Providing Health Insurance Coverage to All: The 4 Essential Questions and Answers

Providing Health Insurance Coverage to All: The 4 Essential Questions and Answers
Andrew Winnick

A fact filled lecture on the Medicare for All option

Introduction – Why are we considering a major change in the American Health Care System?
It is reasonable to begin by asking just why are so many Americans and all of the Democratic party’s candidates for president so focused on the need to dramatically reform or even remodel the American system for providing health insurance, and, in general, the system for paying for the delivery of health care. Indeed, why is there even a perceived need to consider reforming how health services are provided? The answer is quite straight forward. The current systems are just not working in a manner acceptable to most Americans.

It has been argued in one study (by Moving Forward based on government figures): As tens of thousands of American families face bankruptcy and financial ruin because of the outrageously high cost of health care, and while 30 percent of U.S. adults with private health insurance delay seeking medical care each year due to cost, the top 65 healthcare CEOs made $1.7 billion in compensation in 2017 (an average of $26 million per CEO), including $83.2 million for the CEO of United Health Group; $58.7 million for the CEO of Aetna and $43.9 million for the CEO of Cigna.

According to a study by the Kaiser Family Foundation, from 2008 to 2018 the annual deductibles paid by workers covered by private health policies (mostly provided through their employers) increased eight (8) times faster than their wages, with deductibles going up by 212% while wages (not adjusted for inflation) went up by only 26%.

Returning to the study by Moving Forward, it was cited that 45 percent of Americans are worried a major illness could leave them bankrupt, 1 out of 4 Americans skipped needed medical care because they could not afford it, and 77 percent are concerned rising health costs will cause significant and last damage to our economy. Moreover about one out of every five Americans cannot afford to fill the prescriptions given to them by their doctors because we pay, by far, the highest price in the world for prescription drugs. Meanwhile, last year pharmaceutical companies made over $50 billion in profits. A 2013 study showed that in 2010, the United States paid, on average, about double what was paid in the United Kingdom, Australia and Switzerland for prescription drugs. Since 2014, the cost of 60 drugs commonly taken has more than doubled, and 20 of them have at least quadrupled in price.
All of the Democratic Party’s candidates are quick to point out that individual Americans pay very much more per individual for their health care than do people in other industrialized countries. According to the Centers for Medicare and Medicaid Services, the U.S.(in 2018) spent more than $10,700 per capita on health care, while the U.K. spent $4,826, France $4,902, Germany $5,728. Moreover we spend almost 18% of our GDP, whereas the other developed counties spend less than half as much.
But what are we getting for all that money. It is sad to say but our health care outcomes are among the worst among the developed “western” nations. The rate of child mortality is the worst among the major industrialized nations. The rate of women dying during child birth is the highest, in fact higher than in some underdeveloped nations. Our life expectancy is 2.5 years shorter than, for example, Germany. Our five year survival rate after a stroke or heart attack is worse than in most other industrialized nations. So indeed, one does have to ask just what is it we are getting for all the money we are spending.
Moreover while the implementation of the ACA (Obamacare) reduced the number and rate of those without health insurance from 48.6 million (16.6%) in 2010 to 28.6 million (9.0%) in 2016, those were still unacceptably high figures. Then, under the Trump administration, those numbers got even worse again, increasing to 30.4 million (9.4%) in 2018. Moreover, we must not forget how many with insurance are in fact underinsured! Sanders has recently estimated that 87 million are either uninsured or underinsured.
So, the bottom line is that we pay too much for health care, only to receive inadequate services; and we fail to provide any health insurance at all to far too many. Is it any wonder that we hear widespread demands for reform.

Question #1
Can we afford to provide full coverage health insurance to all,
let alone improved coverage?

Answer: Yes, without a doubt we can afford to do this. First, keep in mind that the key point is that we can reallocate the trillions of dollars per year we already spend on private and public health insurance and on health care and, instead, guarantee full coverage health insurance and health care to all of our people. In fact, we can do so and save money despite the false and misleading comments made by some opponents, and even by some Democratic Party candidates for president.

Moreover, if needed, there are many places from which we can gain funds to supplement or replace those we are already spending, in order to reduce the terrible burden that health care currently imposes on poor and middle class American families. These include higher income taxes on the rich and corporations, a new tax on the wealth of the super-rich, and a new transaction tax (of maybe ten cents) on each of the trillions of shares traded on the stock markets monthly. We could also reallocate money now being spent on the military.

