“Giving Americans What They Want”

by Ed Dolan – Oct 16, 2019 (NiskanenCenter.org, abridged)

The Democratic Party is at risk of falling into a trap on health care — a trap called “Medicare for All.” But at the Democrats’ October 15 debate for presidential candidates, Pete Buttigieg offered a plan that could allow a timely escape.

Buttigieg began by characterizing his plan, Medicare for All Who Want It (M4AWW), as one that “trusts you to make the right decision for your health care and for your family. Unlike the purist form of Medicare for All promoted by Elizabeth Warren and Bernie Sanders, Buttigieg maintained that his plan could be “delivered without an increase on the middle-class taxes.”

The key to making this work will be to implement M4AWW in a way that is biased neither toward the public nor the private option. Many observers see the coexistence of traditional Medicare with Medicare Advantage as a model. Over the past ten years, the share of Medicare beneficiaries who have opted for Medicare Advantage has increased steadily, from 23 percent to 34 percent. Although originally a Republican idea, over time it has grown in popularity among Democrats. Medicare Advantage is not perfect, but commonsense reforms with bipartisan appeal could improve it. Presumably, lessons learned from Medicare Advantage would be applied during the process of turning M4AWW from a campaign position into actual legislation.

Under M4AWW, Medicaid would remain the principal source of coverage for people with low incomes. Two changes would broaden Medicaid coverage. First, people who do not currently have coverage and who live in states that have not expanded Medicaid under the Affordable Care Act (ACA) would be automatically enrolled. Second, states would no longer be allowed to impose work requirements.

For people above the Medicaid cutoff but below Medicare age, M4AWW would use the same basic tools to ensure affordability as does the ACA. Under M4AWW, premium supports would be structured so that no one would have to pay more than 8.5 percent of their income, while people with the lowest incomes would pay no premiums. At the same time, the plan would restore and expand the ACA’s system of cost-sharing reductions in order to ease the burden of deductibles and other out-of-pocket expenses for low-and middle-income beneficiaries. Affordability would be further enhanced by basing the public option on “gold” rather than “silver” ACA coverage.

The combination of premium subsidies, cost-sharing reductions, and Medicare reform would mean that low-income beneficiaries would have their health care costs covered in full, while those who could afford to do so would make reasonable contributions to the cost of their own care. In that regard, M4AWW closely resembles an approach to reform known as universal catastrophic coverage (UCC). It also resembles another UCC-like plan, the Medicare for America bill drafted by Democratic Reps. Rosa DeLauro of Connecticut and Jan Schakowsky of Illinois, and endorsed by presidential candidate Beto O’Rourke. In the committee rooms of Capitol Hill, it ought to be possible to reconcile the two proposals.

Under M4AWW, people who are offered coverage by their employer but don’t sign up because it’s too expensive will be able to enroll in the public option and receive the income-based subsidies that would help guarantee affordability. That would be an improvement over current rules, under which employees who are offered coverage but reject it in order to seek coverage on the ACA exchanges usually do not qualify for income-based premium subsidies and cost-sharing. Furthermore, M4AWW would essentially end job lock. The public option would provide a reliable backup for workers who changed jobs or move to self-employment.

M4AWW would be especially beneficial for low-wage employees. The latest data from the Kaiser Family Foundation show that the average premium for employer-sponsored family coverage now exceeds $20,000 per worker, with the employee paying an average of $6,015 of that. Since M4AWW includes a premium cap of 8.5 percent of income, it would offer a better deal to any family with income of less than $70,000 per year. That is well above the median annual wage of $47,000.

What’s more, Buttigieg is right when he says that his plan is “what most Americans want.” The latest polling by the Kaiser Family Foundation finds that a slim majority of voters, when asked directly, say they favor Medicare for All, but it also finds that they lose their enthusiasm when they are provided details of Sanders’ version of that plan.

Tellingly, 55 percent of all voters, including 66 percent of those who say they favor Medicare for All, think, wrongly, that Sanders’ plan would let them keep their current insurance. If they are asked their opinion of a plan that would eliminate private insurance companies, 58 percent oppose. Fully 60 percent oppose Medicare for All if they are told it would replace the current versions of traditional Medicare and Medicare Advantage. In short, if we believe the polls, Medicare for All is a political dead end.

Pete Buttigieg seems to get this. He understands that 89 percent of voters say it is very important to cover all Americans, compared with just 38 percent who think it is very important to eliminate private insurance companies. Whether or not he ends up with the Democratic nomination, his approach to reform should not die with his candidacy. Whoever prevails in the primaries, and whatever they call their health care plan, they should offer something in the general election that more closely resembles Medicare For All Who Want It rather than Sanders-Warren-style Medicare for All.

[read in full at NiskanenCenter.org]

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