Summary: A recent commentary in JAMA proposed using private insurance health plans as intermediaries in a universal health insurance system, instead of direct payments from a public payer to providers, as under “traditional” Medicare for All / single payer. The supporting arguments, though perhaps appealing on a first read, don’t withstand scrutiny.
Medicare Advantage for All: A Potential Path to Universal Coverage
December 16, 2021
By Greg J. Zahner et al
Medicare Advantage (MA) for All—which would create a national guarantee for health insurance while maintaining private-sector involvement in health insurance administration—represents an alternative path to achieving universal health insurance that could mitigate many of the disadvantages of Medicare for All. This Viewpoint outlines what MA for All might look like and describes potential benefits, limitations, and risks.
MA for All: How It Might Work
The MA program allows MCOs to provide coverage for Medicare-eligible populations and has become increasingly popular, with an estimated 42% of Medicare beneficiaries now enrolled in MA plans. At a high level, MA for All could be structured and funded as follows: all existing non-Medicare insurance funding (eg, employer-sponsored coverage, commercial insurance, Children’s Health Insurance Program, and Medicaid federal funding) would initially flow through CMS. Employers would pay a health benefit tax to CMS rather than directly pay for health insurance, and state contributions for Medicaid would shift to federal responsibility. Private health plans would then apply to become CMS-approved MA MCOs. These MCOs would provide coverage not just for Medicare beneficiaries but also for children, low-income individuals, and people previously insured through employer-sponsored plans.
Flexibility and Equity
Unlike Medicare for All, which would restrict a person’s flexibility to choose the best health plan for them, MA for All could help ensure that individuals continue to have multiple options and the opportunity to select an MCO that covers their preferred clinicians or health care organizations. This model could accommodate regional differences in the health care landscape by continuing to enable flexibility in how payers and health care organizations work and partner together. For example, accountable care organizations could continue to grow, and local and state governments could retain a level of autonomy and apply for waivers to create MA plans for select populations (eg, individuals with low income).
Equity is also a key concern. Today’s environment, with commercial insurers paying significantly higher rates than public payers, incentivizes clinicians and health care entities to selectively pursue commercially insured patients. Greater payment parity, such as through comprehensive risk adjustment for all individuals, greater control over rates in noncompetitive markets, and greater rewards for offering plans that cover higher-risk populations, may help reduce these resultant disparities. Additionally, CMS could expand innovative programs that target high-need and underserved populations, such as clinically aligned payment models like the Program for All-Inclusive Care for the Elderly, which provides nursing home–level care at home, or special-needs plans designed to help patients with mental health and chronic conditions.
Comment by: Jim Kahn
Zahner and colleagues propose that Medicare Advantage offers a good model for how to implement single payer. They point to lower care costs, some higher quality metrics, and political viability. Here I address their main assertions. Pardon the longer-than-usual comment.
Assertion #1: Insurance companies could serve a central role in a single payer system.
Structuring single payer around private insurers would garner their political support. However, doing so would fundamentally undermine single payer design.
Insurance companies are central to current health system problems. They earn and extract high profits based largely on limiting access through care denials and financial barriers (for the home health example, see Monday’s HJM). They fail to provide the detailed data that would reveal what’s working well or poorly for access and health.
Insurance companies as we know them are incompatible with efficient and generous health coverage. In some countries, insurers have a major role, but they are non-profit and effectively claims administrators, selling a single insurance product with standard medical necessity and payment protocols, unlike what’s proposed in the US.
Assertion #2: Medicare for All would remove important economic activity that people want.
Not true. Medicare for All (single payer without private insurers) would remove the dead weight of insurance profits and administrative burden, and largely replace that with clinical services, including much-needed increases in long-term care.
As for polls indicating support for keeping private insurers, it’s all in the wording. If respondents are provided a fair description of how single payer would work – including choice of any doctor and elimination of cost-sharing – they don’t pine for private insurers.
Assertion #3: Medicare Advantage for All would increase efficiency and equity.
MA4A might trim a small portion of the horrendous administrative bloat in our current system, and reduce inequitable coverage. But not nearly as much as true single payer.
Administrative costs at insurers would remain high, because it’s a lot of work to oversee care approvals and complex payment arrangements. Not to mention profits (oops, did mention that). Administrative costs for providers would drop a little, if indeed they dealt with fewer MA plans than the current morass of private and public payers. But most doctors and hospitals in this “single payer” system would have to deal with multiple MA plans, each with different rules.
Equity – more similar insurance across individuals – would be enhanced versus today. (How could it be worse?) But differences in benefits scope, coverage rules, provider network design, and payment levels and structures would leave ample room for disparities.
Economic feasibility would benefit from a muted rise in utilization, as colleagues and I published recently (and they cite). But that’s a stronger argument for true single payer – you can fully remove restrictions on care access and still avoid overwhelming utilization growth.
Assertion #4: Medicare Advantage for All would allow choice – of health insurance plan.
People want choice among doctors and hospitals, not insurance plans. This is especially important when they have complex medical conditions. And choice imposes costs.
Selecting among health plans is nerve-wracking and nearly impossible for people to optimize. Consumers have almost no usable information about plan rules and performance or out-of-pocket costs, and huge uncertainty about their own future health needs
And provider choice is sacrificed. MA plans usually sharply restrict choice of doctors, by relying on narrow provider networks and excluding many top referral doctors – all to trim costs.
Furthermore, the profusion of plan options is extremely disruptive. It forces doctors to deal with multiple payers (and payment models) and patients to change doctors if they switch plans (or doctor networks shift), creating costs and hassles, all distractions from optimal clinical care.
Assertion #5: Medicare Advantage has higher quality metrics.
MA plans know how to play to the measure – raise targeted quality metrics. But much more importantly, mortality is highly variable across MA plans, unrelated to quality ratings, with no way for beneficiaries to know. And quality is useless if MA enrollees experience financial barriers to care.
Assertion #6: Medicare Advantage reduces health care spending compared with traditional Medicare.
Finally, with gusto: Untrue in any meaningful way. Because:
First, reported savings are for medical care payments, not total costs. The care savings are more than offset by MA plan profits and administrative costs. Overall, MA increases insurance cost: medical spending down, profits and overhead up even more. This problem is accelerating in MA as private equity ramps up its role.
Second, savings in medical care costs are achieved by reducing service use in ways that are often harmful to patients. Plans deny care via prior authorization using obscure criteria. Small provider networks can mean the best care is out of network. And MA plans impose out-of-pocket costs, such as high deductibles and other cost-sharing, that is often unmanageable when people get sick and thus need more care.
Third, MA selects for lower cost individuals, leaving higher cost enrollees in traditional Medicare. The clearest recent evidence of this comes from a 2019 study of spending prior to MA enrollment.
Authors’ financial conflict of interest.
The authors disclose, as required by medical journals, significant financial connections to the private insurance industry. Does this influence their views? Impossible to say, but important to have this information.
Let’s stick with the plan: single payer, Medicare for All, with direct payment from the public funder to providers. No for-profit insurers in the mix. This is what works in all the other wealthy countries. It will work for us.