The 2020 health care debate has centered on two basic types of plans — (1) the Medicare for All Proposal championed by Senator Sanders and Senator Warren and (2) Modifications to the Affordable Care Act championed by Vice President Biden, Senator Klobuchar, and Mayor Buttigieg.
The two approaches differ starkly. Both plans have advantages and problems. Neither side of the debate has recognized potential problems with their plan or has proposed compromise. The only candidate that attempted to bridge the gap between the two camps is Senator Kamala Harris.
Warren has a much more detailed discussion of funding issues than Sanders but both candidates have a similar world view. I have not detected any major differences among the three centrist candidates. This lack of debate and innovation weakens the case for Buttigieg or Klobuchar replacing Biden in the centrist lane.
The contest between the two plans should narrow to two candidates. My shorthand attributes the Medicare for All approach to Warren and the Modification of the ACA approach to Biden, although, polling data suggests it is equally likely that the race will narrow to Sanders versus Buttigieg.
Senator Sanders, the first champion of Medicare for All has written a detailed bill. Senator Warren has a paper describing how she would finance her plan. The main features of Medicare for All include the following:
· Creation of a national single-payer health insurance plan,
· Automatic enrollment for life with no annual or lifetime cap,
· Prohibition of private plans from competing with the new national health insurance company,
· Elimination of all cost sharing with the exception of some cost sharing for pharmaceutical subject to a fairly low cap,
· Funding obtained from a tax applied to employers and other taxes,
· Expansion of benefits beyond the current Medicare program,
· Annual negotiation of drug prices,
The approach taken by Senator Warren and Senator Sanders is aspirational but appears unrealistic. The most controversial aspect and most unrealistic aspect of the Medicare for All is the elimination of all private insurance.
The main potential achievements and problems with Warren’s plan include:
· Warren approach with low or zero premiums and automatic enrollment would do a good job at reducing the number of uninsured and reducing financial costs for people with insurance. The Medicare for All provision contains low deductibles and low coinsurance rates for the entire population.
· Warren’s plan would lead to the total elimination of surprise medical bills caused by unintentional use of out-of-network providers because all providers would be in the same network. A Medicare for All proposal that allowed for a small private insurance sector would also substantially reduce surprise medical bills.
· Warren’s plan would eliminate the need for short term health care plans, which do not provide all essential health benefits.
· Warren’s plan would require substantial new tax revenue. Warren’s team does a reasonably good job in describing her approach to funding but her budget estimates like most estimates for such proposals are fairly optimistic.
· Warren’s plan would result in both politics and the budget process substantially impacting health care provider compensation, benefits, and timely access to specialists. The Warren approach would lead to lower compensation rates for health care providers, an increase in the percent of doctors not seeing new patients, and longer wait times to see specialists.
· Warren’s approach, if modified in the future, could lead to political restrictions on all insurance payments for abortion services.
Biden offers a description of his approach on his web site and Congressional Democrats have created a bill modifying the Affordable Care Act that is likely to be part of Vice President Biden’s initiative. Parts of this bill, summarized here, are likely to become part of Biden’s plan.
Biden’s plan outlined on the web site contains three major elements
· the addition of a public health insurance option on state exchanges,
· an expansion of the premium tax credit on state health care exchanges
· modifications to rules governing the affordable care act
Vice President Biden presents some ideas on how to help lower-income households obtain health insurance, however, many aspects of his proposal including the scope and cost of the public option are not clearly defined.
My main findings on the advantages and disadvantages of Biden’s plan include:
· Biden’s plan and the Congressional bill modifying the ACA are silent about a possible revision to IRS rules that would fix problems caused by repeal of the individual mandate. This is a very large oversight given recent litigation on this question is jeopardizing the legal status of the entire ACA.
· Biden’s plan does not include a precise discussion of whether he is repealing or proposing changes to the affordability rule determining whether taxpayers are eligible for the premium tax credit on state exchanges. A bill endorsed by Congressional Democrats will modify but not repeal the current affordability rule.
· Biden’s proposed expansion of the premium tax credit will cause some small firms to eliminate their offers of employer-based coverage. Many younger adults will end up paying substantially higher premiums because of this change. This issue is discussed in a recent Tax Notes paper — Potential Modifications to the Premium Tax Credit.
· Biden’s proposed ACA modifications will reduce cost sharing on some health plans sold on state exchanges by linking premium tax credits to a more expensive gold plan. However, under Biden’s plan households obtaining their health insurance through state exchanges would still have to tradeoff higher premiums versus higher cost sharing. Biden does not state whether he will eliminate short term health plans, which do not provide essential health benefits. His proposed changes may reduce demand for such health plans.
· Biden’s proposed modifications have no clear impact on cost sharing or premiums for employer-based health insurance. (Approximately 94 percent of the working age population and their dependents get health insurance through an employer.)
· Biden’s approach would not do anything about surprise medical bills. Congress has recently failed to fix this problem.
· Biden’s plan would not substantially expand the role of the annual budget process on health care decisions. Biden’s plan would not increase government control over private health insurance benefits or compensation to doctors and other health care providers or access to specialists for people insured by employer-based insurance.
· Biden’s plan would continue to insulate private health insurance from political decisions on abortion.
Two approaches to a potential compromise between the Warren and Biden approach are possible. The first approach involves the adoption of a health care plan proposed by Senator Kamala Harris, a plan worth reading. The second approach involves the combination of a more detailed and substantive plan to expand state health exchanges. In particular, the expanded ACA modification would, at a minimum, provide more details on the scope and cost of the public option and fix problems with the proposed expansion of the premium tax credit.
My paper on fixing health care will be available shortly. Readers who want some of my policy insights now can go to my book Defying Magnets: Centrist Policy in a Polarized World