Progressives are readying the next era of health reform. Bernie Sanders has introduced a Medicare-for-all bill, with substantial support among prominent Senate Democrats. Other Democratic proposals include letting people buy into Medicare, or letting them buy into Medicaid, or creating a “Medicare X” plan that would let people buy into a new form of Medicare on Obamacare’s marketplaces. The left-of-center terrain is rife with ideas about what comes next in healthcare.
A new symposium hosted by the American Prospect and the Century Foundation adds to this terrain. All six contributions from healthcare experts are worth reading (1, 2, 3, 4, 5, and 6). I’d like to focus on two of these ideas, and what they mean for how health reform thinking is evolving on the left-of-center.
The first comes from Jacob Hacker, a political scientist at Yale. He is also the godfather of the public option—the Affordable Care Act-era proposal to create a government-run insurance plan to compete with private insurers.
In 2007, Hacker proposed a healthcare plan that paired a mandate on employers to provide insurance with a Medicare-like public plan to cover the uninsured. At the time, Hacker’s plan was out of step with mainstream Democratic priorities on healthcare. As I’ve written, Democrats felt burned about being tagged as overreaching statists during Bill Clinton’s 1993 health reform effort. When Barack Obama made another attempt at health reform, Democrats opted for a centrist approach built around government facilitation of competitive private insurance markets.
Within this framework, Hacker’s proposal was whittled down to a public option that would offer plans within Obamacare’s insurance marketplaces. This was the chief liberal imprint on the Affordable Care Act debate. But the public option ultimately proved too much for the Senate Democrats that held the decisive votes on health reform. Hacker’s public option was unceremoniously excised from the bill.
Obamacare went into effect with no alternative to private insurance for most people. The law has made tremendous gains in getting people covered. But most of these gains have come from the law’s expansion of public insurance under Medicaid. Obamacare’s private insurance marketplaces have been wobbly and in flux, constantly under attack by Republican opponents, and prone to price increases and exits by insurers.
Now Hacker is back with a new contribution to the liberal healthcare brainstorm session. He proposes a plan he has called “Medicare Part E”—Medicare for everyone who wants it. “All Americans should be guaranteed good coverage under Medicare if they don’t receive it from their employer or Medicaid,” Hacker writes.
The key features of Hacker’s plan include:
- Automatic guaranteed coverage for all Americans under a new Medicare Part E.
- You can opt out of this default Medicare coverage by enrolling in an employer-sponsored plan or other private insurance plan with benefits at least as good as those offered by Medicare.
- A “pay or play” requirement on employers, who would be responsible for either providing good health insurance to their workers or contributing toward the cost of Medicare Part E.
Hacker’s plan has a lot going for it. It takes the best part of single-payer—guaranteed coverage—while leaving room for consumer choice. Medicare Part E wouldn’t jeopardize the employer-provided coverage that people have and like (as long as those plans meet quality standards). And the experience of Obamacare shows that employers are unlikely to ditch their insurance offerings in droves to dump workers on to a new public plan.
Medicare Part E builds on the public preference for voluntary, rather than coercive, government healthcare programs. The idea for a voluntary public option has been consistently popular, while Obamacare’s now-stricken individual mandate was consistently not. Rather than banning private insurance (as some single-payer plans would), Hacker would supplement private insurance with a Medicare fallback available to all Americans as a right of citizenship. Like the idea of making Medicare the default coverage for kids (which I’ve written about), those who prefer private coverage could still get it.
The second proposal comes from John Holahan and Linda Blumberg of the Urban Institute’s Health Policy Center. They argue that instead of creating a public option, we should cap the payment rates that hospitals and providers can charge to insurers.
The strongest version of a public option would help control healthcare costs by paying providers the same low rates that Medicare pays. But this public option would draw fierce industry opposition from both insurance companies and providers.
Blumberg and Holahan suggest that we can capture the same cost savings of a public option by simply applying the same payment caps to private insurers. Under their proposal, private insurers would pay providers at rates capped at what Medicare pays (or the Medicare rate plus a percentage more). This would achieve cost savings while defusing potential opposition among insurers.
This plan would essentially import the regulatory structure used in Medicare Advantage into the rest of the health insurance system. Medicare Advantage is the program that allows private insurers to compete with traditional single-payer Medicare. It currently enrolls about one-third of all Medicare beneficiaries. Under Medicare Advantage, out-of-network providers cannot charge private insurers more than Medicare rates, which also implicitly caps the rates paid by in-network providers, too.
Blumberg and Holahan would expand these rules beyond the Medicare Advantage market and into the broader health insurance market. In effect, the insurance industry would become more like a public utility—the broader market would functionally be a public option. “This approach would control costs in areas where premiums are high,” Blumberg and Holahan write, “and it would reduce barriers for insurers in markets where monopoly conditions currently exist.”
It’s not clear that this proposal would lure health insurers off the sidelines to sell in the nearly barren areas underserved by Obamacare’s marketplaces, like rural regions. And it wouldn’t provide an alternative to the administrative complexity of the private insurance system.
But Blumberg and Holahan are right that absurd costs are at the root of much of what ails our healthcare system. Rate-setting and price controls should be in the discussion for the next phase of health reform. Healthcare simply isn’t a market where we can let prices fluctuate with supply and demand. “Consumers” aren’t able to easily shop around or walk away from healthcare services that are just too essential to turn down. This removes the downward price pressure that exists in other true markets for goods and services. Government can step in and restore that price pressure by limiting the prices that doctors and hospitals can charge.
“Medicare-for-all” is a good campaign slogan for progressives to run on. But it’s also a bull-in-a-china-shop approach that would upend the existing system. There are other ideas on the table that more gingerly navigate the political headwinds that Health Reform Phase 2 will inevitably face. Coupling national price controls while making Medicare available to everyone may just be the way forward.