This week’s second round of debates among Democratic presidential hopefuls is producing a (mostly healthy) conversation about health insurance. But for normal people, much of the argument is enormously confusing. What are these candidates talking about? And how are their plans different from today’s Medicare and from one another?
One way to make this debate more comprehensible is to drop the label Medicare for All (MFA). I get why Sen. Bernie Sanders (I-VT) and others like it: Medicare is a hugely popular program and promising to include every American has real political appeal, at least among Democrats.
But what Sanders is proposing is not Medicare for all. It is far more generous—and more expensive. It would be funded much differently. And its relationship with private insurance would be nothing like today’s Medicare. Sanders would, in fact, replace the current Medicare program.
Sanders—and some others—are proposing a universal public health insurance program, which is not the same as Medicare for All. OK, so UPIP may not trip off the tongue. But it is a more accurate description of what Sanders is selling.
It would also be much less confusing for those who are receiving actual Medicare, or are about to enroll. Making Medicare choices is already teeth-grindingly complicated. Throwing an entirely new insurance program into the mix only adds to the stress.
Finally, dropping the Medicare for All moniker will prevent all those other Democrats, whose plans are vastly different from the Full Bernie, from promoting their ideas as MFA. For instance, this week Sen Kamala Harris (D-CA) proposed what she calls “My Plan for Medicare for All” which isn’t Medicare for all at all.
Here are five ways the Sanders plan is different from Medicare:
It promises far more generous benefits: It would cover not only all medical treatment but a wide range of other services not provided by traditional Medicare. They include dental and vision care, hearing aids, reproductive services, early childhood care, and home and community-based long-term care (it would not cover long-stay nursing home care). It may also cover some experimental drugs and other treatments.
It would require almost no cost-sharing by consumers: Medicare incudes a wide-range of out-of-pocket costs, including deductibles, coinsurance, and co-pays. Today, enrollees can lower those costs only by buying additional insurance. Sanders would require no out-of-pocket payments from participants, except up to $200 annually for prescription drugs.
It effectively would eliminate private health insurance. Sanders would allow doctors and other providers to take private insurance, but only if they do not participate in MFA. And it would allow some supplemental insurance—but only for uncovered services such as nursing home care or cosmetic surgery. In effect, it would end private health insurance for the vast majority of Americans.
Today’s Medicare is far different. Indeed, private insurance is deeply woven into the fabric of the government program.
Of today’s 60 million Medicare enrollees, about 22 million–or one-third– are covered by Medicare Advantage plans offered by private insurers. Of the remaining 38 million, 25 million are enrolled in Part D drug insurance offered by private insurance companies. About 9.5 million have purchased Medicare Supplement (Medigap) insurance from private carriers, and another 9.6 million have retiree health coverage from their jobs or unions—also run by private insurers.
Sanders also would roll Medicaid into MFA. But today, about two-thirds of those on Medicaid get their coverage through private managed care plans. The Kaiser Family Foundation has an excellent short report on MFA and private insurance here.
It would be vastly more expensive. My Urban Institute colleagues estimated that the 2016 version of the Sanders plan would increase federal health spending by $32 trillion over the next decade. Of course, consumers would no longer have to pay for private insurance.
It would be financed differently. At its core, the Sanders plan is about financing, not health care. It would replace today’s mixed payment system that combines taxes, insurance premiums, and out-of-pocket costs with one funded nearly entirely by taxes.
Today, Medicare Part A hospital insurance is financed with a payroll tax plus some participant cost-sharing. Part B outpatient services and Part D drug coverage are funded through a combination of enrollee premiums, patient cost-sharing, and general tax revenues. In effect, nearly every worker, business, and retiree pays for a share of Medicare.
Sanders has not said exactly how he would pay for his plan. However, he has put out a description of funding options.
They include multiple tax hikes on high income households, the wealthy, and estates as well as new taxes on corporations, financial firms, and financial transactions. He’d also raise payroll taxes on employers and impose a new 4 percent income-based tax on individuals. While Sanders calls that a premium, it is quite different from today’s Medicare premiums.
The Sanders plan will be an important part of the coming presidential campaign. You can call it many things–from ambitious to unrealistic. But please don’t call it Medicare.