One of the most popular Democratic rallying cries is “Medicare for all!” The concept is that Medicare — one of the federal government’s most popular legislative entitlement programs — could be expanded to cover the entire population. Not only could we achieve the elusive goal of full coverage of the population, so the story goes, we could rid ourselves of those greedy health insurance companies and their nefarious schemes to avoid paying claims for people when they get sick. But proponents of “Medicare for all” often appear to know very little about the Medicare program itself.
Medicare offers multiple types of health plans to qualified people who are disabled (after a two-year waiting period), who are over age 65 or who have end-stage renal disease. Medicare is organized by the federal government but largely administered by private companies.
Medicare has four different “parts.” Part A covers primarily inpatient care. Part B covers primarily outpatient or office-based care and Part D covers outpatient prescription drugs.
Part C brings us to one of the main features of Medicare. There are three types of health plans in the Medicare program: traditional fee-for-service (FFS) Medicare; private Medicare Advantage or MA plans (Part C) and the private health plans that offer “stand-alone” Part D drug coverage to beneficiaries who choose traditional FFS Medicare. In addition, there are purely private Medigap insurers who offer coverage for the “gaps” in the basic entitlement coverage levels that are determined by Congress.
Collection of premiums for basic coverage is handled by the Social Security Administration, but insurance claims in FFS Medicare are processed by private companies, and all MA plans and Part D plans are private health plans. So the first thing to realize about “Medicare for all” is if we’re talking about real-world Medicare, implementation of “Medicare for all” would greatly expand the role of private health insurance in the Medicare program. The second thing to realize is that traditional FFS Medicare is a “public option” offered alongside private health insurance options similar to Hillary Clinton’s proposal for a public option in the health insurance “exchanges” or insurance pools established under the Affordable Care Act, otherwise known as Obamacare.
It appears that what many Democrats mean by “Medicare for all” is not real-world Medicare at all, but a single-payer, nationalized health insurance system that is entirely organized and administered by the federal government. The irony of Democrats supporting such a proposal is that it turns out not to be very democratic. In fact, when you look at current enrollment trends in the real-world Medicare program with its public option, imposition of a single-payer system looks somewhat totalitarian.
Since the implementation of the Affordable Care Act in 2010, Congress has been cutting payments to private MA plans. Those cuts arguably were justified because in some geographic areas, Congress had been paying MA plans more than it would have cost to care for the same beneficiaries in FFS Medicare. Of course, Congress also granted the government’s plan unlimited access to subsidies funded by present and future taxpayers — an advantage not enjoyed by private MA plans. But that’s just the sort of contradictory hash you get when you give a fairly simple task to Congress.
The odd thing is that despite the annual payment cuts to MA plans, the proportion of Medicare beneficiaries choosing MA plans has continued to increase — now reaching almost one-third of all beneficiaries. It isn’t clear why. Perhaps it’s because a growing number of peer-reviewed studies have found that MA plans reduce avoidable utilization of hospital services and provide better preventive care than FFS Medicare. Perhaps it’s because that for most people, FFS Medicare entails the purchase of a Medigap policy and Medigap premiums have been rising sharply, while MA plans often cover the FFS Medicare “gaps” for no additional premium. At any rate, even though beneficiaries increasingly are expressing a preference for private health plans over the government plan in Medicare, advocates of a single-payer system apparently are prepared to tell them that they simply won’t be allowed to express that preference any longer.
So the bottom line is that all of us have some policy choices to make, but the menu is not infinite. You can be in favor of “Medicare for all” or you can be in favor of a single-payer system, but you can’t be in favor of both. You can be in favor of “freedom of choice” between public and private health plans or you can be in favor of a single-payer system, but you can’t be in favor of both. You can be in favor of social justice or you can be in favor of generous government benefits for yourself, financed by people who can’t possibly object because they haven’t been born yet, but you can’t be in favor of both. You certainly can be in favor of adding a public option to the Affordable Care Act’s exchanges, but if you’re up to speed on the peer-reviewed literature regarding our closest existing analogy — the real-world Medicare program — you should expect the public option’s market share gradually to be eroded by the private health plans that appear to be more adept at providing consumers what they want.
Bryan Dowd is a professor in the Division of Health Policy and Management in the School of Public Health at the University of Minnesota. This article is intended to represent his opinions alone.