Current Affairs: Why a ‘public option’ isn’t enough

July 16, 2019

Topics: Quote of the Day

By Benjamin Studebaker & Nathan J. Robinson
Current Affairs, July 14, 2019

At one point, the meaning of “Medicare For All” was quite clear. Under Medicare For All, every American, instead of having to navigate the tangled and inefficient marketplace of for-profit health insurance corporations, would simply be enrolled in Medicare. Instead of people paying premiums and copays to an insurance company, they would pay taxes, and those taxes would be used to pay providers. As Dr. Abdul El-Sayed wrote in this magazine, Medicare For All is “single-payer healthcare that would provide cradle-to-grave government-supported healthcare for all Americans.”

But as Democrats have realized how well the phrase “Medicare For All” polls with voters, its meaning has been deliberately muddied. Most of the Democratic presidential candidates now support something they call “Medicare For All,” but it’s often not clear what they mean by it. Some, when they clarify specifics, make it clear that what they actually want is a “public option,” i.e. a new kind of government insurance plan that you can buy within the structure of the existing healthcare marketplace.

Why abolish private insurance? Why not just have insurance companies compete against a government plan in an open marketplace where people can choose? That way, everyone who wants Medicare gets it, while people who are satisfied with their current insurance can keep it. Everyone wins. The implication here is that anyone who supports a full single-payer plan, in which everyone would just be insured under a government program, must be rigidly ideological, wanting to shutter the private insurance industry for no good reason. Why would we do that instead of just providing a new option?

To understand why full “single payer” health insurance is the left’s goal, rather than just “another insurance plan on the marketplace,” it helps first to understand the left’s vision for how healthcare should work. In an ideal world, your healthcare would not be something you have to think about very much. If you got sick, you would choose a doctor’s office and make an appointment. You would go to that appointment and see the doctor. Then you would leave. You would not have to apply for insurance, not have to pay bills. And this would be the case no matter who you were or how much money you made. Your relationship is between you and your doctor, not you and your doctor and your doctor’s hospital’s billing department and your insurance company. Leftists dream of making healthcare as easy as possible to receive and universally accessible to all regardless of how much money they have.

Private health insurance is an unnecessary part of the healthcare system. Insurance companies are middlemen, and insurance just exists to make sure that providers get paid. It was the federal government that subsidized private insurance companies and encouraged employers to use them. Other countries didn’t build this kind of healthcare system, for two reasons:

1. It doesn’t cover everyone.
2. It creates a bloated, inefficient insurance bureaucracy.

Our government has always been playing catch-up trying to get more people covered. It’s created employer subsidies, Medicaid, CHIP, and the Obamacare exchanges in a desperate bid to get this system to do its job, and despite decades of piecemeal healthcare reforms 13.7 percent of Americans remain without health insurance and millions more have inadequate coverage. Offering to let Americans “buy-in” to Medicare keeps Americans paying premiums, and as long as Americans must personally pay premiums to receive healthcare there are going to be some people who can’t or won’t pay those premiums and go without. It turns Medicare-For-All into a publicly run HMO. Maintaining an employer-sponsored health insurance system means remaining in a situation where large numbers of people go through a period of being uninsured each year, because when you lose your job you lose your insurance. (Currently 1 in 4 Americans go through an uninsured period each year.) Single payer advocates ask the question: “Why have a nightmarish tangle of public and private options, varying by state, with people moving on and off all the time? Why not just pay for healthcare with taxes, cover everyone, and make it free at the point of use?”

Not only will a public option fail to cover everyone, it will do nothing to restrain the growth of healthcare costs. Single payer systems control costs by giving the health service a monopoly on access to patients, preventing providers from exploiting desperate patients for profit. If instead there are a large number of insurance companies, providers can play those insurance companies off each other.

The bloat doesn’t just come from providers. Because insurance works on a profit incentive, the insurance companies must extract rents as well. So the patient is paying to ensure not only that their doctor or hospital is highly-compensated, but that the insurance company generates profit too. Each insurance company has its own managers — its own CEO, its own human resources department, and so on. We have to pay all of these people, and because there are so many private insurance companies, there are so many middle managers to pay.

