Kamala Harris Health Care Plan Exposes the Lie to ‘Single Payer’ Medicare

This morning, Sen. Kamala Harris’s presidential campaign released outlines of her health care plan. She calls it Medicare for All, although far Left and single-payer purists are sure to raise a commotion over the name. But if we are being honest, her plan is actually much more deserving of that title than that of Bernie Sanders, for example. Kamala Harris’ plan is also politically smart, if disappointing for the purity crowd.

First, the elements of her plan:

  1. Harris’s plan would essentially expand today’s Medicare, with some enhancements, to everyone without an employer plan. Just like today’s Medicare, Harris’s plan offers people a choice between government-administered, fee-for-service (FFS) Medicare and Medicare plans from private insurance companies, commonly known as Medicare Advantage. Medicare Advantage plans presently cover a third of Medicare beneficiaries.

  2. Under Harris’s plan, employer-sponsored private plans will continue to be available, as long as those plans meet certain standards (... sounds like the concept of minimum standards plans have to meet under Obamacare) to be certified as ‘Medicare’ plans.

  3. There would be a 4% surtax to fund Harris’s plan, imposed only on household incomes over $100,000, which would be adjusted up for areas with a high cost of living.

  4. Lastly, Harris gives herself an ‘out.’ She’d subject the new system to benchmarks in order to make the transition, which would have an initial timeline of 10 years, easing up on an ideological do-or-die mindset.

The biggest change the Harris plan makes from the current system is to set public (FFS) Medicare as the default for most people - including the uninsured and newborns and allows people to opt to choose a different, private plan if they wish. She would also expand coverage, eliminate copays and deductibles after the 10-year transition period, and shore up the standards under which Medicare Advantage private plans operate. Her plan would hit the note on several consensus issues, such as addressing prescription drug prices, allowing re-importation, etc. Harris’s plan is, for all practical intents and purposes, an expanded version of Obamacare structured in a way to be able to lay claim to the name ‘Medicare for All.’

Medicare in the United States has never been a ‘single payer’ plan. From the onset, Medicare has put a share of the cost on the beneficiaries in the form of premiums and copays, creating at least a dual-payer system (government and beneficiary). Since the 1970s, Medicare has had some form of private coverage option as well. Today, 22 million people are covered by private Medicare Advantage plans. While Sanders and the backers of a single-payer government-only health care system are already trashing Harris’s plan as not being a ‘real’ Medicare for All plan, in truth, it is Sanders and the ideological backers of a single-payer system who co-opted the term ‘Medicare’ because it works better as a soundbite and hides how truly drastic a departure their vision is from actual Medicare.

But let’s also be clear-eyed about what the Harris plan does not offer. While Medicare (both government and Advantage) is much better at controlling health care costs than their private-market counterparts, the cost of providing actual care is not something directly addressed by the Harris plan. Medicare also controls the costs by dictating reimbursement rates. Simply sticking everyone in the Medicare system may not be as lucrative a solution as many, including Harris seem to believe.

Harris and others have argued that since 91% of providers already accept Medicare, people would continue to receive all the care options they currently have and have access to the doctors they currently see.

That may not hold up.

A CBO report in 2017 found that the reimbursement rates provided by commercial private health insurance to health care providers are vastly higher than the rates fee-for-service Medicare pays, while the rates paid by Medicare Advantage plans are about on-par with FFS Medicare rates. In-network median prices for health care services are, on average, up to 50% higher for commercial payers, while out-of-network services for commercial payers can be over 500% higher, depending on the service. On average, the CBO says, when all services are factored in, commercial insurance pays about 30% more overall than Medicare.

There is also data, albeit from parties interested in preserving the higher payment model from commercial insurance such as the American Hospital Association and the like, that shows Medicare and Medicaid reimbursements actually fell about $77 billion below the cost of providing services to beneficiaries. This data has two possible conclusions, neither one favorable to the proponents of Medicare for All.

First, the data is valid, and it means that it is necessary for hospitals and other providers to make up the loss they incur from Medicare and Medicaid through higher rates for private commercial payers. If the data is valid, the higher payments from the commercial insurers - and therefore the commercial insurance plans themselves - are necessary simply to operate the system without creating a crisis of access. The only alternative in this scenario is to increase what Medicare pays, raising costs substantially.

The remaining conclusion is that hospitals and providers are inflating the actual cost of doing business and trying to protect their profit margins. But about 70% of privately operated hospitals in the US are nonprofit, which would mean that what hospitals are really trying to protect are fat overpayments to the people who provide the services, i.e. doctors, nurses, and other professionals. So, who’s up for telling doctors and nurses with hundreds of thousands of dollars of student loan debt that their pay is about to get cut by at least 30%, and for certain services and specialties, a whole lot more? I didn’t see that plan in Harris’s outline.

Another possible pitfall of the Harris plan is how it integrates today’s Medicaid with her Medicare for All plan. As president, Kamala Harris would require states continue to make their share of Medicaid payments as if under current law, even as current Medicaid beneficiaries are eventually absorbed into Medicare.

Sounds simple enough, but the Supreme Court has already set a precedence by invalidating a provision in the Affordable Care Act that could have forced states to expand their Medicaid programs, even with all of the additional expenses essentially covered by the federal government. The Court made the expansion optional and as a result, 2.5 million people who could otherwise be covered are left out of medical coverage because their states’ Republican rulers refuse to expand Medicaid. Right-wing states could raise a very similar argument about having to contribute to the cost of health care in a system they don’t get to make the rules. It is more than likely that the courts would be receptive to that line of argument.

To be clear, Harris’s plan is the most sensible and serious attempt yet, among all the ‘Medicare for All’ variations, to strike a balance between a system broken by Republicans that leaves far too many people without care and a burning agitation within some in the Leftist base to nationalize health care immediately. Harris’s plan would include benchmarks to test her assumptions and to adjust the plan rather than a wholesale uproot of the current system. It is a more gradual plan that preserves options and choices.

Nonetheless, essentially all of her reforms can also be easily offered by making Medicare an option for individuals and businesses to buy into within the current system, shoring up Obamacare’s insurance regulations, and using the money Republican states are giving up by not expanding Medicaid to cover those they leave uninsured by Medicare instead. Her plan, at least to me, appears more about structuring to be able to claim the nomenclature of ‘Medicare for All’, which is probably a savvy political move but not a radical, substantive departure from a strong public option.

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