Health Reform Medicare

What would Medicare for All look like?

A nice overview is provided by Johnson, Kishore and Berwick (2020). They review the HR13841 and S 1129.8 in detail [Note: HR 1384 and S 1129 were also proposed in the last Congressional session and they have an overview of that as well]

HR 1384 and S 1129 both establish a single payer federal insurance program that provides comprehensive benefits for all Americans, including in the areas of mental health; maternity; pediatrics; dental; vision; hearing; and comprehensive reproductive care, including abortion. HR 1384 fully covers long-term care. S 1129 covers home and community-based long-term care, leaving institutional long-term care coverage to state Medicaid programs. Both bills eliminate cost sharing (copayments and deductibles) for covered services, with the exception that S 1129 permits cost sharing for prescription drugs up to $200 annually for households with incomes above 200 percent of the federal poverty level.

One key issue is what specific services would be covered and how would the government make this decision. Currently, Medicare covers any service if it is considered “reasonable and necessary.” Applying this approach would grant broad access to care, but would be costly. The government could use more explicit cost-effectiveness analyses–as done by National Institute for Health and Care Excellence (NICE) in England–but US taxpayers have to date been averse to top-down government decisionmaking of medical treatments based on cost. Further, while most pharmaceuticals have randomized controlled trials to estimate benefits, many hospital and physicians services do not have sufficiently rigorous studies to quantify health benefits.

Both bills prohibit private health insurance for any services covered by the Medicare for All plan. These bill, however, would allow individuals to purchase supplementary private insurance for any services not covered by the Medicare for All health plan.

Unlike Veterans Affairs and UK’s National Health Service (NHS) where health care providers are government employees, in Medicare for All providers would be private practitioners. This approach is similar to the Canadian health care system (also known as Medicare).

What about provider reimbursement?

HR 1384 reimburses physicians on a fee-forservice basis and implements global operating budgets for hospitals and other institutional providers. S 1129 maintains Medicare’s current methods of provider payment. Neither bill specifies the payment rates that would be applied. Both bills allow the federal government to negotiate the price of prescription drugs. HR 1384 transitions to Medicare for All over two years, while S 1129 transitions to Medicare for All over four years. Neither bill includes financing mechanisms.

Johnson and co-authors are a bit overly optimistic on two fronts. First, they claim that Medicare for all could be cost savings. While payment rates could decline, clearly expanding the services covered and providing services with no deductible will inevitably increase cost. Frakt and Oberlander (2020) cite an Urban Institute study that estimates Medicare for All would increase federal spending by $34 trillion over 10 years. Although part of this rise would be offset by lower private spending, on net national annual health care spending would increase from $3.5 trillion to $4.2 trillion, a 20% increase.

Further, Johnson and co-authors argue that centralized quality initiatives can lead to better care. They cite initiatives on reduced antipsychotic use for sedation of long-term care residents, and initiatives to reduce injuries and infections at hospitals. While these are clear examples of government successes, the idea that a top-down, Washington-driven health plan will improve quality is unlikely. Frakt and Oberlander note that Medicare for All could be more decentralized. For instance, Canada’s single payer Medicare program is largely administered and regulated by provinces. They also note that, most people with private health insurance actually like their plan.

In short, while a single payer system may appear to simplify the US health care system, I am skeptical that it would improve quality or reduce cost.

4 Comments

  1. I definitely agree with your skepticism. Maintaining the current method of provider payment just wouldn’t work, it would need to be completely overhauled since the system is already so cross-subsidized by commercial reimbursement. The “reasonable and necessary” is also a slippery slope that would take some getting used to for people currently on private plans.

    Also – will I get a refund on my Health Savings Account since I will have no cost-sharing to use it on? : )

    Take care, Max

  2. Hi Jason
    Thanks for sharing an overview of HR13841 and S 1129.8 in detail. This article about the single-payer system really put a positive impact and simplify the US health care system.

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