Yes, We’re Com­ing for Your Pri­vate Insur­ance Plan

By Natal­ie Shure

Since the 2016 Bernie Sanders cam­paign pop­u­lar­ized the idea, ​“Medicare for All” has blos­somed into a nation­wide ral­ly­ing cry, rack­ing up con­gres­sion­al sup­port­ers and chal­leng­ing the D.C. con­sen­sus around what is polit­i­cal­ly pos­si­ble. But for many Democ­rats, sup­port comes with fine print.

The pop­u­lar slo­gan ini­tial­ly described a sin­gle-pay­er sys­tem, in which the gov­ern­ment would act as the sole insur­er. Sen. Sanders (I‑Vt.) has pro­posed such a bill, co-spon­sored by sev­er­al oth­er Demo­c­ra­t­ic pres­i­den­tial con­tenders, includ­ing Sens. Cory Book­er (N.J.), Kamala Har­ris (Calif.), Kirsten Gilli­brand (N.Y.) and Eliz­a­beth War­ren (Mass.). On Feb­ru­ary 26, Rep. Prami­la Jaya­pal (D‑Wash.) intro­duced a sin­gle-pay­er bill in the House, co-spon­sored by pres­i­den­tial can­di­date Rep. Tul­si Gab­bard (D‑Hawai’i) and mul­ti­ple poten­tial candidates.

But Book­er now says he would keep pri­vate insur­ers around, and War­ren has hedged, express­ing open­ness to alter­na­tives that would expand cov­er­age through a com­bi­na­tion of pub­lic and pri­vate insurers.

There are polit­i­cal rea­sons to do so. Not only does the deep-pock­et­ed health­care indus­try oppose sin­gle pay­er, but one recent poll found that respon­dents’ sup­port for Medicare for All plunges to 37 per­cent when they’re told it could elim­i­nate pri­vate cov­er­age. The cen­tral ques­tion: Can pri­vate health insur­ers be part of the solution?

A clear-eyed analy­sis of our ail­ing health sys­tem yields a sim­ple answer. The for-prof­it health insur­ance indus­try as we know it must be cat­e­gor­i­cal­ly eliminated.

Coun­tries like Ger­many built their health sys­tems atop a social insur­ance mod­el in which the pri­ma­ry pur­pose is to pay for care. The U.S. sys­tem, how­ev­er, grew out of mod­els of for-prof­it prop­er­ty insur­ance — which means that health insur­ance was only ever intend­ed as a safe­guard against the risk of catastrophe.

This mod­el assumes pay­outs for dam­age are rare, a fun­da­men­tal­ly ill-fit­ting way to finance, say, the needs of chron­i­cal­ly ill patients, exten­sive can­cer treat­ments or com­pre­hen­sive mater­ni­ty care.

If a dri­ver totaled their car four times a year, they would be prac­ti­cal­ly unin­sur­able — they’d be locked out of cov­er­age com­plete­ly, or charged astro­nom­i­cal pre­mi­ums to safe­guard insur­er prof­its. This tac­tic is essen­tial­ly what health insur­ers have attempt­ed to impose on sick peo­ple. For decades, they barred peo­ple with pre­ex­ist­ing con­di­tions from pur­chas­ing poli­cies, or charged high­er pre­mi­ums to peo­ple like­li­er to use more care. Insur­ers still charge old­er patients high­er pre­mi­ums and often find tech­ni­cal­i­ties to deny claims for pay­outs. A 2018 fed­er­al analy­sis con­clud­ed that pri­vate­ly man­aged Medicare Advan­tage plans engaged in wide­spread improp­er claims denial to boost profits.

Oba­macare and oth­er leg­is­la­tion banned the health insur­ance industry’s most egre­gious prac­tices. But they can’t change the fact that the most basic pur­pose of a health­care financ­ing sys­tem — to pay for what­ev­er care peo­ple need — is fun­da­men­tal­ly at odds with the inter­ests of for-prof­it insurance.

