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Medicare for All by James A Medicare for All by James A. Morone Overview way for such alternative practice settings. Medicare for All would break with current Medicare for All proposes a sharp break with both financing arrangements. Medicare payroll taxes the current health care system and with convention- would be abolished. Medicare would not draw from al wisdom. The proposal begins with the assump- general revenues. There would be no cost sharing. tion that the problems of American health care— The current benefit limits (which force some elderly most notably the problem of the uninsured—will to spend down their life savings) would be eliminat- not be fixed by tinkering at the margins. Nor will ed. Providers could not bill their patients for cov- they be fixed without popular agitation, without a ered services. movement. The system would be financed by a value-added This is not a proposal geared to the current tax (VAT) specifically earmarked for the new pro- Congress, but it does build on and improve one of gram. Today, the VAT is championed by a range of the nation’s most popular public policies. It is easy political bedfellows. In the United States, many fis- to understand. It is a proposal that citizens could cal conservatives seek to replace the income tax with rally around. And, given the trends in the American a VAT; some tax specialists would combine the VAT economy and the health care system, it might even- with an income tax paid only by relatively wealthy tually prove to be more politically feasible—and people. And the VAT is the major tax used (in fact, effective—than programs lodged more securely in required) by the European Union. In short, this is a conventional wisdom. familiar tax with a substantial track record. Turning The proposed program would improve the to the VAT cuts through the Gordian knot of health Medicare program and extend it to all legal resi- care finance. The VAT’s potentially regressive effects dents. Medicare for All would cover a broad range of could be offset by graduated income tax reductions health care services: acute care, prescription drugs, for low- and moderate-income taxpayers. mental health services, maternal and child health, Employers could continue to offer health bene- and other services detailed below. fits by providing wraparound coverage that fills in The proposed program addresses our health care the gaps in Medicare for All (such as dental insur- delivery systems by placing strong emphasis on pri- ance, expanded mental health benefits, or amenities mary care. Medicare for All would fund primary such as private hospital rooms). These would be health care in non-traditional settings. For example, equivalent to contemporary Medigap policies. The it would foster community health centers and tax advantages that accrue to employer-sponsored school-based health centers. More important, it health benefits would remain in place. would rethink and vastly expand the delivery of Medicare for All would permit states to experi- home health services, especially to the elderly and ment—essentially mirroring Medicaid waivers. Any disabled. A generation ago, the medical profession state could opt out of the Medicare program for res- resisted these kinds of innovations in care settings; idents under age . States that chose to opt out today, the managed care revolution has prepared the would design their own alternatives—under simple federal guidelines. State plans would be required to kets, and regular labor-management relations. By guarantee universal coverage, they would have to , more than four out of five full-time employees offer health options with no cost sharing, and they got their health care from their employers. The would be required to organize their plans in a sim- numbers have declined ever since (with a brief ple and transparent way. While Medicare would be uptick in the s).1 Rising health care premiums fully funded from the VAT, state plans would get take a steady toll on the employment-based systems; percent of costs, matched by funds raised at the state and the apparent return of relentlessly rising costs or local level. (employer health insurance premiums increased Medicare for All puts special emphasis on organ- three times faster than the rate of general inflation izing an efficient bureaucracy. It would establish a in ) have eroded a long-standing faith that cor- new cabinet-level Department of Health, which porate America would have the will and skill to rein would be charged with creating a simple, transpar- in its health care costs.2 ent, user-friendly health care system. By putting an More important, the old industrial economy is end to multiple payment sources and extensive sinking into history. People shift jobs frequently— patient cost sharing, the proposed system would end lifetime employment with a single firm has become some of the major sources of complexity in the unusual. Global trade and fierce equity markets put American health care system. The new program enormous pressures on firms (and on their employ- would operate with electronic billing and payment. ee benefits). Contingent and part-time workers, Major organizational initiatives would include a consultants, and other flexible arrangements all benefits board that would review, evaluate, and undermine the kind of long-term commitment to update the benefits package and a division for com- employees that nourished the old system of health munity health. benefits. Of course, the pressures on companies vary The existing Medicare program would be by sector and firm—most large companies still offer streamlined—for example, we would eliminate the health benefits; most small firms no longer do. arbitrary division between Part A (hospital) and However, the numbers are declining in every catego- Part B (physician services). Medicaid would become ry. Efforts to reform the system by shoring up a smaller program focused largely on long-term care employer health care confront the new realities of benefits. an emerging global economy. As the quicksilver economy of the st century gathers velocity, the Breaking with the Old Logic mid-th century employment-based health system will be increasingly difficult to defend—or revive. It Medicare for All introduces two sharp changes from offers patchy coverage, it offers few footholds for current practice. It breaks the link between coverage expanding coverage to the uninsured (or the under- and employment—a great American innovation insured), and it places a heavy burden on many rendered increasingly obsolete in the new global companies. Put bluntly, its days are numbered. As economy. And it limits the long, futile American that becomes clear, Medicare for All may stand out as effort to run a system with competing health care an appealing reform alternative. payers. Second, this plan largely rejects one of the great First, consider the link between employment and health insurance. The idea developed during 1 See Marie Gottschalk. The Shadow Welfare State. Ithaca: Cornell World War II when health care benefits sidestepped University Press, 2000, for a fine description of Taft-Hartley and, more generally, the rise of the employment health care state. See also Michael wartime wage limits. It got a further boost from Graetz and Jerry Mashaw. True Security: Rethinking American Social post-war policy, especially the seminal Taft-Hartley Insurance. New Haven: Yale University Press, 1999, chapter 7. 2 Employer Health Benefits: 2001. The Henry J. Kaiser Family Foundation Act ( ). The approach was well geared to an and HRET, pp. 3, 13, 14; Lawrence Brown. “Dogmatic Slumbers: industrial sector marked by stable (often lifetime) Business and Health Care Policy.” In James Morone and Gary Belkin (eds.). The Politics of Health Care Reform. Durham, NC: Duke University employment, relatively predictable domestic mar- Press, 1994. health care reform standards: consumer choice of ering physician services and out-of-hospital expens- health plans. (States that opt for their own health es; it was proposed as a Republican answer to plans may keep the idea alive.) In theory, American Medicare and dramatically added onto the package health care offers two different kinds of consumer in the House Ways and Means Committee. Part B is choice: the choice of provider is one of the great— funded percent by beneficiary premiums and and unassailable—values in American health care. percent from general revenues. Today, almost all That is not the same as choice of insurers. The idea Medicare beneficiaries participate in both parts of of competing insurance packages has been a kind of the program. holy grail for health reformers; the idea is intuitively Medicare for All would abolish Parts A and B. A appealing, because it more or less fits with tradition- general benefits package would be available to all al economic models. Consumers choose among Americans. The financing mechanisms for both A competing plans, selecting the mix of price and and B would be abolished. services they most value. The benefits package would begin with current However, the reality has rarely met expectations. Medicare services: inpatient hospital services, physi- In the real world, the choice of insurance packages is cian services, short-term nursing care, home health a source of confusion and frustration. People have no services, hospice care, and post-hospital skilled idea how to cut through the complexities. They do nursing care and rehabilitation services. not understand what exactly they are buying or what Medicare operates with some gaping benefit trade-offs they are making. A full range of options is holes that would be closed under the proposed plan. rarely available to them in any case (nine out of For example, outpatient prescription drugs and small employers offered just one plan in ).3 durable medical equipment would be covered. More Worse, the two kinds of choice often conflict: generally, a careful review of the benefits package choice among competing health plans leads to limits would be undertaken (and updated every two years, on the choices that really matter to most people, a as described below).
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