11.20.19 / Updates

The Truth About One-Size-Fits-All Government Health Insurance Systems

MEMORANDUM

To: Interested Parties
From: Lauren Crawford Shaver, Partnership for America’s Health Care Future
Re: The Truth About Government-Controlled Health Insurance Systems
Date: November 20, 2019

On the presidential debate stage tonight, Americans can expect to hear a lot about proposals for new one-size-fits-all government health insurance systems like Medicare for All, Medicare buy-in and the public option.  Americans deserve to know the facts when it comes to the unaffordable costs and serious consequences American families would face under a new one-size-fits-all system controlled by politicians.

Medicare For All Would Force Americans To Pay More…

Medicare for All “would cost more than $50 trillion over 10 years,” Yahoo! Finance reports, whileRonald Brownstein of The Atlantic notes that the new government-controlled system would cost “more than the federal government will spend over the coming decade on Social Security, Medicare, and Medicaid combined.”

As presidential candidates continue to claim Medicare for All wouldn’t cost middle class families more, economists agree “fully offsetting the cost would require higher taxes on the middle class,” according to the Committee for a Responsible Federal Budget (CFRB) and would “require the equivalent of tripling payroll taxes or more than doubling all other taxes.”  

  • The bill’s author, Senator Bernie Sanders (I-VT), acknowledged that Americans making more than $29,000 per year would “pay more in taxes” for Medicare for all.
  • Economists agree that proposed funding mechanisms like the $9 trillion tax on employers, “will get passed onto workers through reduced wages,” Axios reports.  The Washington Post adds that “[b]asic economic theory holds that such payments are essentially a tax on employees because it comes out of compensation.”  “[P]ayroll costs of this sort are essentially middle-class taxes on employees.  Fixing per-employee business costs at some future date would also be an incentive for companies to reduce their coverage now to reduce future costs.  So employees would get worse coverage than they have now,” The Wall Street Journal reports.
  • Medicare for All “would require aggressive changes in taxes, spending or borrowing,” and “the middle class would be forced to shoulder some of the burden,” Axios reports.  
  • “No matter how you cut the numbers, there is absolutely no way to pay for Medicare for all without tax increases – or spending cuts – on the middle class,” Marc Goldwein of CRFB told POLITICO.  “There’s no question it hits the middle class,” Kenneth Thorpe, Chairman of the Health Policy and Management Department, Emory University told The Washington Post.
  • “Although [Medicare for All’s supporters] have frequently stressed that the middle class would see overall costs go downa wide range of experts … say it is impossible to make those guarantees based on the plans that the candidates have outlined so far … ‘It’s impossible to have an ‘everybody wins’ scenario here,’ said Kenneth Thorpe, chairman of the health policy department at Emory University … ‘There’s no question it hits the middle class,’ he added.  John Holahan, a health policy expert at the nonpartisan Urban Institute agreed: ‘Even though high-income people are going to pay a lot more, this has to hit the middle class.’… ‘Most of the proposals to move to Medicare-for-all would involve substantial tax increases that would affect most people,’ said Katherine Baicker, an economist at the University of Chicago who specializes in health policy.  ‘These are going to be big tax increases.’ … ‘I think it seems likely under most proposals taxes would have to go up substantially unless you dramatically cut the health care you’re getting,’ she added.” (Matt Viser & Sean Sullivan, “Will Medicare-For-All Hurt The Middle Class? Elizabeth Warren And Bernie Sanders Struggle With Questions About Its Impact.” The Washington Post, 10/5/19)

… While The ‘Public Option’ And Other So-Called ‘Moderate’ Fallbacks Would Ultimately Lead To The Same Results

new study from FTI Consulting reveals a new government-controlled health insurance system known as the public option could eliminate consumer choice for millions of Americans and “eventually cause the elimination of all private plans in the individual market.”  The study finds:

  • After the first 10 years of the public option, more than seven million current enrollees would no longer have private coverage through the marketplaces – with two million of those enrollees being forced off their private plans as insurers exit the marketplaces altogether.
  • The study also warns that the public option could eventually cause the elimination of all private plans in the individual marketplaces, eliminating choice for millions of health care consumers, even those with the resources or subsidies available to cover their preferred plan.
  • In fact, the report finds that by 2050, 70 percent of state marketplaces (34 U.S. states) would no longer offer a single private insurance option.
  • Rural families – millions of whom already find their access to quality care at risk – would be especially hard hit by the public option, the study warns, and could find few if any options available to them.

