At the time of the Affordable Care Act’s passage, many suspicious conspiracy theory proponents suggested the goal of Obamacare was to fail in order to usher in a single-payer program of Medicare-for-All. The theory goes something like this: with nowhere to turn except the government, Americans would finally throw up their hands and acquiesce to government intervention. Seniors purportedly all love their Medicare, so why not expand the program to cover everyone?
It’s not that hard to believe Obamacare was a conspiracy, with asinine design features intended to cause the program to unravel. If I were designing a health proposal intended to fail it would be hard to find a better plan design for that purpose. All that’s keeping Obamacare afloat are huge subsidies for middle-class voters, huge subsidies for low-income enrollees and huge subsidies for insurance companies. Without huge subsidies, it would collapse like a house of cards in an adverse selection death spiral.
Medicaid expansion was another brick in the road towards Medicare (or Medicaid-for-All). Over the years I’ve derisively referred to expanding Medicare to cover the entire U.S. population as Medicaid-for-All. My point was that the program the elderly have come to rely on is not the same program we would have if it were expanded to cover the entire population. Various proposals, from Vermont, to Colorado and others, such as California have been derailed by cost projections that give taxpayers and voters pause. Nonetheless, there have been numerous others, with some type of initiative proposed in 21 states from 2010 t 2019:
Since the ACA was passed in 2010 through 2019, legislators in twenty-one states have proposed sixty-six unique single-payer bills. Although our research turned up over 100 bills that can be characterized as proposing a state-based single-payer plan, removal of duplicates (i.e., substantially similar bills introduced in different chambers in the same legislative session or bills assigned different numbers as they move through the legislative process) resulted in sixty-six bills. Although many bills explicitly stated that their purpose was to establish a single-payer health system, not all did.
As recently as this past May the Medicare for All Act of 2023 was introduced by Democrats and cosponsored by nearly one-fourth of Members of Congress. The Biden Administration apparently hasn’t gotten the message. It is currently propping the ACA up using expanded middle-class subsidies.
There are numerous reasons Medicare-for-All faces an uphill battle. Expanding Medicare would upset 57 million seniors, whose benefits would be worth far less if they have to compete with 270 million more people in the program. It would upsell most doctors because Medicare pays lower provider fees than private insurance – in some cases substantially lower. On average, Medicare only reimburses doctors $0.70 to $0.80 cents for every dollar that private insurers pays them. Hospitals too would oppose Medicare-for-All in its present form. There are examples where hospitals with monopoly power are charging private insurers 300%, 400% and sometime 500% of what Medicare reimburses them for some procedures. Doctors and hospitals would undoubtedly lobby for higher fees, which would negate any advantage of Medicare-for-All, without fixing the flaws, waste and cost-overruns.
Before people like Vermont Sen. Sanders or Washington Rep. Jayapal clamor for Medicare-for-All, perhaps they should work to fix the flaws inherent in Medicare by making Medicare more competitive. Reforms like making hospitals compete for business by including competitive bidding for some procedures, reference pricing, selective contracting, bundled payments, fraud control, refusing to pay for poor quality, etc. The list is endless. Currently Medicare is treated like an economic development entitlement for state and local health care organizations. Medicare doesn’t even have the authority to withhold payments to vendors who perpetuate fraud. Medicare is required to pay and chase fraudulent payments rather than block them. Apparently, most Medicare beneficiaries prefer private insurance rather than government-run insurance. Indeed, the sector of Medicare that is growing is Medicare Advantage, those private insurance companies that service Medicare beneficiaries. Medicare Advantage now covers half of Medicare beneficiaries.
“usher in Medicare for All”?
As I recall one of the writers of the bill said almost exactly that, at the time.
Thanks to Devon for a stimulating article. I will probably write more than one comment because there is a lot to unpack here.
Item #1 — I would not agree that the ACA is “unraveling.”
The legislation had two main parts — Medicaid expansion, and the guaranteed-issue exchanges.
The ACA designers knew that guaranteed-issue can cause an actuarial meltdown. To prevent this, they included an individual mandate and subsidies.
The mandate was eventually cancelled. The subsidies were capped originally because Obama wanted the entire bill to cost less than $1 trillion over 10 years.
Under Biden the caps have come off on the subsidies. My point is that this development is not an ‘unraveling.’ Subsidies are not a sign of failure unless one is a hard-core free marketeer. Also note that numerous fairly conservative nations use subsidies extensively–
Switzerland and Japan for example.
One more point for now:
The fact than single-payer cheerleaders are still promoting their program is not a sign that their program will happen. None of the single payer proposals has any real tax backing at all. The majority of Americans under age 65 are in employer plans, and there are no signs whatsoever that this huge group wants single payer.
I want to expand further on Devon’s apprehensions about Single Payer.
Let me take a step back.
If any form of insurance is voluntary, some people will not be covered. They may lack the money to buy coverage, they may not want coverage, or they may want coverage desperately but they are uninsurable.
This is true not just of health insurance, but also of life insurance, disability insurance, long-term care insurance, fire insurance, or auto insurance.
Before the Great Depression, the only ‘solution’ for the uninsured was private charity.
But the failure of charities in the early 1930’s was traumatic, and has led to a variety of safety-net public programs. Social Security has what amounts to life insurance for young families. Medicaid has what amounts to long-term care insurance. Some states have safety-net insurers to cover hurricane damage. Car insurers have safety-net coverage for bad drivers..
I go through this accounting to suggest to Devon that there will always be some pressure to help the uninsured in health care. Dr. Goodman had a column several years ago on why many Americans are concerned if their neighbor is uninsured.
The Affordable Care Act or something like it is inevitable, in my opinion. The failure to admit this is one reason why the Republicans could not repeal the ACA, even when they had the votes to do so.
Perhaps a system like Singapore, which requires residents to payroll deduct for health needs and requires a catastrophic plan. I think it’s called MediSave, MediShield and I think there may be a third type of optional coverage. The current system has too many flaws and the proponents of Medicare-for-All have yet to reform Medicare before expanding it to all.
“The Affordable Care Act or something like it is inevitable, in my opinion.”
I’ve said something similar for more than 25 years: If people want their medical care paid for without regard to “insurance” then that is what we will eventually have.
Only call it by its correct name. Not medical insurance. Medical welfare.
Those who oppose Medicaid-for-All may find it in their best interest to support incremental reforms to the ACA rather than repeat empty pledges to “repeal and replace.” That bus left years ago.
After Hillarycare was defeated in 1993, the GOP did little over the next 15 years but hold the door open for Obamacare. I hope they aren’t doing the same now.
One problem with Univeral programs is that people rarely are willing to pay taxes sufficient to fund the program. They may be more willing if the funding was going into their own account like Singapore MediSave accounts.