These duplicate bureaucracies are expensive to maintain and do nothing to improve the quality of care. The providers make them compete to offer higher compensation, and you pay for it. Getting rid of these middle men makes the system far more efficient. People do not associate government with efficiency, but when it comes to moving money from one place to another — which, after all, is all an insurance company does — it can be quite good, and it makes far more sense to have government handle healthcare payments than to leave it to companies with a direct financial incentive to deny treatment.

Private insurance is inconvenient, inefficient, and continues to leave large numbers of Americans with inadequate insurance or no insurance at all. The Affordable Care Act shored up this system by funnelling more public money into subsidies for private insurance. Now these Democratic candidates are proposing to make a new insurance company, call it “Medicare,” and charge you premiums to use it. That doesn’t get rid of the problem of wasteful duplicative bureaucracies, and will guarantee that some people remain uninsured. It was the federal government’s decision to build this bizarre, burdensome system. Nothing about private health care is natural or inevitable. It doesn’t have to be like this.

A single payer system requires a lot of political commitment, because it means going up against the insurance companies and the ritzy providers and telling them they can’t screw us over anymore. They can’t deny us coverage, extract heavy rents, and keep us on the phone forever. If a Democratic candidate doesn’t see a meaningful difference between a public option and single payer, if that candidate sees these things as two different “paths” to the same place, that candidate cannot be trusted to put an end to this madness. They are offering just one more piecemeal reform to prop up a failing system — not a true overhaul.

Single payer healthcare is a tried and tested system, and it isn’t radical. Trying to cobble together “universal” coverage from a patchwork of giant for-profit bureaucracies and government insurance products is senseless. “Eliminating private insurance” rather than “adding choice” may sound unnecessarily sweeping. But private insurance just gets in the way of efficiently paying healthcare providers and covering everybody. Medicare-For-All makes sense, and we shouldn’t let it be watered down.

Use this link for the full version of this article:
https://www.currentaffairs.org…

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Comment:

By Don McCanne, M.D.

An inordinately large percentage of individuals who seem to support public insurance has bought the concept that we can avoid disruption of the existing private health plans by the incremental addition of a public option – an optional Medicare plan that individuals can choose to purchase. Supposedly everyone would recognize the superiority of the public option Medicare plan and would eventually shift to that coverage thus ending up with a single payer system. This vision of reform is a fantasy, and today’s article describes, once again, why this pathway will not lead to single payer.

Some say, “Well, isn’t this fine? Those who want their private plans can keep them, and those who prefer Medicare would now have that option.” But the Medicare public option is structured like an individual private insurance plan. It would have a premium, which, in itself, creates considerable administrative complexity – determining the amount of the premium, collecting the premium from the individual, determining the amount of a government subsidy, if any, and crediting that amount to the individual, making premium adjustments each year, and keeping track of shifting between the Medicare option, employer-sponsored plans, plans in the marketplace, and the all too common periods of lapsed insurance coverage. The administrative hassles with premiums alone do not begin to account for the half trillion dollars in other recoverable administrative waste, almost all of which would remain in place if we accept the incremental step of merely adding a public option.

Moving all health care funding to a highly efficient, tax-financed single risk pool while removing financial barriers to the access of health care (eliminating deductibles, coinsurance, etc.) are essential features of a single payer model but would not be achieved through incremental steps, including the step of offering a Medicare public option.

Our current health care financing infrastructure has nothing in common with a single payer system. That transition will have to be made sometime. Until then, we will have to put up with uninsurance, underinsurance, personal financial hardship, profound administrative waste, inequity in financing, inequity in health care, and physical suffering and preventable premature death. Merely adding a public option cannot have more than a negligible impact.

As the authors state, the public option and single payer are not two different paths to the same place. One is just one more incremental tweak that leaves us pretty much where we are, and the other is the infrastructure reform that will accomplish our goals of effectiveness, equity, and efficiency so that we all have the health care that we need. No more delay. We need to end the suffering.

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