The point is that we have the resources to provide quality health insurance and health care to all of our people. In fact, we are the only industrialized country on earth which fails to do so. The issue is not whether we have the money, the issues is whether we have the political will to accomplish this goal. As one example of how this can be done we can examine the proposal made by Warren to fund the establishment of a Medicare for All single payer system. The Urban Institute estimates that her plan would involve shifting $34 trillion in health care expenses to the federal budget in the first decade. Warren’s plan to fund this includes the following:
 The cost of pharmaceuticals would be cut by about 70% by requiring the federal government to bargain with the drug companies to get drug prices down to the levels paid by other nations, a savings of $1.7 trillion over the first decade.
 Another $1.8 trillion would be saved in administrative overhead cost as compared to what is now spent by the private insurance firms and by doctors and hospitals having to deal with the current array of insurers.
 An additional $2.9 trillion in savings would come from reorganizing how hospitals and medical practitioners are paid.
 A massive $8.8 trillion would come from requiring large, but not small, businesses to pay a fee to the Medicare system equivalent to 98% of what they now pay to private insurers.
 Under the new Medicare system, the costs for Medicaid for the poor and disabled that are now borne by state and local governments would be paid by the federal government. Therefore those state and local funds would be required to be transferred to the Medicare system resulting in revenue of $6.1 trillion.

There would be, under Warren’s plan, no fees or new taxes imposed on the poor or middle classes. But a series of new taxes would be imposed upon large corporations and the rich, especially on very rich millionaires and billionaires. These would include among other items:
 Imposing new taxes on the capital gains received by people in the top 1% ($2 trillion)
 The wealth tax on billionaires would be increased from the 3% Warren already proposes to use for other new, non-medical programs to 6% ($1 trillion).
 A new tax on financial stock transactions would be initiated ($0.8 trillion).
 Increasing the corporate tax rates that were recently cut ($2.9 trillion)
 Eliminate a Pentagon “overseas contingency fund” often criticized as a slush fund ($0.8 trillion)
These shifted and new federal funds would more than replace the costs now borne by American families and small businesses.
Question #2
When we say health insurance coverage for ALL, just who do we mean is to be covered?

Answer: There are actually six different possible answers to this question. We will need to choose among them.
a. All American citizens
b. Plus All permanent legal residents (“Green Card” holders)
c. Plus All legal residents with work permits, even if temporary
d. Plus All legal residents, including spouses/children of those with work permits, but who do not themselves have the right to work
e. Plus All persons legally in the U.S. even if only temporarily, such as those awaiting judicial determination as to their right to reside in the U.S. and tourists
f. Plus All persons in the U.S. without legal permission to be here

We need to decide how far down this list we should go. Clearly, the safest choice from a public health perspective and the most humane is to include everyone who is in the U.S., as is done in many European nations. Indeed, we are now spending money providing health care to everyone since even those here illegally have the option to go to an emergency facility and get treated – even though that costs on average 10 times more than if they had insurance and went to a family doctor (about $3000 instead of $300 per visit). That is, it is quite possible that it might cost less to provide health insurance and care to everyone than our current system costs us. On the other hand, publicly guaranteeing that we will provide health insurance and health care to those visiting or living here legally or illegally, may attract more people to come, even though that is really already our policy. Now we just do it very inefficiently and more expensively via emergency rooms than could be done with a comprehensive insurance program that covers everyone.

Question #3
What medical services and medicines should be covered by a new plan?

Answer: This turns out to be a somewhat complicated issue. Currently, under the Affordable Care Act (ACA), also known as Obamacare, there are ten “Essential Health Benefits” that must be covered by all health insurance providers:
1. Ambulatory patient services (outpatient services), whether provided at individual doctor’s offices, clinics or hospitals
2. Emergency services
3. Hospitalization
4. Maternity and newborn care
5. Mental health and substance abuse services, including behavioral health treatments
6. Prescription drugs
7. Rehabilitative services - those that help patients acquire, maintain, or improve skills necessary for daily functioning, including physical therapy and needed medical devices
8. Laboratory services/tests, including blood tests, X-rays, MRIs, EKGs, EEGs, Sonograms, etc.
9. Preventive and wellness services and chronic disease management, including routine preventive tests or vaccines and maintenance care for such conditions as diabetes
10. Pediatric services, including dental and vision care (Note – Under the current terms of the ACA,
dental and vision care is only required to be covered for children.)

