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Unpacking “Medicare for All”

Proponents say a "Medicare for All" approach would expand access and affordability of health care in the U.S. But there are practical downsides.

With their new majority in the U.S. House of Representatives, Democratic leaders have already pledged to hold hearings on the idea of a “Medicare for All” model for the U.S. health system.

It’s a political slogan that’s gained traction over the past two years, but some details — including its potential drawbacks — are generally less discussed.

I wanted to address some basic questions about the idea to bring you up to speed.

What is Medicare and what does “Medicare for All” mean?

Medicare is the public health insurance program that provides coverage for seniors and the disabled. It is funded and administered by the federal government through the Centers for Medicare and Medicaid Services. Medicare is already quite a substantial program, serving 59 million people and costing almost $700 billion in 2017.

During his 2016 presidential campaign, Vermont Sen. Bernie Sanders included a “Medicare for All” platform that called for ending employer-based health insurance and replacing the various payers in the U.S. health system with a single government program. He and other proponents offer the idea as a way to ensure that all Americans have health coverage and that those who are underinsured can better afford their care.

Last year, Sanders and other Democrats in Congress put forth proposals that would expand the role of public programs in health care to varying degrees.

Why are there calls for major health reform now?

Public concerns about health care relate to the "triple aim:" access, cost and quality of care. These concerns continued to arise after the 2009 passage and rolling implementation of the Affordable Care Act, and have persisted through a decade of debate about health care in this country.

Here are some stats that illustrate the problem. Between 2007 and 2017, U.S. health spending grew from $2.3 trillion to $3.5 trillion, not accounting for inflation. This hits individuals, too: For workers covered by employer-based plans, average employee contributions for health insurance increased over 70 percent over this same period — and this was despite the increasing popularity of high-deductible plans, which tend to have lower premiums.

What are the potential benefits of expanding the Medicare program?

There is considerable support by Medicare beneficiaries for the program — they have a broad choice of physicians and hospitals (over 6,000 hospitals and almost 700,000 physicians), and the coverage is relatively generous (especially when coupled with public or private supplemental insurance).

Second, the payment rates for services would be controlled by a national fee schedule. This eliminates out-of-network and surprise medical bills, while driving down the administrative costs for the program.

What are potential downsides to a Medicare for All approach?

Though Medicare beneficiaries are largely satisfied with their coverage, people with employer-based insurance also overwhemingly like their plans overall: In 2016, 83 percent rated their plan as excellent or good. These folks may be unhappy if forced to switch to government coverage.

Plus, Medicare is a politically-managed program, subject to frequent changes in leadership and direction. Congressional oversight offers another hurdle. Innovation in Medicare, such as updates to benefits, can take a long time because they require legislation, a process that can be slow and contentious. For example, Medicare’s telemedicine benefit is currently limited to specific providers in some rural areas under certain conditions.

Finally — and this is important — Medicare is not on sound financial footing. The program will run a deficit of over $300 billion this year, and by 2025 that deficit is projected to grow to $542 billion. From this starting point, developing a “Medicare for All” program with a governance body independent of partisan politics and a sound financial structure could be a real challenge in today’s Washington.

It will be interesting to see how this debate advances, and what other policy approaches surface to improve access, reduce cost and enhance quality of health care in the United States.

Stay tuned.

Kevin Schulman is a professor of medicine and clinical hospitalist at Stanford, and a professor, by courtesy, of economics at the Graduate School of Business. As a member of the Clinical Excellence Research Center, he studies ways to reduce the cost of high-quality care.

Photo by mauro mora

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