Healthcare Reform: “150 million Americans won’t give up their private health insurance to get Medicare for all.” Really?

Former Representative Jim Delaney (D-Md) threw down the gauntlet to the left-leaning attendees at the California Democratic convention on June 2 by challenging Medicare-for-all.

”The problem with Medicare for all, it’s actually really simple, is that it makes private insurance illegal. And 150 million Americans have private insurance, and 70% of them like it according to polling. So if we want to actually create universal health care, we’re never going to do it by trying to get 150 million Americans to give up what they want.”

The crowd booed at first, but then gave him a respectful hearing. Pundit George Will and commentator Charlie Sykes think Delaney has a good point politically. But let’s look at Delaney’s claim through the apolitical lens of this blog.

1. Why Did Delaney make this claim?

Two reasons:  He wanted to move the debate over U.S. healthcare from sound bites to substance. And Rep. Delaney wanted to distinguish himself from the rest of the pack of Democrat Presidential contenders and position himself as a moderate on this and other issues.

2. Does Medicare-for-all mean making private health insurance illegal?

Clearly for Sen. Bernie Sanders the answer is yes. But not for any of the other Democrat Presidential candidates, at least not right away.  Some like Mayor Pete Buttigieg and entrepreneur Andrew Yang contemplate a gradual path, eventually leading to a single public payer. In Yang’s case, he expects that public health insurance will eventually out-compete private insurance, not that it will be outlawed. Others like Senators Cory Booker and Amy Klobuchar, Governors Hickenlooper and Inslee, and Rep. Eric Swalwell contemplate using public insurance, alongside private insurance, as the means to get to universal coverage, more like “Medicare for all who want it.”  This month’s Kaiser Family Foundation poll found that 55% do not perceive that Medicare-for-all would mean abolishing private insurance.

3. How many Democratic candidates advocate Medicare-for-all?

Of the 24 Democrats who have announced their candidacy (25, if you count former Sen. Mike Gravel), 13 advocate some version of Medicare-for-all, but 10 prefer some other approach to achieve universal coverage. Former Vice-President Joe Biden has not put forward a clear position yet. (Sen. Gravel supports universal healthcare “like Medicare.”)

4. What about Republicans?

Many Republicans, including the President himself, have at times given lip service to universal healthcare coverage. Most of them also advocate “protecting” Medicare, in some cases by scaling it back and limiting it. However, the President and Senate Republicans are once again pledging to “repeal and replace Obamacare” with a new plan, touted as “phenomenal” (though no details so far). At first the new plan was promised “in a very short period of time,” then “in next 2 months,” and now most recently “after the 2020 election.” For them, opposition to Medicare-for-all is a political matter of faith, not just a strategy for preserving private health insurance for those who want it.

5. How many Americans have private health insurance?

Private employer-based insurance covered 181 million Americans in 2017. According to the Census Bureau the full 2017 breakdown is:

• Any insurance at least part-year                            295 million
  • Employer-based, private             181 million
  • Direct purchased, private             52 million
  • Government                                   122 million

(Note: Some individuals had more than one type of insurance during year)

• Uninsured entire year                                                 29 million

6. Are Americans satisfied with their own private employer-based healthcare insurance?

Americans currently rate the “coverage” (69%) and “quality” (80%) for their own individual health plans as “good” or “excellent,” according to a December 2018 Gallup poll.

7. How does this compare with Medicare satisfaction statistics?

For Medicare recipients the ratings for “coverage” (88%) and “quality” (88%) are even better, in the same poll.

8. Do Americans see any downside to having employer-based healthcare insurance?

Many Americans feel locked into their current jobs lest they lose health benefits. This is especially so if they have chronic pre-existing conditions. Fear of losing coverage subtly puts them at the mercy of the employer for wages and work conditions. In addition, employees are shouldering a larger share of premiums and copays with each passing year.  A Rand study showed that in the first decade of the 2000s, workers gains in productivity were offset by higher healthcare costs, holding their take-home wages flat.  Increasingly, employees are switching to plans with high deductibles and less doctor choice.

Americans also express dissatisfaction with the wider system, even if they are satisfied with their own plans.  They rate “coverage” at 34% and “quality” at 55% nationally.

Americans polled by Gallup are especially dissatisfied with costs. Only 58% are satisfied with cost of their own plan, while a low 20% are satisfied with overall cost in the national system.

