What about the surge in health care from implementing Medicare for All?

November 20, 2019

Topics: Quote of the Day

By Adam Gaffney, Steffie Woolhandler, and David Himmelstein
Journal of General Internal Medicine, Online November 19, 2019

Abstract

Most analysts project that a reform like Medicare-for-All that lowers financial barriers to care would cause a surge in the utilization of services, raising costs despite stable or even reduced prices. However, the finite supply of physicians and hospital beds could constrain such utilization increases. We reviewed the effects of 13 universal coverage expansions in capitalist nations on physician and hospital utilization, beginning with New Zealand’s 1938 Social Security Act up through the 2010 Affordable Care Act in the USA. Almost all coverage expansions had either a small (i.e., < 10%) or no effect on society-wide utilization. However, coverage expansions often redistributed care—increasing use among newly covered groups while producing small, offsetting reductions among those already covered. We conclude that in wealthy nations, large-scale coverage expansions need not cause overall utilization to surge if provider supply is controlled. However, such reforms could redirect care towards patients who most need it.

From the Methods

We identified all rapid universal coverage expansions in high-income capitalist nations. In brief, we considered a nation to have undergone a rapid universal coverage expansion if it experienced a ≥ 10 percentage point reduction in uninsurance rates over a 2-year period that brought it to ≥ 95% population coverage. Our final sample included the following: New Zealand—1938, Great Britain—1946, Sweden—1947/1953, Canada’s hospital insurance—1957, Finland—1963, USA/Medicare—1965, Canada’s physician insurance—1966, Australia—1974, Portugal—1979, Greece—1983, Spain—1986, Taiwan—1994, and the USA/ACA—2010 (although neither US expansion achieved 95% coverage, we include them because of their policy salience).

From the Discussion

Thirteen UHC expansions in 11 affluent nations spanning eight decades were mostly associated with small (< 10%), or no, increases in society-wide hospital and physician utilization. However, many redistributed care from well-off populations to more disadvantaged ones. These findings suggest that healthcare supply may constrain utilization increases, even when financial barriers are lifted. Most, but not all, cost projections of Medicare-for-All have failed to account for such supply constraints.

Milton Roemer famously noted that “a hospital bed built is a hospital bed filled,” and conversely that a limited bed supply constrains utilization. Many studies — and our finding that UHC rarely caused a surge in hospital utilization — support “Roemer’s law.”

Many, but not all, econometric analyses have similarly found that doctors provide slightly less care to the previously insured when coverage expands — and slightly more care to those remaining insured when coverage shrinks. Several studies suggest that such utilization reductions among insured populations predominantly affect low-value services, with no evidence of harm. Similarly, an oversupply of hospital beds in a community apparently does not improve health and may increase overutilization of low-value services.

In summary, history suggests that coverage expansions such as Medicare-for-All redirect care to the poor and sick, but need not drive up overall utilization if growth in supply is regulated.

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Comment:

By Don McCanne, M.D.

It is often claimed that if we expanded health care coverage to include everyone, as would happen with implementation of the single payer model of Medicare for All, we would not be able to afford the costs of the surge in health care utilization, plus the increased demand for care would require greater rationing with resulting impairment of access. Today’s report assures us that neither one of these claims constitute a real threat to access or affordability.

This important study looked at 13 large coverage expansions in 11 nations and found that, by and large, utilization increases were fairly negligible, thus increases in costs and rationing were also negligible. The change that did seem to occur was that there was a limited redistribution of care from low-value care for the healthy and wealthy to essential care for the sick and poor – an actual improvement in health care delivery.

Thus, when you hear that we cannot afford the increase in costs of Medicare for All, you can respond that we will not be spending more, but we will be spending better (keeping in mind that we will recover hundreds of billions of dollars in administrative waste that can be spent on health care).

Also, when you hear that people will not be able to get health care because of rationing, you can respond that the value in health care will improve because we will target our health care resources to providing more effective care (keeping in mind that all universal systems place a priority on emergency services).

This study further confirms that expanding health care coverage to include everyone will provide greater value and higher quality in our health care. We can’t afford not to do it.

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