Politicians can be amazingly adept at blowing smoke, especially while electioneering. With the 2020 presidential race unfolding, there is no better example of the phenomenon than the Democrats’ mantra of “Medicare for All.”
Healthcare is certainly top-of-mind for many seniors, who are projected to make up nearly a quarter of the electorate in 2020, the largest fraction since 1970. If the implications of Medicare for All were understood by the 50 million or so and increasing numbers of seniors in the United States, the promises of the Democrat presidential hopefuls could precipitate a Red Wave in the 2020 election.
According to the Kaiser Family Foundation, in 2017 (the most recent validated data), of the 317 million Americans, approximately 43 million are now on Medicare or Medicare Advantage and 75 million rely on Medicaid. Of the remaining 209 million, 9 million are in Affordable Care Act (ACA) plans, and 28 million are uninsured.
Of the uninsured, 5 million opted out of employer plans, 12 million declined government assistance, and nearly 6 million are illegal immigrants. Democrats seemingly are focused on these various minorities. The rest of the population is covered privately or by other government entities (e.g. the Veterans Administration). An important fact, well known to politicians and their pollsters, is that Medicare recipients are more likely to vote than other groups.
Putting aside the consequences for the economy (a downturn) and taxation (much higher or new taxes), there are many reasons seniors have reason to fear almost any version of Medicare for All:
If you like your doctor or provider, you may not be able to keep him.
Many healthcare providers accept Medicare patients in spite of the relatively low reimbursement rates—38-40 percent below what they get paid for treating private patients—because private insurance patients’ higher reimbursement offers them a financial cushion. Primary care physicians (PCPs), in particular, understand this balance. Millions of new participants jumping into the pool would encourage providers to stop seeing Medicare patients. A severe provider shortage already plagues Medicaid, the federal-state program for low-income Americans, which has even lower reimbursement rates.
Moreover, if overall reimbursement to providers—that is, their income—shrinks, many will retire, go out of business, cease accepting insurance (go “concierge”), or retreat to less stressful, salaried positions. Fewer bright young people will want to become medical professionals. An already worrisome doctor shortage could grow far worse, as is the case in Canada, which has a single-payer system where private coverage is prohibited for anything considered “medically necessary.”
Kiss Medicare Advantage goodbye.
Most of the Democratic plans eliminate Medicare Advantage, a system now enjoyed by some 40 percent of Medicare recipients. (Senator Kamala Harris (D-Calif.), who is seeking the Democratic nomination, says her plan would retain the Medicare Advantage program.) Somehow, in spite of the profit-taking by the private insurance industry so despised by multiple candidates, it manages to offer plans that attract a substantial number of seniors by offering extra benefits. The government reimbursement to these plans is risk-adjusted, which if eliminated would kill Medicare Advantage even without an explicit ban. Expect this subterfuge to be the preferred method of destruction.
Supplemental Medicare Coverage options will diminish or disappear.
These plans offer out-of-pocket caps and relief from deductibles and co-pays. Approximately 80 percent of Medicare recipients have such a plan. This is an enormous source of comfort for seniors, because a fixed budgetary item for them can drastically reduce financial uncertainty. Most of the Democratic plans would eliminate these in favor of a single government option (Senators Sanders and Warren would eliminate the existing Medicare program and dump seniors into a new “universal” plan.) Practically speaking, there may be no escape from the new Medicare deductibles and co-pays, unlike with current supplemental coverage.
If you like your employer-provided plan, you are out of luck.
All the Democrats’ plans would eliminate employer-based coverage for 180 million people over some time frame, in spite of the fact that 86 percent of workers rate their employer-provided coverage positively. Especially with a strong job market, employers must compete for workers, in order to avoid the cost of turnover. Although there are co-pays and deductibles, there are only rare cases of employer-covered families bankrupted by medical costs. In contrast to the way it is for many people on Medicare or Medicaid, the income associated with employment can cushion the impact of the medical costs borne by workers.
Although this system has significant portability concerns that may lock people into employers, that can be addressed without resorting to dumping everybody into a single-payer system—for example, by providing some form of transitional coverage or subsidies for COBRA (post-employment continuation of coverage).
The big question, of course, is how many employers would simply dump all workers into Medicare for All to avoid the high costs, the hassles of administration, and the risk for those companies that self-insure under the Employment Retirement Income Security Act (ERISA). This could become a stampede, to the detriment of many current Medicare beneficiaries who are retired but have coverage through their former employer, as competition for limited resources heats up.
Dealing with Medicaid will affect seniors.
On the one hand, if all Medicaid recipients are moved to Medicare for All, either the taxpayer-borne costs will skyrocket or reimbursements will fall significantly. If private insurance were banned and reimbursements lowered, more and more providers might abandon the insurance system altogether and accept only direct payment from patients. And should private insurance be retained, it is not inconceivable that the top providers will opt out of all public insurance, leaving many seniors without good options.
On the other hand, if Medicaid continues in its current form, how will politicians justify keeping the poor less well insured or ensure their access to doctors, inasmuch as reimbursement rates would be even lower than they receive under Medicare now? (One result would be even greater overuse of emergency rooms.)
All evidence suggests that rationing and waiting lines will emerge.
In virtually every single-payer system, the primary mechanism to control costs is rationing, which often means waiting for services. It may also mean the complete unavailability of some drugs and other interventions that are deemed not to be cost-effective. That is why many Canadians and Brits who can afford it come to the United States for certain procedures and medications. Only in countries with relatively small and homogenous populations (e.g. Australia and Norway) are these problems kept to a tolerable level. In Sweden, where the alien population is larger, waiting is becoming more common.
No candidate has realistically analyzed the economic impact on seniors.
Although it is true that new or increased taxes will be offset to some degree by eliminating other premium costs, the after-tax impacts on any given group are hard to predict. How employers will compensate for relief from the healthcare burden is unknowable at this point. And when all the other possible costs, including deductibles, copays, premiums, optional coverages, etc. are reshuffled under a new system, the effects on seniors are uncertain and disconcerting.
The bottom line is that seniors have much to lose and little to gain with Medicare For All or a stepping-stone approach such as the public option. They have paid into the existing system over their entire working lives, and they will balk at having to subsidize benefits for others if it jeopardizes their own care or sense of security.
Once educated, seniors should, in political terms, glow bright red, and vote that way as well. As Molly Roberts pointed out in a recent Washington Post op-ed, younger voters are not going to do any favors for seniors, on healthcare or anything else. She cites their popular, derisive term “OK, boomer” as indicting “not an argument and not an individual but an entire generation, or an entire generation’s attitude—and it does it with two words dripping with dismissal.”
Seniors and Republican politicians, take notice.
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Author: Andrew I. Fillat and Henry I. Miller
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