9. Who are other stakeholders in the healthcare debate besides employees with employer-based insurance?

All Americans have a stake in healthcare reform.  But here are some stakeholder sub-groups with special issues:

• small business
• big business
• federal, state and local government employers
• healthcare insurers
• healthcare sytems
• healthcare professionals
• other healthcare suppliers (of equipment, drugs, software, subcontractors)
• healthcare academia.

The uninsured are special stakeholders, as well.

10. Which of these stakeholders have the most to lose with Medicare-for-all?

In the first instance, healthcare insurers would be most directly affected. On closer look, I predict that several functions would not change much at all under a single-payer. There would still be enrollments, benefits management, claims processing, chronic disease management, contract negotiation, and customer service. These functions would continue, either in the form of subcontracts with government payers or in the form of direct government employment. Meanwhile, some would say that insurance companies have abdicated their job of true risk management, and have simply become pass-throughs for local health system monopolies and oligopolies. Under Medicare-for-all administrative complexities would be simplified, and inflated profits and salaries would be constrained, with resultant cost savings for the overall system

11. Which of these stakeholders have the most to gain with Medicare-for-all?

Big business and public sector employers probably have the most to gain from Medicare-for-all or other healthcare reform.  In 1991, Sam Walton famously railed to his managers, “These people are skinnin’ us alive not just here in Bentonville but everywhere else, too….They’re charging us five and six times what they ought to charge us….So we need to work on a program where we’ve got hospitals and doctors…saving our customers money and our employees money.” Walmart and others like Bezos, Buffet and Dimon’s innovative Haven healthcare management enterprise are taking matters into their own hands out of frustration with traditional insurance’s inability to control healthcare costs and deliver value.

Small businesses also stand to gain much from jettisoning healthcare costs and administrative burdens under a single payer system. Small businesses feel a disproportionate brunt of current high healthcare costs.  For them, a single sick employee can jack up their experience-rating. Tracking payments and maintaining regulatory compliance saps valuable administrative time. For these reasons, just 29 percent of small businesses with fewer than 50 employees provided group health insurance in 2016.  Many dropped insurance for their employees and referred them to the public exchanges instead.

12. Is Medicare-for-all the end goal for its supporters, or only the means to a further goal?

Democrat candidates base their arguments for Medicare-for-all, or for their alternative approaches, primarily on achieving universal coverage. This is a worthy goal in itself. Having healthcare insurance has been linked to quality of life, life expectancy, worker productivity, and financial security.

But this blog has argued that an even more critical goal is constraining costs. Climbing healthcare costs are consuming an ever-greater share of the GDP, diverting resources from other worthy projects, and stressing household, corporate and public budgets.

This blog, thus, sees single payer as a means to the end of leveraging cost containment.

 13. If Medicare-for-all in some form would give government the ability to finally constrain costs, who would be the biggest losers?

Clearly, potentially the biggest losers would be the healthcare industry, from front-line workers to professionals to health system CEOs.  However, many could shift into higher-value healthcare activities. Others could transition to equivalent jobs in other service industries. True, a few might need to accept cuts in their bloated incomes. Since healthcare currently comprises almost one-fifth of all economic activity, these transitions should be done slowly. Leaders should do some industrial policy planning to facilitate changes and mitigate disruptions. Having said that, we should keep in mind that healthcare professionals are generally well educated, motivated, adaptable and resourceful, thus able to successfully navigate change.

Conclusion

Rep. Delaney asks a good question:  Whether Americans with current employer-based health insurance would trade it for Medicare-for-all.  Would they recognize that Medicare gets better quality and coverage ratings than private insurance? Would they view changing to Medicare-for-all as a fair bargain to achieve universal access for all? Do they think that single-payer would give the government leverage to finally constrain costs?  Do they recognize that the total cost of healthcare – whether in the form of out-of-pocket payments, paycheck deductions, or new “$30 trillion” healthcare taxes  – comes out of their wallets, one way or another?

On the other hand, could a larger public insurer (Medicare-for-all-who-want-it) gain sufficient reach and clout to tame the healthcare tapeworm without a Sanders-style single payer system?  This blog will tackle that question in another post.

Now, take action.

 

Image Credit

Title:  John Delaney 113^thCongress Official Photograph

Attribution:  U.S. Congress (Public Domain)

URL:  https://commons.wikimedia.org/wiki/File:John_Delaney_113th_Congress_official_photo.jpg