, preventive care and generic drugs. It extends a premium subsidy schedule --as yet unspecified -- to 600% FPL and caps premiums for enrollees above that threshold at about 10% of income. Enrollees with incomes up to 200% FPL (about $24,000 for an individual, $50,000 for a family of four) pay zero premium.
Tax burden aside, implementation of Medicare for America would vastly reduce spending on premiums and out-of-pocket costs for most people. A recent University of Pennsylvania study found that the premiums alone for employer-sponsored insurance constitute an average of 30% of employees' compensation, when the employer contribution is taken into account. Some affluent future seniors, however, would pay more than under current Medicare, though they'd also be getting long-term care insurance for their money.
Of all these bills, only Medicare for America, which allows all but the truly rich to buy into public insurance on a subsidized basis, effectively guarantees truly affordable coverage for all Americans. The real tripwire to transformation is allowing people with access to employer-sponsored insurance that qualifies as "affordable" by current standards to opt into a comprehensive public plan that costs no one more than 10% of income (topping out at about 14% with out-of-pocket costs. included) and most people much less. More limited public option bills that leave senior Medicare and Medicaid alone could do that, but none profiled above do so.
The three potentially transformative components of a strong public option are 1) paying low but sustainable provider rates, 2) providing comprehensive coverage and 3) being available on affordable terms to all. That was the original concept floated in the early 2000s, then watered down by degrees until it disappeared entirely in the third trimester of the ACA's gestation. Standing up a strong public option of this sort seems to me a reachable goal to which Democrats should commit themselves.
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* Kenneth E. Thorpe, a health economist at Emory University, estimated that the Medicare for All plan Sanders introduced in the 2016 presidential campaign would require a 20% payroll tax, on top of an array of tax increases on the wealthy that Sanders had proposed. The latest version of the bill adds long-term care coverage for all Americans. At present, about 60% of Americans in long-term care are covered by Medicaid, and Medicaid spending on long-term care is currently about $120 billion per year.
** Both ACA 2.0 bills would, however, make ACA marketplace subsidies available to those for whom an employer's offer of family insurance costs more than about 10% of income, fixing the ACA's so-called family glitch. A 2016 Urban Institute study estimated that a fix like this would increase marketplace enrollment by 3.6 million people -- most of them swapping hard-to-afford employer-sponsored family coverage for marketplace plans.
Andrew Sprung, co-chair of BlueWaveNJ's healthcare committee, writes about healthcare policy on his blog, xpostfactoid, and at healthinsurance.org and other publications. His previous article was Medicare For All (Who want or need it).