Medicare for All: What are the Risks?

I watched the Affordable Care Act completely change the way health insurance is paid for and delivered over the past decade. Today, I think it’s prudent to apply some of what I’ve learned on those front lines to the current healthcare debate: Medicare for All.

As you might expect, there are many risks and many unknowns in this proposed massive undertaking that would re-route 20% of our country’s Gross Domestic Product (GDP).

Here are the top 10 things I believe will have to be carefully thought out before such a program has a chance of success.

1. 1. Without a ton of modifications to the existing Medicare program, government-issued Medicare for All will leave people with much worse coverage than they have already. In fact, if insurance companies tried to offer coverage mirroring Medicare Parts A + B + D, they wouldn’t be allowed to sell it on healthcare.gov or even on Covered California because it wouldn’t satisfy the minimum requirements of those Exchanges. And according to the Commonwealth Fund’s definition of what it means to be UNDERinsured, Medicare for All would leave people with health coverage that would make them UNDERinsured compared to having quality private coverage. Straight government-issued Medicare is simply too skimpy for most people.
   2. Medicare enrollees reporting the highest satisfaction are almost always those enrolled in PRIVATE Medicare Advantage plans or PRIVATE supplemental plans. JD Power’s 2019 numbers also show that the LONGER seniors are enrolled in private Medicare plans, the more they like their coverage. 2019 satisfaction levels of those enrolled in private Medicare plans were 79.5% overall, and almost 85% for longer-tenured members.
   3. Government healthcare programs (Medicare and Medicaid) reimburse healthcare providers at significantly lower rates than private insurance, which means private insurance heavily subsidizes these programs to maintain the current levels of safety, quality, access and capacity in the U.S. healthcare system. If everyone is on a government-run healthcare program, providers will see their payments drop significantly. And we are likely going to see cuts in either staffing, capacity, services, safety or access as a result.
   4. Medicaid, the payer for 75 million Americans, reimburses hospitals and docs at a 20-25% lower rate than CURRENT Medicare rates. It would cost $100s of billions annually just to move those insured through Medicaid UP to Medicare for All.
   5. While polling earlier in 2019 showed a 56% approval rating for a “Medicare for All”-type program, that support dropped dramatically (into the teens or 20s) when pollsters mention that such a program would raise taxes, limit insurance choices and/or lead to delays in care (slide 11). ALL of these things happen under government-run healthcare programs in other developed nations like Canada or the UK.
   6. Under our current system, states can develop what are called “innovation waivers” that let them, with permission from the Feds, tweak their Medicaid programs to best meet the unique needs of their population. After all, the Medicaid population in Louisiana looks very different from the Medicaid population in, say, New Hampshire. This approach establishes a federal set of program rules that states can tailor. This has been in the news a lot lately because many states are expanding their Medicaid programs contingent on adding state-specific workforce requirements. Under a universal, federally run program, states would lose the ability to set their own program criteria, and we’d end up with a one-size-fits-all solution that is supposed to be just as good for states like Louisiana, with very high levels of people living in poverty and needing access to Medicaid, as it is for higher-income states.
   7. At much lower payment levels, Medicare for All will make our already-existing doctor shortage even worse. The American Association of Medical Colleges is already projecting a shortage of 122,000 doctors by 2032 because the population is aging very quickly, and there are simply not enough doctors coming out of medical schools to take care of them all. Paying prospective doctors LESS,  LESS, which would likely happen under Medicare for All, is going to make it harder to attract people to clinician jobs and a time when we need MORE physicians, not fewer.
   8. The Government’s version of Medicare wasted at least $52 billion in 2018, according to the Government Accountability Office. Yet this is the very administrator that would be in charge of everyone’s healthcare under Medicare for All.
   9. The Committee for a Responsible Federal Budget has analyzed the actual costs of Medicare for All and offered the following options to pay for it:
      • 32% additional payroll tax (over existing taxes, both state and federal)
      • 25% additional income tax (surtax)
      • 42% Value Added Tax (VAT) on all transactions, retail and wholesale (this is before any targeted exemptions like medications or food)
      • A $12,000 annual fee you pay out-of-pocket if you are not already on Medicaid or Medicare
      • A 100% increase in all individual AND corporate income tax rates
      • An 80% reduction in federal spending that is NOT related to healthcare (like eliminating three of the four major branches of the military)
      • Allowing the national debt, which is over $22 trillion now, to increase to over $44 Trillion in the next decade — just for healthcare.
      • Some combination of these adjustments.
   10. Every single government-run healthcare payer in the industrialized world (except the U.S.), from Canada to Germany to Italy to France to the United Kingdom, uses gatekeeper primary care to control costs and outlaws private major medical coverage. This would be a very different way than Americans are used to receiving healthcare with private insurance. So not only would you no longer have your Blue Cross coverage, this means you cannot access ANY healthcare or see a provider beyond your PCPs office without his/her permission. You are no longer in control of where you go for care. And this technique is popular because it cuts costs dramatically, while, of course, limiting choices. AND – single-payer healthcare doesn’t mean the consumers do not pay for anything. In many countries with government-run healthcare systems, people still have to buy their prescription drugs out of pocket.

Straight Talk is, as long as we’re going to have a grown-up conversation about tearing down our existing healthcare payer system and starting from scratch, it’s prudent to acknowledge the realities and risks that would come with the proposed new model.