 At federal and state levels, the growing rallying cry is for a massive overhaul of the healthcare system as we know it. While these proposals are commonly referred to as a "Single Payer" system or "Medicare-For-All," they vary widely along the socialized medicine spectrum. I am sure you’ve heard the war cries of Medicare for All, Single Payer, Socialized Medicine, Medicare Buy-in, Public Option, and others. It is helpful to understand their differences. They run the gamut from full replacement of all current private and public coverage to an optional buy-in program only available to a subset of Americans. Why so Much Commotion? In the state of Washington, the Public Option currently under review by the legislature would provide an alternative for those purchasing coverage through the Exchange. There is a need for additional individual options, especially in the 14 Washington counties that currently only have one insurance option on the Exchange (Asotin, Chelan, Clallam, Douglas, Ferry, Garfield, Grays Harbor, Island, Okanogan, Pacific, Pend Oreille, San Juan, Skagit and Wahkiakum counties). It remains to be seen if this option will come to fruition, and if it does, whether carriers on the Exchange will decide to pull out of more counties. Currently, about 30 million Americans nationally are not covered by insurance of any kind. Plus a large percentage of those who do have insurance are underinsured; one health issue away from a financial crisis. According to the Commonwealth Fund, 41 million adults were underinsured in 2016. People are underinsured because of high deductibles and out-of-pocket costs; 36% of adults who had coverage in 2016 had a deductible equaling 5% or more of their annual income. With ever more people in financial crisis due to healthcare expenses, the rallying cry has become the need for government intervention. One other reason for these cries that isn’t often mentioned, but is definitely a factor, is the large numbers of self-employed in the United States. Our “gig economy” just continues to grow. According to the Department of Labor, in May of 2017 independent contractors made up 6.9% of total employment in the United States. These workers tend to be older, with more than 1 in 3 age 55+. Without access to group-based coverage options, these contractors must purchase coverage through their state’s individual marketplace. With double digit premium increases year over year, it’s not a stretch to think that many contractors will forgo insurance altogether. No insurance and over 55 is a bad combination. The Single Payer Spectrum Let’s take a look at the various options on the table and how they fit onto the spectrum of disruption to the current system. On the “lighter” side At one end of the spectrum, you’ll find the Public Option, Medicare Buy-in, and Medicaid Buy-in programs. A bare bones level of all three allows enrollment to be optional. A Public Option can look quite different depending on who provides the underlying coverage (an insurance carrier or the government) and the level of reimbursements providers receive (Medicare-like rates or Medicaid reimbursement levels). Medicare Buy-in proposals often set a lower age threshold, such as 50, 55 or 60, to qualify for enrollment. Medicaid Buy-in could be set up as an individual option up against other individual health plans available on the Exchange, and could be limited to those with certain household income levels. Reimbursement Levels Before forging on, there are two elephants in the room we must address – Medicare and Medicaid reimbursement levels. According to the Washington Policy Center, in Washington state we are seeing Medicare reimburse at approximately 70% of private payers, with Medicaid reimbursing around 40%. Will access to care be available to those choosing a Public Option, Medicare Buy-in, or Medicaid Buy-in? Personally, I would like to see options that pay at FAIR Health levels that would also bar providers from balance-billing. Ah, but that’s a blog for another day. Oldies But Goodies Medicare Buy-in could be turned up a notch, into a Medicare-for-More program. Under this type of system, the qualifying age for Medicare would be lowered below the current age 65 threshold. Just like today, where those age 65+ do not have access to individual plans on the Exchange, this would also be the case in Medicare-for-More. I actually like this option, since moving this swath of Americans to Medicare would add younger people to the Medicare risk pool and remove older people from the individual risk pool. This could help to stabilize both pools at the same time. But you also have to look at the possible ripple effect with Medicare-for-More. Would those who have access to employer-sponsored coverage be eligible to jump to the Medicare option? Would employers be allowed to pay for part of the Medicare option (currently employers are barred from incentivizing their older employees to move to Medicare)? Would Medicare-for-More affect Secondary Payer rules? Medicare-for-More could also be ratcheted up several notches, requiring all Americans who qualify for Medicare to enroll, without the possibility of choosing employer-based coverage at all. Payment of premiums (employer and/or employee) could be set at a percentage of salary or at a flat dollar amount. Again, this would help the Medicare risk pool, and the group plan risk pools as well. Plus it would eliminate the Secondary Payer issues. However, if Medicare coverage included only Part A and B through a payroll tax, would employers then offer a second set of plans for those needing a Medicare Supplement and/or Part D? One Nation, Indivisible, with Healthcare for All Then there’s Medicare-for-All, which would be run by the government. Again, it could look like today’s Medicare system, but most of those rallying around this option are also looking to overhaul the program substantially. Not only would they like to have the program include A, B, and D, there would be no (or very low) copays for care, and coverage would include dental, vision, and long-term care. While this could be provided as an individual plan replacement, proponents ultimately want to see all other competing insurance programs eliminated, including employer plans, medicare supplement programs, and any “buy-up” plans that would enhance the benefits provided under the Medicare-for-All program. Socialized Medicine Finally, at the extreme other end of the spectrum, there’s Socialized Medicine. While some might want to place all versions of government-sponsored healthcare under the Socialized Medicine umbrella, that would be highly misleading. Socialized Medicine includes a single payer system that also operates all hospitals and employs the medical staff. We actually already have Socialized Medicine for a group of Americans – those covered by the Veterans Health Administration. Taking Medicare Higher Under proposals for Medicare Buy-in, Medicare-for-Most, and Medicare-for-All, don’t assume that Medicare coverage would look like it does today. Currently, the different components of Medicare cover the following (generally speaking):
Most proponents of these programs are also asking for an overhaul of this system. Some even want to throw in coverage for vision, dental, and long-term care. I absolutely believe that the Medicare system needs a good overhaul – it can be so confusing to figure out the different components and enroll on each correctly. Don’t even get me started about moving from a group-based HSA plan to Medicare. But the first major overhaul could simply be combining A, B, and D together into one program, and funding the overarching plan by removing the salary cap on Social Security taxes. Medicare Supplements could still be purchased if desired, or moving to a Medicare Advantage program would be a possibility as well. Other countries have this type of Two-Tier Healthcare system. The Bottom Line As healthcare premiums, cost of care, and drug prices continue to soar, we will continue to hear ever-increasing cries for government intervention. Some legislation is making its way through state and national levels, and maybe this year some of them will actually take hold. The more people who are affected by outrageous pricing and the more people who die because they are rationing their unaffordable drugs, the faster and louder the chants will become. They are already pretty deafening. I am hoping that we will see some relief with balance-billing rules, drug pricing caps, and other cost containment strategies. What Congress seems to not understand is that to do nothing does not mean all will remain status-quo. It just gives more ammunition to those getting crushed by the current system. Be Benefits Informed
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