We have to decide whether all of these will continue to be required to be covered under any new plan. Some have advocated for “simple” or “slimmed down” plans that do not cover all of the above. Indeed, the Trump Administration has allowed the sale of such policy under the excuse of declaring them to be “temporary.” All of the Democratic candidates for president have opposed allowing the sale of such policies.
In addition, the ACA (Obamacare) requires that all health insurance policies:
 Must cover previous or existing medical conditions without extra charges
 Must charge men and women the same rates, that is, being female cannot be considered a medical condition that incurs higher rates
 Cannot impose annual or life-time financial caps or limits on payments
 As people get older all plans must accept limits on the increased rates that can be charged
 Must accept limits on the profit margins of private health insurance firms by requiring that a fixed percentage of all premiums paid to the insurance firms must be spent on the provisions of actual health services, or the excess must be returned to the person who paid the premium.
We will have to decide if these rules will continue to be required under any new plans.

Many of the proposals for guaranteed universal health insurance propose to add two new areas of coverage:
a. Vision, dental and hearing assistance care is covered for everyone, not just children, in all of the proposals by the Democratic Party candidates for president.
b. Long Term Care is likely to be covered, that is, Skilled Nursing care and Assisted Living care, will be covered, whether it is provided in separate facilities or in a patient’s home
Note – Long Term Care is not covered currently by the ACA or by Medicare, but it is covered, to some extent, in most states, but only to the poor under Medicaid. For non-poor couples, the spouses of those needing Long Term Care are required to impoverish themselves before coverage is granted, thus guaranteeing that the spouses will not be able to provide for themselves if they come to need it. So, the issue is whether Long Term Care will be covered under any new plan to all those needing it.

Question 4
What is the Difference between Medicare for All as a Single Payer System (MfA), and
Maintaining the ACA, but adding a Guaranteed Public Option (Medicare)

Answer: We currently hear both of these terms used, but they describe quite different systems. First of all, it is important to note what is NOT being talked about in any of these options. All of these proposals pertain only to the issue of how health insurance is provided. No one is proposing a government health system; that is, no one is suggesting that the hospitals, clinics or doctors be government owned or become government employees. And no one is proposing that people lose their ability to choose their own doctor or hospital to which to go. In fact, all of these plans, especially the first, call for far broader access to doctors than is now provided by private insurance firms. Hence describing any of these as socialist is misleading at best.

There are three (3) new systems being considered. These are:
1. Medicare for All as a Single Payer System (MfA for short): Under a pure single payer system all medical services would be billed to and paid for by a single government agency, such as Medicare or some new agency. No private health insurance policies would be allowed. If this government agency chooses not to pay for some treatment or medicine, then the patient must pay out of pocket for it (just as now happens under private insurance plans). However all of the proposals currently being made by various Democratic Party candidates for president envision providing the expanded list of services described above under Question #3. All of the current proposed MfA plans would eliminate all deductibles and co-pays, reliving families of these costs. Some would require no monthly premiums at all, others envision minimum premiums tied to a one’s level of income, much as in the current Medicare program. It is estimated that even the later system would save the average family about 14% of their income per year.

A separate handout describes in more detail the main provisions of the bill proposed by Sanders that has been endorsed by Warren. Booker, Yang and Gabbard have also supported the concept of MfA. Harris supports the concept of MfA, although she proposes to allow private Medicare Advantage type plans as well, which would leave some private insurance firms in operation.
The pure version of this option would eventually mean that about 150 million people, including many union members on whose behalf health insurance benefits were negotiated in past years, would need to move from their current private insurance plan to the new expanded government plan. This could be phased in over a few years (Sanders and Warren propose a four-year phase in), allowing for adjustments along the way. But ultimately people could not keep their old plans. At the same time, they would avoid all the high premiums, co-pays and deductibles they now must pay, and would have available a broader array of doctors. Another serious issue is that the phasing out of private health insurance would mean the loss of thousands of jobs. The Sanders bill calls for a multi-billion dollar five-year program to provide assistance to those displaced.

2. Retain the Affordable Care Act (ACA) system, but add a Guaranteed Public Option
This is sometimes referred to as the Medicare for All Who Want It system, or alternatively as the Public/Private Mixed Option system. It is also referred to as the Opt-In system, in that people join Medicare only if they want to. In this case, health insurance would continue to be provided by private insurance firms as it is now, but only to those who want and can afford such coverage with its co-pays and deductibles. However everyone would have the guaranteed option to choose instead to obtain health insurance from a government agency, such as Medicare. That is, all individuals and families would have the choice of public or private insurance as their primary form of coverage. This means that to the extent people choose to stay within the private system, a portion of the costs of profits and high overheads would continue to be incurred. It also means that all providers of health care would continue to need to maintain large clerical billing staffs, unless they refused to accept private insurance payments.

This option is supported by Biden, Buttigieg, Klobachar and Styer. Buttigieg initially supported MfA, but then changed his mind as he chose to project a “more moderate” image. Klobachar supports the idea of MfA as a long term goal, but argues that the modified ACA proposal will be quicker and easier to adopt in the short term, in part because it engages less resistance to the idea of being forced into the new system.

