This article original available on podcast, click here to listen podcast.
Is Medicare for All the solution? There’s been a new push since Democrats have won the presidency. And effectively both houses, although it is barely with respect to the Senate and even the house margin is much thinner. There’s been a much greater emphasis on trying to get Medicare for All restarted. It’s touted as a solution to all the financial problems associated with our healthcare system by many.
Many things that people reference include surveys. One of the Gallup surveys last year said that 1 in 10 respondents in April of 2020, so during one of the peaks of the pandemic, said that they would avoid treatment if they thought that they had COVID because they feared the medical costs associated with it, so 10% of all survey respondents.
1 in 3 Americans struggles to pay financial bills. There are often quotes about a single healthcare cost of approximately $400 would be beyond the capacity of most Americans to afford, to be able to absorb that small of a hit. Approximately half a million personal bankruptcies occur every year now as a result of healthcare expenses. It’s now the number one reason for personal bankruptcy in the United States.
All of these reasons lead people to suggest the solution is Medicare for All. That’s what many would have people believe. But we have to sort of break that down and look at “What is Medicare for All?” and “What is it trying to solve?” and “What is the actual problem that we’re trying to address here?”
Does Medicare provide universal coverage?
The basic premise of Medicare for All is what? Is it universal coverage? Suppose it’s universal coverage and making sure that all the uninsured people become insured. In that case, that doesn’t require Medicare to be an administrator or to switch. For all those private plans or the other government insurance entities like VA and Medicaid.
Those that have insurance already and can’t afford the premiums or can’t afford the share of the cost, or any of those types of issues, whatever the financial ramifications are to the individual consumer: bankruptcy, and so on, they’re switching from Anthem to Medicare to solve that problem. By the way, we are not fans of Anthem. So please don’t misunderstand this to be somehow in support of the health insurance industry.
Most of our clients are healthcare providers. Effectively, most of their revenue, the overwhelming share of the revenue comes from health insurance companies. We play a role in helping providers get more money out of insurance companies. And insurance companies in the United States play all kinds of games to try to withhold payment from healthcare providers. Please, in no way should this be construed as being supportive of the health insurance industry.
Does switching an individual patient from Anthem Blue Cross, for example, to Medicare solve any of those financial problems that we talked about? The answer is only if we switch. The patient’s cost to the payer or some additional third-party taxpayer, whatever that might be. Switching the cost for the procedure from the patient to someone else doesn’t require changing insurers. If it costs $50,000 for a procedure and private insurance covers $40,000, and Medicare covers $48,000, the difference isn’t the payer. The difference is how much is being covered. It’s not as though somehow switching to Medicare suddenly means the procedure doesn’t cost $50,000 anymore. It only costs $20,000, that somehow the procedure got less expensive unless one believes. That Medicare will lower the procedure cost.
Medicare rate vs. regular rate
In some areas of the country, the average contracted rate for a procedure is above the Medicare rate 110-120%, sometimes 130-140%, etc. Or it’s a fixed dollar amount, but that happens to be higher than Medicare. If we’re talking about lowering the reimbursement. To physicians or providers for that same procedure, if it switches insurers, now we’ve effectively said, “Okay, the way that we’re going to solve this problem is by taking the money from the physician and giving it to the patient.” Again, we can argue whether that’s good or bad, but now we’re getting more into a political discussion around that. That doesn’t require Medicare for All again.
You could solve that same problem assuming that was the goal. Again, we’re not suggesting or advocating any particular position on this. You could say, “Okay, we’re going to institute national pricing. And commercial payers pay that same pricing to reduce the cost and pass those savings. On to patients.” That would be a way to do that. It still doesn’t require Medicare for All. Again, we’re not necessarily advocating that solution. We don’t think that’s at the root of the problem. Moving the cost from the patient to the government, in this case, really means the taxpayer.
That can be done with subsidies, with private insurance as well. Again, it’s taking that case where somebody has Anthem Blue Cross. You could switch them to Medicare or, assuming Medicare. Share of the patient’s cost would be $2,000 instead of $10,000 in that example we gave. You could increase subsidies for those patients who are without the same kind of financial means.
What is the solution?
There is more than one path that Medicare for All isn’t the only solution to this. It probably isn’t the best solution, even if that were, in fact, the goal. Now, this is a nonpartisan piece. We are not trying to advocate a particular political position. We are trying to say there is a lot of information, a lot of advocacy going in many different directions out there. Want to make sure people are focused on “What is the goal they are trying to accomplish?” and then “What’s the best way to do that?” In our opinion, Medicare for All is not the best solution even if one were to try to advocate. For improving the financial situation for the millions of patients out there in the United States who experienced bankruptcy or unreasonable share of costs or can’t afford coverage or other issues.
The reason why Medicare for All is not the best solution is it’s effectively untenable. It will never pass. If the goal is to have a single-payer where you’re effectively wiping out the commercial insurance industry, imagine a trillion-dollar health insurance industry that would be taken out overnight. They would fight an existential threat like that with more resources than anyone could imagine. Think about the dollar resources from a trillion-dollar industry that could be put towards advocacy fighting Medicare for All. It would dwarf what we saw with the tobacco wars.
If the focus is to make sure that care is provided in a pandemic to reduce the impact. And make sure people get healthcare so that we don’t exacerbate the problems that we’ve seen, that’s not Medicare for All. That’s universal coverage, or that is subsidies for patients to make sure they can afford the cost of care. That doesn’t equal Medicare for All. While that may be a solution that some people advocate. And it could accomplish that goal, that doesn’t mean that that is the only path. Realistically, it is the least likely and least possible path to achieve that.
That’s our rant. If the focus is reducing the cost of care that bankrupts people, we have to look at why a cost is so high. For healthcare in the United States relative to the rest of the developed world. Again, that’s not Medicare for All being the silver bullet. That will not solve the problem. That effectively swaps out one payer for another unless we are somehow changing many other things to do that.