euclid managers legislative review

VOL. XXIV, ISSUE 2 – FEBRUARY 2019

Medicare-For-All Has Many Meanings

The drumbeat for further expansion of healthcare is likely to continue with Democrats in the majority in the House. On the one hand, Democrats must continue pursuing healthcare since healthcare was seen as a driving force behind Democratic wins in the mid-term elections. On the other hand, the more progressive wing of the party with standard bearer Bernie Sanders has made healthcare and Medicare-for-All a cornerstone of their movement.

Efforts are already underway in Congress to pursue Medicare-for-All. A Medicare-for-All Caucus in the House of Representatives already has more than 70 members.

And, all of the legislative debate will not be confined to the federal legislature. As many as 10 states are already exploring healthcare expansion options such as Medicaid buy-ins. Several states including New York, California and Colorado have also explored such healthcare expansion programs in recent years. In 2014, Vermont abandoned its effort to establish the first state-level single payer plan due to the massive tax increases, including an 11.5% payroll tax, which would have been necessary to finance the plan.

Campaign and election promises are often vague or ill-defined. And, most often, rhetoric and what can be passed and enacted into law are miles apart. At the nub
of any of the proposals is the idea of expanding access to healthcare. Proposals vary from those that eliminate private insurance entirely to those that would allow individuals to choose between private or government-run programs.

So it is with the discussions regarding Medicare-for-All and similar pronouncements. This issue of Legislative Review explores the landscape of the healthcare expansion and Medicare-for-All discussions.

Costs Driving Dialogue

It comes as no surprise that rising health costs – especially drug costs – are catalysts for government to have a bigger role in health coverage. It is common across many proposals that government will have a greater role including setting prices for health care services.

The role of employers in providing coverage is another point under contention. Employer-provided coverage has been threatened by Republicans and Democrats. Republicans have long sought to decouple the significant tax breaks employers and employees enjoy when an employer sponsors coverage. Democrats see employer provided coverage as an obstacle to the broader effort to have universal coverage.

Medicare-for-All

Medicare-for-All is shorthand for a program that would cover all Americans under a government insurance plan. Proposals often differ on whether the plan would merely extend existing Medicare to all or whether Medicare would itself change to accommodate this new mission.

The biggest obstacle to Medicare-for-All is cost. An analysis of Bernie Sander’s plan by the Urban Institute estimated a cost of $32 trillion over 10 years.  Of particular note, the Urban Institute is considered a left-leaning organization making their analysis hard to overlook by Medicare-for-All advocates.

A critical factor in any cost estimate is the cost to patients at the time of care. Some proponents of Medicare-for-All eschew any patient cost-sharing.  Adoption of such a plan is clearly the more expensive option. Expenses could mount beyond estimates if the absence of cost-sharing leads to overutilization of medical services.

Another obstacle to Medicare-for-All is keeping medical providers – especially hospitals – in the market. The American Hospital Association Annual Survey of Hospitals found that Medicare reimbursement was $53.9 billion below hospital costs of treating beneficiaries in 2017.  Traditionally, uncompensated care which includes underpayments by Medicare and Medicaid as well as care provided to the uninsured is partially offset by charging private payers more than the actual cost of care. If there are no private payers, this “cost-shift” goes away. Whether hospitals can remain financially viable or whether the numbers of hospitals would be dramatically reduced will be important questions to be considered.

Medicare-Buy-In

A Medicare-Buy-In can address the high premium costs faced by older individuals under age 65 who are not yet eligible for Medicare. The Affordable Care Act (ACA) age rates coverage in the individual market. As such, older individuals face premiums that become increasingly high, especially if the individual does not qualify for ACA’s premium subsidies.

Whether a buy-in program can co-exist with employer-based coverage is also a question. Older employees with a choice of remaining in their employer plan or enrolling in a buy-in program could result in adverse selection for the buy-in plan.

Another iteration of the buy-in plan would allow employers to pay for the buy-in plan through a payroll tax. Employers who preferred to offer their own plans would be required to meet stricter federal benefit standards.

Yet another Medicare-Buy-In plan would allow small employers to enroll their employees in an employer sponsored buy-in plan. This option is considered most viable where the employer is in a section of the country that has only one insurer or excessively high health costs.

The buy-in proposals assume that more Americans will opt to enroll in coverage moving the needle toward universal coverage. But, absent a requirement to do so, universal coverage is unlikely to be achieved.

A proposal from the Center for American Progress would initially include a buy-in option. At some point, however, all newborns would be enrolled upon birth into a government plan to achieve universal coverage.

Medicaid-Buy-In

Medicaid-Buy-In plans are aimed at lower-wage workers. The theory is that lower wage workers have difficulty affording plans that their employers may offer. Furthermore, ACA subsidies may make premiums affordable in the individual marketplace but coverage barriers such as high deductibles or cost sharing will still be problematic.

Medicaid-Buy-In plans face many of the same hurdles of Medicare-Buy-In plans. Medicaid also faces a dearth of health care providers willing to accept Medicaid reimbursement levels which are generally lower than Medicare’s.

A Medicaid-Buy-In strategy has an advantage in that it likely could be implemented on a state-by-state basis.

Single Payer

Fewer proponents of expanding coverage use the term “single payer.” But, “single payer” is not always a synonym for Medicare-for-All or other proposals. “Single payer” can mean how care is funded but it can also mean how care is provided.

At the extreme, “single payer” can mean that all hospitals are government run and that all physicians and medical services providers work for the government. “Single payer” can also mean that government is responsible for paying all health care claims.

One of the more seductive aspects of “single payer” is that it contemplates no insurance claim hassle. A person needing care gets it. Any paperwork is typically between the medical providers and the government.

One of the most feared aspects of a “single payer” system is the likelihood of rationing of care. In order to keep costs in check, the levers are either reductions in access or reductions in care provided. Americans are used to the current system which offers abundant access to technologically sophisticated care with little waiting time to access it. Whether Americans will accept increased wait times or less access to high tech services is of concern.

ACA Still In Force

In the background of these debates will be the future of the ACA. With loss of the House, Republicans are unlikely to resurrect their failed effort to “repeal and replace” the ACA. The Democrats are unlikely to find sufficient support in the Republican controlled Senate to move forward with ACA fixes or expansions. The biggest threat to the ACA may be the Court case regarding the elimination of the individual mandate penalty which is expected to make its way to the Supreme Court.

Letter from Karen Knippen

For the past decade, our focus has been on Congress with passage and implementation of the ACA. Medicaid-for-All and other health care proposals
may return attention to the states. What is most likely is that we’ll see activity on these and other health coverage proposals at both state and federal levels.

In the meantime, employers are facing many of the same questions. How can they provide quality health coverage that is affordable? What benefits do their
employees want and need? What benefits should they consider that they don’t currently offer to attract and retain valued employees?

Euclid Managers can help you answer these questions for your clients. Call your marketing representative to learn about everything we have to offer.

Sincerely yours,
Karen Knippen Signature
Karen Knippen, RHU, REBC Senior Vice President

EUCLID MANAGERS has been serving the independent agent since 1976 with a portfolio of group health, life, disability, dental and individual health. We proudly represent UnitedHealthcare of Illinois, Delta Dental of Illinois, MetLife and UnitedHealthOne Individual. We encourage your feedback and suggestions. Please call your EUCLID MANAGERS Marketing Representative or Marcy Graefen at (630) 238-2915 for more information.

The information contained in this publication is intended for the general information of our clients. It should not be construed as legal advice or legal opinion regarding any specific or factual situation.