Why do Democrats think expanding ObamaCare would be easier than passing Medicare-for-all?
In response to Medicare-for-all's growing popularity, a nervous Democrat Party leadership is repeating a familiar mantra: We all agree that universal, affordable coverage is the end goal. A single-payer system where the government provides health coverage for everyone, like Medicare-for-all, is one way to get there. But another is to build upon the victories of ObamaCare through expanding Medicaid access and subsidizing private insurance. The implication is that this latter option would be less scary, radical, and politically vexing, and thus more likely to succeed.
If that's what the Democratic leadership thinks, they're in for a very rude awakening.
The matter got shoved into the headlines this week, when The Intercept reported on a recent meeting between Wendell Primus, the top health policy advisor to House Speaker Nancy Pelosi (D-Calif.), and Blue Cross Blue Shield executives.
Primus outlined the standard concerns with Medicare-for-all: its costs, the furious political opposition it will inspire, and the bureaucratic difficulty of implementing it. Instead, Primus outlined a strategy for building on ObamaCare's successes. He also implied that Democrats and health insurers could band together to pass new laws that free up generic drug manufacturing, cut down on pharmaceutical price gouging, and negotiate better prices via Medicare.
Now, Primus is hardly a neoliberal sellout; he resigned from the Clinton administration to protest welfare reform. Nor is his thinking crazy. Health-care costs remain stratospheric, but their growth rate is down since ObamaCare passed. The Medicaid expansion has been a real success, albeit a slow-burn one. And the bulk of health-care costs really do come from out-of-control prices for drugs, procedures, and services.
The problem, rather, is the end goal of actual affordable universal coverage. If you're serious about getting there, then the advantages of Primus' preferred strategy largely evaporate.
By definition, getting everyone health care will require a massive redistribution of resources across society. Which groups receive more income and which groups shoulder more costs will change dramatically; the health insurance industry, medical providers, hospitals, and pharmaceutical companies will all be upended. This holds true regardless of which route you take to get there. Medicare-for-all versus building on ObamaCare may look different in terms of politics and policy implementation, but those differences camouflage this fundamental similarity.
Consider taxes and spending.
As they are, ObamaCare's subsidies are wildly inadequate. Meanwhile, the Medicaid expansion needs to reach all 50 states, and state budgets must be shored up long-term. Fixing both problems will require hundreds of billions of dollars a year in new federal spending. Americans would have to pay those new taxes, while still shouldering premiums and out-of-pocket costs.
Under Medicare-for-all, premiums and out-of-pocket costs would be replaced by taxes, and then additional taxes would have to be imposed. But would the final cost burden under either scenario be all that different?
Remember that a lot of already-existing government spending like Medicare and Medicaid would simply be swapped out for Medicare-for-all spending. Beyond that, all the premiums and out-of-pocket costs Americans currently pay to private insurers would be swapped out for taxes paid to the government instead. Which sounds like a mammoth new tax bill. But Medicare-for-all would would also cut down on provider prices and overhead, saving a ton of money, and reducing that tax bill in the process.
In the final tally, the additional taxes needed to finance a Medicare-for-all program would would be a fraction of its total "cost" — probably a few hundred billion a year. And again, that number would adjust up or down depending on how many out-of-pocket costs we leave in the system.
Under either scenario, the final cost burden on Americans is roughly the same. And this shouldn't surprise anyone! If the end goal is the same distribution of resources, regardless of the policy route taken, then of course the final cost wouldn't vary much.
Now, you might argue that using Medicare-for-all to squeeze all those extra savings out of providers would set up a mammoth political fight. And you’d be right. But if you thought we could avoid that hurdle by just building on ObamaCare, you'd be wrong. ObamaCare's subsidies are calculated based on households' premiums and expenses; if health-care costs go up, federal spending increases. Building on ObamaCare would mean bargaining down the cost of drugs, using both Medicare and new laws — and bargaining down all other health services and procedures, too. We need to get our arms around the whole pricing system.
Short of Medicare-for-all, the best way to do that would be some form of all-payer rate setting: The government gets the country's health-care providers together each year, and everyone agrees on a reasonable set of prices across the board.
Plenty of other Western countries already do this. But it would of course require a massive political brawl with hospitals and providers.
An enormous part of Medicare-for-all's appeal is its simplicity: Dealing with the private insurance industry as it exists, even on the ObamaCare exchanges, is a dispiriting hassle — when it isn't a hellscape of rampant financial exploitation. So for Americans to get the same benefits from an improved ObamaCare that they'd get from Medicare-for-all, private insurance markets would need to be similarly simple. This will necessitate a big regulatory crackdown on insurers, both to repair the damage done to ObamaCare's rules by the GOP, but also to go beyond those rules. Premiums and actuarial values will need to be strictly controlled, out-of-pocket costs standardized (or preferably eliminated entirely), and variations in coverage plans reduced to a minimum.
The health insurance industry will fight such an effort tooth and nail. The same goes for implementing a public option worth its salt. That's another necessary piece of the "build on ObamaCare" route because it applies competitive pressure on insurers and makes sure no marketplace lapses into a monopoly under one insurer.
The Democrats might be able to work with the insurance industry in the short term, to combat providers and drug manufacturers first. But if they're serious about getting coverage for everyone, Democrats will have to turn on the insurers at some point as well.
In his presentation to Blue Cross Blue Shield, Primus included "creates winners and losers" in the list of Medicare-for-all's downsides. But creating winners and losers is not a problem for single-payer systems; it's a problem for the pursuit of universal and affordable coverage, period. No matter how we get there, that goal will require reforms that are big, scary, and radical. There's no shying away from it.
So whenever Democrats question Medicare-for-all, what they're really questioning is universal coverage.