3. The Opt-Out system This is the MfA system, with the option to Opt-Out into the ACA system
One candidate, Castro, supports this Opt-Out system. Here everyone is automatically enrolled in the Medicare for All (MfA) system as in option #1 above, but they then have the option to “Opt-Out” and sign up for private insurance coverage under the terms of the ACA. If they choose to Opt-Out, they must then provide proof that they have committed to a privatefin ACA plan, so that we know that everyone is covered.

There are two other systems which so far no presidential candidate has proposed.
a. The MfA system, but with Optional Supplementary Private Coverage
This system would be the same as the MfA System in that everyone would be required to have their primary health insurance moved to the new single government agency, but at the same time everyone would have the option to also purchase a supplementary health insurance policy from a private firm. The private firms would be free to provide coverage for procedures, treatments or medicines not covered by the government agency. The rates that private firms may charge for this supplementary coverage may or may not be regulated.

b. There is also the possibility that (as is the case in some nations) only some people are given the option to opt-in to the public system; whereas, some (the rich?) could be required to get their own health insurance on the private market. Germany uses a variation of this approach. This clearly means that both the expanded Medicare and the privately based ACA systems would be maintained, with all the costs involved.

<>There are three other issues that need to be discussed:

1. How will the providers of health care be paid?
An important part of the Affordable Care Act (ACA) (Obamacare) involved new rules about the manner in which doctors, clinics and hospitals are paid, or reimbursed, for the medical services they provide. For example, under the ACA payment is made based upon the nature of the treatment, not the amount of time spent, and hospitals are penalized for “readmissions” for the same or related medical problems. There are currently a series of different proposals for how the providers of health care will be paid under different plans for Medicare for All or even the expanded ACA system. Hospitals are particularly concerned about how they will be paid for different types and levels of service. The Sanders and Warren plans call for hospitals to be paid at 110% of the current Medicare rates, which are substantially less than what they have negotiated with various private insurance firms. It should be noted that if medical education were provided at government expense (as is done in many countries), then individual providers would not incur the educational debts that have to be repaid, and they could afford to earn less.

It is widely recognized that the U.S. pays far more for the provision of most medical services than is paid in other nations, even in other highly industrialized nations with high standards of living. Therefore it is not surprising that the advocates of either the Medicare for All or the reformed ACA systems are exploring ways to reduce these expenses, while sustaining high levels of medical care.

2. How will we expand medical care facilities to ensure availability to everyone?
We know that we have many poorer urban areas and many rural and small town areas where the availability of medical care is quite inadequate today. If we implement health insurance coverage for everyone, the demand for health care, especially for primary care, will increase further as people rely less on emergency facilities. So we are going to need to place multipurpose clinics in poorer urban area and in our small towns and rural areas, and train many more doctors, nurses and medical technicians, especially to provide primary care.

3. How much leeway will individual states be given in determining any of the above?
Under the original Affordable Care Act (ACA) / Obamacare, there were some provisions for variation by state or region. Under the ACA, the rates at which providers of medical care are paid differ from region to region depending on the average costs of care in different areas. But even these regionally-based rates are set by the Federal Government, not the state governments.

In the original ACA, there were also some variations among the states as to how they would expand their coverage of Medicaid, which provides health insurance for the poor and/or disabled. These programs, which are jointly paid for and administered by the states and the Federal Government, were to be expanded in that the definition of who was eligible was to be increased to cover adults earning up to 138% of the poverty level in that state. Previously most Medicaid coverage was limited to the disabled and to families with children below the poverty level. However, some states, including California, obtained waivers that allowed a broader definition of eligibility. The Federal Government paid about 80% of the cost, but the states administered the program, in compliance with federal rules. Under the AC, the Federal Government committed to pay 100% of the costs of providing the expanded Medicaid coverage for 3 years, and then pay 90%. Initially states that failed to expand their Medicaid coverage would be penalized. But the Supreme Court ruled that penalty violated the States’ Rights provisions of the Constitution, and so this expansion of Medicaid became voluntary. As of 2019, all but 14 States have either expanded Medicaid, or have passed legislation to do so. But, the Supreme Court also ruled that the states had the option of imposing certain rules of eligibility for Medicaid, including so-called “work requirements” and these have gone into effect in some states.

It remains to be seen what variations among the states will be allowed if the Federal Government passes either some version of Medicare for All or an expanded ACA with a pubic option plan, especially since the MfA program is envisioned to replace the current Medicaid programs.