Another study by KNG Health Consulting, LLC reveals that “Medicare for America,” a proposed new government-controlled health insurance system, could force one-third of American workers off of their current employer provided health care coverage, also known as employer-sponsored insurance (ESI).  And The Wall Street Journal reports that new government health insurance systems like the public option, Medicare buy-in and ‘Medicare for all who want it,’ represent “stepping stones to single payer.”  This fact has been acknowledged by journalists, analysts and Democratic presidential candidates:

  • Mayor Pete Buttigieg emphasized that a “buy-in” or “public option” system “will be a very natural glide path to the single payer environment.” (“2019 Democratic Debates, Night 2: Full Transcript,” The New York Times, 6/28/19)
  • Senator Cory Booker (D-NJ): “Medicare for all is what we should be going for, but the first step getting there has to be showing that we can create a public option, or allowing Medicare to be available for more people.” (“Sen. Booker Confirms: Public Option ‘First Step’ Getting To Medicare For All,” YouTube, 7/22/19)
  • Senator Kirsten Gillibrand (D-NY): “[I]f you have a buy-in over a four or five year period, you move us to single payer more quickly,” adding that under such a system, “our step to single payer is so short.” (“2019 Democratic Debates, Night 2: Full Transcript,” The New York Times, 6/28/19)
  • NBC News reporter Jonathan Allen explained to viewers that “[t]he public option is essentially a back door to Medicare for all.  You can say all day long if you want it’s not Medicare for all.  But this is a different packaging of how to get there.” (“Biden Releases Plan To Keep Obamacare,” YouTube, 7/15/19)
  • Dr. Scott Atlas of Stanford University explains,such a system would raise costs for families and “mainly erode, or ‘crowd out,’ private insurance, rather than provide coverage to the uninsured.” (Scott W. Atlas, “Public Option Kills Private Insurance,” The Wall Street Journal, 7/16/19)

“The public option would cause premiums for private insurance to skyrocket because of underpayment by government insurance compared with costs for services … A single-payer option is not a moderate, compromise proposal.  Its inevitable consequence is the death of affordable private insurance … Massive taxation would be needed to expand Medicare, whether optionally or not.” (Scott W. Atlas, “Public Option Kills Private Insurance,” The Wall Street Journal, 7/16/19)

  • The public option “could also lead to a 10 percent increase in premiums for the remaining pool of insured people.” (Reed Abelson, “How A Medicare Buy-In Or Public Option Could Threaten Obamacare,” The New York Times, 7/29/19)
  • “[A] government buy-in that attracted older Americans could indeed raise premiums for those who remained in the A.C.A. markets, especially if those consumers had high medical costs.” (Reed Abelson, “How A Medicare Buy-In Or Public Option Could Threaten Obamacare,” The New York Times, 7/29/19)
  • “[A] government plan that attracted people with expensive conditions could prove costly.” (Reed Abelson, “How A Medicare Buy-In Or Public Option Could Threaten Obamacare,” The New York Times, 7/29/19)
  • And a report found that an effort to implement the public option in Colorado, “could imperil thousands of jobs in the health-care industry or take hundreds of millions of dollars out of the state’s economy.” (Ed Sealover, “Colorado Public-Option Insurance Plan Could Cost Health-Care Jobs, Study Argues,” Denver Business Journal, 9/10/19)