The reliance on pri­vate insur­ance cre­ates struc­tur­al obsta­cles to reform. For instance, a piece­meal web of com­pet­ing insur­ance plans makes it dif­fi­cult for any giv­en insur­er to com­mand any lever­age in nego­ti­at­ing prices with health­care providers and drug com­pa­nies. This obsta­cle is a large part of why U.S. health­care costs are so high. By con­trast, a sin­gle gov­ern­ment pay­er would be able to exert far greater con­trol over health­care costs.

Fur­ther­more, pri­vate insur­ers’ vest­ed inter­est in min­i­miz­ing ​“med­ical loss” — that is, pay­outs for care — leads to eye-pop­ping admin­is­tra­tive bloat on the part of both insur­ers and providers as each side strug­gles to pin­point who pays what. All too often, nav­i­gat­ing the snarl falls to indi­vid­ual patients, who are forced to call, sit on hold, beg, appeal, sue or go bank­rupt to get care.

After decades of entrench­ment, the U.S. insur­ance indus­try has only exac­er­bat­ed prob­lems in health­care financ­ing while adding no val­ue what­so­ev­er for patients. We deserve an effi­cient, equi­table sys­tem. A uni­fied pub­lic pool is the best way to deliv­er one.

If You Build a Pub­lic Option, They Will Come

By Max B. Sawicky

There is a new cur­rent of nay-say­ing on ​“Medicare for All” (M4A). At the risk of asso­ci­at­ing with some unsa­vory char­ac­ters, I’m afraid I have to join the chorus.

The pre­vail­ing pro­gres­sive view, pre­sent­ed by Natal­ie, is tak­ing on the unfor­tu­nate nature of a lit­mus test. In this ver­sion of the pol­i­cy, pri­vate health insur­ance would be leg­is­lat­ed out of exis­tence, replaced with a new régime of uni­ver­sal, sin­gle-pay­er insurance.

The idea that we must elim­i­nate pri­vate com­pa­nies to have real M4A flies in the face of expe­ri­ence, not to men­tion polit­i­cal sense. Actu­al­ly exist­ing uni­ver­sal sys­tems in Europe still rely heav­i­ly on the par­tic­i­pa­tion of pri­vate insur­ance com­pa­nies. In these mixed sys­tems, the huge size of pub­lic pro­grams allows gov­ern­ments to nego­ti­ate prices with health­care providers and main­tain down­ward pres­sure on costs.

More impor­tant­ly, forc­ing every­one to change their health insur­ance risks a potent polit­i­cal back­lash. Demand­ing that Demo­c­ra­t­ic can­di­dates com­mit to elim­i­nat­ing pri­vate insur­ance could sus­tain our cur­rent, repul­sive rul­ing jun­ta in the 2020 elections.

For any­body who hasn’t done a deep dive into the M4A leg­is­la­tion float­ing around Con­gress — in oth­er words, most peo­ple — this new vision of Medicare is an unknown. It involves a whole­sale revamp of real­ly-exist­ing Medicare, which is very far from adequate.

The desire, per­haps the gov­ern­ing assump­tion, is that almost all your med­ical expens­es would be paid by some­body else, essen­tial­ly financed with tax­es col­lect­ed from the pop­u­la­tion as a whole. Can this be accomplished?

On the ​“afford­abil­i­ty” buga­boo, there should be no doubt. Uni­ver­sal sin­gle pay­er can be much cheap­er than our cur­rent sys­tem. Those who say ​“we” can’t afford it are refer­ring to them­selves, upper-income tax­pay­ers who can most def­i­nite­ly afford more tax­es but would rather for­go the opportunity.

The 500-pound goril­la in the room is the pol­i­tics of con­ver­sion. The switch to M4A would mean low­er insur­ance pre­mi­ums, per­haps no pre­mi­ums at all, but high­er tax­es for some. Any big change such as this cre­ates what social pol­i­cy wonks call ​“win­ners” and ​“losers.”

Win­ners are those who, after the change, enjoy some pre­ferred com­bi­na­tion of bet­ter insur­ance ben­e­fits and low­er total pay­ments in tax­es, pre­mi­ums and out-of-pock­et expens­es. Losers are those who do not. Despite the short­com­ings of pri­vate insur­ance, many who are well insured would not look favor­ably upon being com­pelled to enter a new, yet-to-be-defined insur­ance régime. They could legit­i­mate­ly fear being stuck in a plan with less­er ben­e­fits, and a tax code that would increase their own tax lia­bil­i­ty, per­haps even more than they would save in premiums.

