Senator Bernard Sanders has made one of the central points of his campaign a promise to work toward "Medicare for All," taxpayer funded universal health insurance. "Medicare" is a good brand, with great loyalty among seniors, loyalty engendered as much by the fact that beneficiaries only pay 10% of the cost of their coverage as by the attractiveness of the coverage itself.
But this label for the Sanders plan is somewhat deceptive, like slapping the Chevrolet name and bow-tie badge on a car made in Korea. In both cases, it may still be a decent product, but it is not the same as its namesake.
Here is what Medicare for All would look like if it replicated today's Medicare: For medical services you would have a choice between a government-contracted privately administered fee for service plan with patient cost sharing (original Medicare or, better yet, "Medicare Classic") or a wide variety of privately managed Medicare Advantage plans with often broader and better coverage than the Classic, but sometimes limits on which doctors are fully covered. About 31% of your fellow consumers would have chosen this option, and the premium you would pay for it is the balance after the government makes a payment (a voucher) equal to what you would cost in the traditional plan.
For prescription drug coverage, you would have a wide variety of private choices but no government-run option. Oh, and if you were willing to pay, you could buy a private Medigap plan on top of your Medicare Classic policy to cover most of the out-of-pocket payments. And if you have the good fortune or good foresight to have a relatively high income in retirement, you will pay a much higher premium for Medicare coverage, whatever you choose.
An alternative, and more accurate, description of Senator Sanders' plan is Universal Single Payer Coverage, and it is obvious on its face that today's Medicare program—with all those options, tradeoffs, and marketing—is not it. The closest claim to authenticity would be to say that he means the Medicare passed in 1965, not its transformed 2016 model. If we look at that model from the tail fin, princess phone era, what do we see?
The first thing we see is the potential for high out-of-pocket costs for beneficiaries. Medicare Classic, unlike the Affordable Care Act, does not cap out-of-pocket payments. It can impose a cost-sharing burden on beneficiaries that is so large that the great majority of them pay for additional Medigap coverage.
Senator Sanders says his plan would be more generous than this. It will be "like Canada," we are told. But the out-of-pocket cost percentage in Canada is presently higher than in the US, even though average spending per person is a little lower.
But the feature of original Medicare and of single payer insurance that is most old fashioned is the reliance on fee-for-service payments to providers. It is a model that most health policy analysts see as inefficient and outdated. Even Medicare itself is gingerly moving away from that model with initiatives such as Accountable Care Organizations and similar "gain-sharing" mechanisms.
I do not want to make too much of these differences. Though they are formidable, I am sure that a single government entity fueled by trillions of dollars of new taxes to pay for what is now privately financed care could come up with some plausible new models.
But I am concerned the current research base does not endorse any one model as superior, which might argue for preserving variety and choice until we can figure out who can get it right. I do believe that, at a minimum, the debate would be enhanced by honestly adhering to truth in labeling and removing the "Medicare" tag from single payer health proposals.
Editor's Note: Cross-posted on the Health Policy$ense blog of the Leonard Davis Institute of Health Economics of the University of Pennsylvania.
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