While headlines and studies also warn about the severe consequences such a government-controlled health insurance system would have on American families’ access to quality care, particularly in rural communities:

  • The Gazette (Cedar Rapids): “Iowa’s rural hospitals could experience a loss of more than $476 million dollars under a public health insurance proposal, putting dozens at high risk for closure, according to an analysis … the analysis said those hospitals could be confronted with an even bigger detriment if a public option is implemented using Medicare reimbursement rates… If a public option plan would go into effect, the study found that between 25 and 52 of Iowa’s 90 rural hospitals would be at high financial risk for closure due to a loss of millions in revenue.”
  • Las Vegas Review-Journal“[H]ospitals lose money on Medicare patients … But if more people were on Medicare, those losses could be unsustainable.  An industry group estimates that more than 50 percent of rural hospitals would face a high risk of closure if a public option were in place.”
  • Virginia Public Radio: “[A]s many as 10 rural hospitals in Virginia could close if the federal government starts offering a public option health plan – the kind of public option that’s now being talked about on the campaign trail by former Vice President Joe Biden and others.”

The study, conducted by Navigant for the Partnership for America’s Health Care Future, finds that the public option could put more than 1,000 rural U.S. hospitals in 46 states “at high risk of closure.”  These hospitals serve more than 60 million Americans, and as Kaiser Health News and NPR reporthospital closures can have “profound social, emotional and medical consequences,” while RevCycleIntelligence also reports,“[p]atient access to care suffers when a rural hospital closes its doors for good, and consequently, patient outcomes can deteriorate.”

  • Another study by KNG Consulting found that “[f]or hospitals, the introduction of a public plan that reimburses providers using Medicare rates would compound financial stresses they are already facing, potentially impacting access to care and provider quality.”
  • An earlier study by Navigant found that government-controlled health insurance systems such as “buy-in” or “public option” could force hospitals to limit the care they provide, produce significant “layoffs” and “potentially force the closure of essential hospitals.

Americans Don’t Want A New One-Size-Fits-All Government Health Insurance System…

Kaiser Family Foundation CEO Drew Altman writes in Axios that support for Medicare for All is “headed in the wrong direction” – meaning down – while “polling shows that support drops much further, and opposition rises, when people hear some of the most common arguments against Medicare for All.” 

And a new poll from the Kaiser Family Foundation and the Cook Political Report finds that nearly two-thirds (62 percent) of swing voters in the states of Michigan, Minnesota, Pennsylvania and Wisconsin rate Medicare for All as a “bad idea.”  In fact, The Wall Street Journal reports that in Michigan, “supporters of a single-payer health care system are finding a tough audience.”  They continue:

Union members in this labor stronghold state have expressed unease with Medicare for All, fearing they would lose health benefits that were hard-won over years of negotiations …A survey of 600 likely voters commissioned by the Detroit Regional Chamber this summer found that a majority opposed a Medicare for All proposal that would eliminate private health insurance, as proposed by Democratic presidential candidates Elizabeth Warren and Bernie Sanders … Michigan illustrates the risk Democrats face in swing states.  The policy appeals to Democrats’ liberal base but is less popular with moderates, polls show.

While 2020 presidential hopefuls continue to face tough questions about their support for new government-controlled health insurance systems, POLITICO has noted that polls show “growing opposition to ‘Medicare for All’” while anational poll by the Kaiser Family Foundation “probes Democrats’ views about the general approaches to expanding health coverage and lowering costs” and finds that “[m]ost Democrats and Democratic-leaning independents (55%) say they prefer a candidate who would build on the Affordable Care Act to achieve those goals.  Fewer (40%) prefer a candidate who would replace the ACA with a Medicare-for-all plan.”

separate poll released by Kaiser in July found support for Medicare for all on the decline, as “a larger share of Democrats and Democratic-leaning independents would prefer lawmakers build on the existing ACA” and “the share of Democrats who now say they ‘strongly favor’ a national Medicare-for-all plan is down” 12 percentage points in the three months since Kaiser last asked the question.