Total costs could decrease, and research sug­gests the aver­age ben­e­fit would be pos­i­tive across all but the very top income brack­ets, but the like­li­hood remains that a great many indi­vid­ual oxen will be gored.

Many of those who come out behind might find them­selves in oppo­si­tion. We can think such per­sons as self­ish as we like, but that won’t make them dis­ap­pear or shut them up. The ​“vast major­i­ty” would be bet­ter off under M4A, but the vast minor­i­ty can be quite a pain in the ass.

For this rea­son, I’d argue that excel­lent-Medicare-for-any­body-who-wants-it is a polit­i­cal no-brain­er, and full-tilt M4A is polit­i­cal sui­cide. The for­mer would be not unlike the ​“pub­lic option” sug­gest­ed dur­ing the Oba­macare debates, but with bet­ter cov­er­age at low­er cost and the express aim of mak­ing pri­vate insur­ance obsolete.

There are times to reject polit­i­cal con­straints. On some issues, com­pro­mise is sab­o­tage. M4A is not one of those cas­es, because it is pos­si­ble to get to uni­ver­sal cov­er­age by more polit­i­cal­ly fea­si­ble, alter­na­tive means. A buy-in avail­able and afford­able for all is one such alter­na­tive. It leaves nobody behind.

With­out doubt, exist­ing buy-in pro­pos­als have defi­cien­cies. Sen. Sher­rod Brown’s (D‑Ohio) lim­it­ed notion of expan­sion only to peo­ple over 50 is par­tic­u­lar­ly dis­ap­point­ing. That doesn’t mean a robust plan is impossible.

Crit­ics of the buy-in are jus­ti­fied in not­ing that exist­ing Medicare leaves a lot to be desired, so a buy-in should itself be tied to an expan­sion of cov­er­age under Medicare. It should elim­i­nate the need for pri­vate ​“Medi­gap” plans that sup­ple­ment Medicare ben­e­fits. Again, the point is to design a pro­gram that ren­ders com­pet­ing arrange­ments infe­ri­or, not to exclude them by fiat.

I would not sug­gest a can­di­date for office con­coct a detailed plan — all that does is pro­vide tar­gets for nit­pick­ing. A can­di­date need only say that any­body will have the choice to enroll in an expand­ed Medicare pro­gram. Increased costs will be defrayed by some com­bi­na­tion of high­er tax­es and, unlike Oba­macare, afford­able indi­vid­ual pre­mi­ums. Peo­ple can still buy pri­vate insur­ance plans, as they do now.

In cur­rent debates, the polit­i­cal dan­gers of what could be called the abso­lutist posi­tion of M4A tend to be glossed over. There is a reluc­tance to acknowl­edge, much less explain, the fail­ure of state-lev­el M4A bal­lot ini­tia­tives in Col­orado and Cal­i­for­nia. Advo­cates also gloss over the pres­ence of the con­ser­v­a­tive Blue Dogs and the mod­er­ate New Demo­c­rat Coali­tion, with 100-plus mem­bers, with­in the House Demo­c­ra­t­ic major­i­ty. What sort of incre­men­tal moves they would sup­port remains to be seen.

Present­ly many can­di­dates for the pres­i­den­tial nom­i­na­tion give at least rhetor­i­cal sup­port to M4A. In the very pos­si­ble event that Sen. Bernie Sanders (I‑Vt.), who defends the more ambi­tious ver­sion of M4A, does not get the nom­i­na­tion, the win­ning can­di­date will embark on the usu­al move to the cen­ter. At that point, those com­mit­ted to max­i­mum M4A will con­vey their dis­ap­proval, to no avail, except for the weak­en­ing of the Demo­c­ra­t­ic tick­et in the nation­al elec­tions. By con­trast, a cred­i­ble, real­is­tic tran­si­tion to a ful­ly built-out Medicare plan can unite Democ­rats and pro­gres­sives against the bar­bar­ic alter­na­tive that looms before us.

