Medicare-for-all is the wrong debate

Initially, Warren proudly touted her support for Medicare-for-all but now it’s becoming a political liability, and she’s backpedaling.

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by Arielle Kane, Director of Health Care | Progressive Policy Institute

In tonight’s debate, Senator Elizabeth Warren should be asked to explain her effort to thread the needle between “single payer” purists who want to abolish private health insurance, and pragmatic Democrats who warn that could cost the party in 2020. Initially, Warren proudly touted her support for Medicare-for-all but now it’s becoming a political liability, and she’s backpedaling.

Last weekend, she released a “transition plan” that indicated she would start with shoring up the Affordable Care Act (ACA), introducing a public option, and reducing the Medicare eligibility age to 50 before pushing for a Medicare-for-all bill in the third year of her presidency. These policies are a great start to making health care affordable for all. But the truth is, if she says she won’t push for a Medicare-for-all bill right away, it’s possible it won’t happen at all.

However, it’s encouraging that she’s rethinking her health plan. Democrats don’t want to hear more debate over “Medicare-for-all vs. the status quo.” Instead, Democrats should be contrasting their proposals to control medical costs and extend coverage with the Trump-Republican campaign to sabotage the ACA.

Polls show Americans trust Democrats more than Republicans to reform America’s broken health care system. They can win on health care in 2020 as they did in 2018. And just weeks ago in two red states, Kentucky and Louisiana, Democrats won the governorship by building on the ACA and Medicaid expansion. Democrats can be bold on health care without scaring swing voters away.

The alternative is to propose ideas that won’t disrupt the entire health care system or force everyone to transition to a government sponsored plan. Have candidates forgotten how upset Americans were when they discovered they couldn’t keep their own plan “if they liked it,” as President Obama had promised? Even though the ACA offered more comprehensive insurance, people were outraged that they couldn’t keep their skimpier, albeit cheaper, health plans.

Instead, Democrats would be wise to pursue reforms that address the underlying cause of the high uninsured rate: Health care costs.

Health care costs are the top financial concern of American families. The price of health care has been rising 2 to 3 times faster than wages and in 2017 the amount families paid to get health care reached $26,944, according to the Milliman Medical Index — nearly $9,000 higher than in 2010, when the Affordable Care Act (ACA) was enacted. As a result, Americans have been effectively paying a 4.5 percent payroll tax toward health care coverage.

According to the Kaiser Family Foundation, 45 percent of uninsured adults in 2017 said they remained uninsured because coverage was cost prohibitive. Many people would enroll in their employers’ plan or purchase coverage from the individual market if they could afford it. A huge expansion of government spending, such as for Medicare-for-all, is not necessary to solve the problem.

Rather the solution is to leverage Medicare’s buying power on behalf of all Americans. We don’t need to enroll every American in Medicare to benefit from its pricing schedule. In our health policy proposal, Affordable Health Care for All, PPI proposes setting a maximum rate, tied to Medicare, that providers can charge payers for out-of-network care. The cap would start at 200 percent of Medicare prices and then steadily decline to 120 percent. All commercial health plans would have the option of using these default prices for all emergency and out-of-network claims, and all health care providers would be required to accept them.

A cap on out-of-network provider prices place a de facto limit on all health-care prices, tied to Medicare rates. It would create a stronger incentive for hospitals and doctors to negotiate value-based reimbursement arrangements with insurers because they would have no incentive to remain outside of networks if prices are capped at levels comparable to what they would receive for delivering services to patients in network. This type of proposal would allow all Americans to benefit from Medicare’s bargaining power without dramatically increasing government spending.

Savings achieved from reducing health care prices would be passed on to consumers in the form of lower premiums because the ACA caps the share of premiums that can be spent on administration instead of paying for services. Subsequently, lower premiums would reduce government spending on ACA premium subsidies and reduce employer spending on health coverage. Then, because spending on employer-sponsored insurance premiums is given preferential tax treatment, the reduction in employer premium spending would translate to higher taxable incomes and more federal revenue.

Senator Elizabeth Warren said, “I don’t understand why anybody goes to all the trouble of running for president of the United States just to talk about what we really can’t do and shouldn’t fight for.” And I couldn’t agree more. But bold change can come in many forms — including regulating health care costs. The United States spends almost a fifth of its economy on health care and Americans have no better outcomes (often worse) than other advanced countries. But as long as we are spending so much on health-care services, we don’t have enough funding to go after other upstream solutions to improve health outcomes — things like housing, environment, education and diet, all of which impact a person’s health status. That’s why I propose we go after high prices and cut the amount Americans, the government, and employers spend on health care.

Radically Pragmatic. We seek to advance progressive, market-friendly ideas that promote American innovation, economic growth, and wider opportunity.

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