And, as in past polling, Kaiser found that “large shares” express uncertainty about what proposed new government-controlled insurance systems would mean for them.  The American public’s confusion over one-size-fits-all proposals such as Medicare for all is not surprising.  “Such a sweeping overhaul of the country’s patchwork health insurance system hasn’t been attempted before,” The Washington Post reports, “and even though the 2020 contenders frequently mention it, they tend to shy away from details on exactly how the whole thing would work.”

  • Previous national polling data released by Kaiser in June revealed that “majorities of Americans are unaware of the kind of dramatic changes that [Medicare for all] would bring to the nation’s health care system.”  However,“[t]here’s one thing Americans understand about Medicare-for-all: It would mean higher taxes … Americans seem most familiar with the fact that Medicare-for-all would require massively higher taxes,” The Washington Post reports.  As Kaiser noted, “[t]he survey finds eight in 10 Americans (78%) are aware that taxes would increase for most people under such a plan.”

Yet another national poll conducted earlier this year by Kaiser revealed that support for Medicare for all “drops as low as -44 percentage points” when people find out it would “lead to delays in some people getting some medical tests and treatments,” and “is also negative if people hear it would threaten the current Medicare program (-28 percentage points), require most Americans to pay more in taxes (-23 percentage points), or eliminate private health insurance companies (-21 percentage points).”

And Voter Vitals – the Partnership’s new quarterly tracking poll conducted nationwide and in 2020 battleground states – finds that a majority of Democratic voters are unwilling to pay any more in taxes for universal coverage and a supermajority of Democrats (69 percent) support building and improving on what we have today over new government insurance systems.

Meanwhile, a new report from the University of Virginia’s Sabato’s Crystal Ball finds that “the performance of 2018 Democratic House candidates shows that those who supported Medicare for All performed worse than those who did not,” and warns that “presidential candidates would do well to take heed of these results.”  And The Washington Post explains in a recent story headlined “Why 2020 Democrats are backing off Medicare-for-all, in four charts” that “[p]olls show why they’re doing this.  On the surface, the idea sounds as if it would appeal to voters.”  But when voters are made aware of the many negative consequences of such a system, including the elimination of private insurance and need for higher taxes, support drops.  

These are just the latest in a string of reports that underscore the political risks of embracing a one-size-fits-all system:

  • The Hill reports that “[c]entrist Democrats who helped their party win back the House majority with victories in key swing districts last fall are sounding the alarm that the liberal push for ‘Medicare for all’ could haunt them as they try to defend their seats and keep control of the House.”
  • “[A] majority of those [Democratic Members] who flipped their seats from red to blue focused on strengthening the 2010 health care law and protecting coverage for people with pre-existing medical conditions,” Roll Call reports, noting the significant “risks for any politician that proposes dramatic change and uncertainty in a system that is central to Americans’ well-being.”
  • “None of the people that were able to win in tough districts in 2018 ran on Medicare-for-all, and the reason is that they can’t,” Matt Bennett of the centrist Democratic group Third Way explains to CNN.  “People in those districts don’t support it.”
  • As one Democratic strategist put it to The New York Times: “Most of the freshmen who helped take back the House got elected on: ‘We’re going to protect your health insurance even if you have a pre-existing condition,’ not ‘We’re going to take this whole system and throw it out the window.’”
  • The Washington Post reports that by “veer[ing] left,” Democratic presidential hopefuls are “leaving behind [the party’s] successful midterm strategy.”
  • And The New York Times reports that some Democratic governors are “anxious” and “alarmed that their party’s presidential candidates are embracing policies they see as unrealistic and politically risky.  And they are especially concerned about proposals that would eliminate private health insurance … Noting that many voters were already uneasy about losing their coverage, [Michigan Governor Gretchen] Whitmer said, ‘I don’t think feeding into that is a good idea.’”

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