A Hybrid Won’t Cut It

By Natal­ie Shure

Max is cor­rect that there are major polit­i­cal obsta­cles to win­ning Medicare for All (M4A). The most sig­nif­i­cant push­back, how­ev­er, will come from the health­care indus­try itself — not from imag­ined hordes of Cigna super­fans. Yes, polls show Amer­i­cans are skep­ti­cal about elim­i­nat­ing pri­vate insur­ers, but most will find much to embrace about no longer argu­ing over unpaid claims, search­ing for providers who accept their poli­cies and por­ing over dozens of plans dur­ing open enrollment.

In a coun­try with near­ly 30 mil­lion unin­sured peo­ple and many more with plans they can’t afford to use, it’s tough to make the case that the inter­ests of ​“losers” in the tran­si­tion to M4A should super­sede the needs of those los­ing already. Such a siz­able swath of the coun­try sure­ly already con­sti­tutes a ​“pain in the ass.”

The Oba­macare back­lash was not about people’s alle­giance to their insur­ance com­pa­nies; patients were angry to lose their doc­tors when shift­ed onto dif­fer­ent provider net­works. An ​“improved and expand­ed Medicare for All,” how­ev­er, will offer a broad­er slate of ben­e­fits and options than more cost-con­scious pri­vate plans, allow­ing a larg­er por­tion of patients to keep their providers. Even for those who tru­ly enjoy their employ­er-spon­sored poli­cies, volatil­i­ty and change already define the sys­tem: They can eas­i­ly lose insur­ance in the event of job loss or divorce, or at the whim of their boss. A coher­ent, uni­fied and sta­ble pub­lic pool would avoid this.

Max is also cor­rect that uni­ver­sal health­care sys­tems abroad main­tain a role for pri­vate insur­ance, but not always for the bet­ter. In Cana­da, for instance, some provinces do not make pre­scrip­tion drugs avail­able through the gov­ern­ment insur­er. This is not a mod­el to fol­low, but a short­com­ing activists are fight­ing to change.

Ger­many and France have pri­vate insur­ers, but many are struc­tured as non­prof­its, or else intend­ed to com­ple­ment (rather than replace) gov­ern­ment cov­er­age. Switzerland’s sys­tem could be com­pared to Oba­macare, but there, firms are barred from mak­ing a prof­it off of basic poli­cies; even then, Switzerland’s health­care costs are far high­er than those of its peers, sug­gest­ing we can and should do better.

In the U.S. con­text, Max’s ​“option­al buy-in” plan could fail to stream­line our piece­meal sys­tem and do lit­tle to increase lever­age in pric­ing nego­ta­tions. With­out auto­mat­ic enroll­ment — which M4A could make law — unin­sur­ance rates would remain high: A 2013 Con­gres­sion­al Bud­get Office analy­sis found a pub­lic option would have prac­ti­cal­ly no effect on unin­sur­ance rates. Iner­tia would also leave many under­in­sured in the pri­vate insur­ance mar­ket, fac­ing stag­ger­ing med­ical bills for reject­ed claims. The sem­blance of ​“choice” may seem polit­i­cal­ly expe­di­ent, but such a struc­ture for­feits the key advan­tages of a sin­gle-pay­er system.

Ulti­mate­ly, Max’s argu­ment in defense of pri­vate insur­ers boils down to the fact that we already have them. That sim­ply isn’t good enough. For-prof­it insur­ance com­pa­nies add no val­ue and have been at the root of struc­tur­al prob­lems plagu­ing our health­care sys­tem for near­ly a cen­tu­ry. The cri­sis is beyond the point of being sal­vage­able through tech­no­crat­ic tweaks. Financ­ing Amer­i­can health­care through for-prof­it insur­ers is immoral and unsus­tain­able, and must be unequiv­o­cal­ly reject­ed. The lessons of his­to­ry — includ­ing those of Oba­macare, for all its flaws — sug­gest that, were a robust pub­lic sys­tem built, so, too, would a con­stituen­cy to pas­sion­ate­ly defend it.