‘Medicare for All’ Isn’t Medicare

Democrats mislead voters by appropriating the name of a popular program they actually seek to abolish

By Robert C. Pozen. He is a senior lecturer at MIT Sloan School of Management. Excerpts:

"Medicare for All differs from Medicare in fundamental ways—with much broader coverage, no cost sharing, and fewer choices of health-care plans. While America needs a debate about health care, it should be based on an accurate description of the alternatives.

"Medicare for All would cover a panoply of dental, vision and mental-health services not covered by Medicare. Under the latest version of the House bill, the federal government would also pay for all long-term nursing and home care—estimated by the Urban Institute to cost roughly $3 trillion over the next decade.

The program would replace Medicare, Medicaid and the Children’s Health Insurance Program, as well as all employer-sponsored insurance and direct individual insurance (including the ObamaCare exchanges). It would cover not only uninsured American citizens but every U.S. resident—potentially including illegal as well as legal immigrants.

Despite this substantial expansion of coverage, Medicare for All would not require beneficiaries to contribute premiums, deductibles or copayments. By contrast, most parts of Medicare require some form of cost sharing by patients. Medicare Part B, for outpatient medical expenses, has a standard premium of $1,626 a year with an annual deductible of $185, plus a 20% copayment, according to the official Medicare website.

Because of the broad coverage of services and patients without cost sharing, Medicare for All would entail dramatically higher federal spending on health care than Medicare and other programs. There have been several estimates of the incremental cost over 10 years of Mr. Sanders’s 2016 proposal, which did not include long-term care—$27.3 trillion by the Center for Health and Economy, $28 trillion to $32 trillion by former Social Security and Medicare trustee Charles Blahous, and $24.7 trillion by Emory Professor Kenneth Thorpe. The Urban Institute estimate, which included long-term care, was $32 trillion over 10 years.

Proponents counter that the proposal would reduce federal health-care spending in three main ways—lower drug prices through government negotiations, lower reimbursement rates for medical services, and lower administrative costs by eliminating insurance companies. They also argue the proposal would increase federal tax revenue by repealing the deduction for employer-provided insurance. But these four factors are already built into the previous estimates. However you cut it, Medicare for All would inevitably lead to massive tax increases."

"Medicare for All would also replace Medicare’s current method of paying fees for services to every hospital, nursing home and other institutional provider. Instead, a new federal board would set an annual budget for each provider, which would receive one lump sum for current operations and another for capital expenditures. That board would be expressly forbidden by current Medicare for All bills from using quality metrics—which would be necessary to prevent providers from skimping on quality with lump-sum payments.

All this would force a radical change in the current business models of most hospitals and other Medicare providers. Although they would generally have discretion over how to spend their lump-sum payments, they could not use them to make “profit or net revenues.” Yet each provider would bear the risk if these payments were insufficient to cover actual costs. Many hospitals would limit the volume or scope of their services until they were sure they would break even for the year.

Finally, Medicare for All would eliminate the plan choices Medicare now allows. Elderly Americans don’t have to get outpatient or drug coverage from the government. Some opt to stay with their employer plans and others choose private providers through Medicare Advantage. Medicare for All would prohibit any insurer or employer from privately offering any services covered by this legislation—which means essentially all medical services."