It’s like a public option on steroids.
One by one, Democrats are moving on from the Affordable Care Act. And increasingly, they’re embracing a full transition to a single payer system as an answer. Bernie Sanders has been touting a Medicare-for-all plan for decades, of course, and gave the issue new prominence in last year’s presidential primaries. But he’s gaining company. But the most ambitious single-payer plans are probably dead in the water. The California bill, like Sanders’ campaign plan, calls for that outstrip those offered by most real-world countries with universal health care. California’s bill would have the state pay for all long-term care, nursing homes, dental, and vision, none of which the single-payer system in, say, Canada typically pays for (it doesn’t even pay for or) . That adds up. California’s plan would cost, according to an analysis by the State Senate Appropriations Committee, half of which would have be funded with huge increases in broad-based taxes. The committee estimated that paying for the plan with a payroll tax would require a rate of 15 percent. Much of that tax would be replacing current spending on health insurance premiums, but voters don’t appear willing to accept a tax hike that large all the same. In 2016, Colorado went for Hillary Clinton by five points, but by 79 percent to 21; the plan would’ve been paid for by a 10 percent tax on both payroll and other income., and can be thought of as a more aggressive version of the that passed the Nevada legislature this year If Democrats want to get to universal coverage, and ultimately to single-payer, this, not a big-bang approach like the California bill, is the way to do it. And there’s no reason Democratic-dominated states like California, Connecticut, Maryland, or Oregon couldn’t get started right now. You can think of the as a public option on steroids. It would create a new single-payer program called AmeriCare that would take on everyone ensured by Medicaid and SCHIP, and would automatically enroll all children at birth. It would pay the same rates to providers as Medicare, meaning it’d be considerably less generous to doctors and hospitals than private insurers. AmeriCare involves cost sharing very similar to what you’d find in a private plan, but more affordable. There are deductibles ($350 for individuals, $500 for families) , co-insurance (20 percent of spending above the deductible) , an out-of-pocket spending cap ($2,500 for individuals, $4,000 for families) , and premiums. However, cost sharing would be sharply limited for low-income families. Individuals and families living on less than twice the poverty line ($48,500 for a family of four in 2015) wouldn’t have to pay premiums, deductibles, or co-insurance, and there would be premium subsidies and lower deductibles for people between two and three times the poverty line. Here’s the kicker: Employers could buy into the plan. They’d have to pay 80 percent of the premium, leaving 20 percent to employees, but it’d be an alternative every company got to their existing private plan. The nonprofit Commonwealth Fund hired the Lewin Group, a widely respected health care policy research group, to look at the AmeriCare proposal and other congressional plans in and. The Lewin Group concluded both times that the vast majority of employers would switch their plans to the new government program. In the latter analysis, they found that over time as employers adjusted to the new reality, 85 percent of Americans would ultimately be insured in AmeriCare, 10 percent in Medicare, 3 percent would be eligible for multiple government programs, 2 percent would be in the military’s Tricare system, and a mere 1 percent would still have private insurance. AmeriCare doesn’t eliminate the private insurance system, but it does make it small enough to drown in a bathtub. But here’s the thing: Lewin finds that AmeriCare would take over because they assume that almost every employer would it over private insurance, because it’d be so much cheaper. « The combination of lower administrative costs and lower provider payment rates under Medicare makes Medicare coverage very attractive to employers, » in 2007, using « Medicare » to refer to the new AmeriCare program. « When given the choice, most employers would purchase coverage for employees through Medicare. » The Lewin Group produced two cost estimates for AmeriCare, finding it would cost the federal government an additional $188.5 billion per year in 2010 and an additional $154.5 billion per year in 2007. Health care costs have grown since then; if you assume that the cost of AmeriCare would grow at the same rate that from 2010 to 2017, you get a number more like $260 billion a year. That would require nontrivial tax increases, but nothing like the huge hikes that a traditional single-payer plan would require; you could by a few points (maybe exempting poverty wages) and easily cover it. Moreover, these estimates predate Obamacare, which further cut Medicare provider payments, expanded Medicaid in a way similar to AmeriCare’s no-cost-sharing option for the poor, and added a bevy of new taxes. Once those are taken into account, the cost becomes even lower. What’s more, AmeriCare gains all the normal benefits from single-payer: cheaper administration, bargaining power over prescription drugs, and lower payment rates to providers. In total, it would’ve reduced health spending by $58 billion in 2010 per the Lewin Group’s analysis. You’d have to restructure AmeriCare considerably to fit a post-Obamacare world. It would probably take the form of a subsidized public option offered on health insurance exchanges, combined with legislation opening up the exchanges to all employers (not just those with 50 employees or fewer) , auto-enrolling newborn children, and so obstructionist states can’t deny their residents coverage by rejecting federal funds. But this restructuring just makes the Americare approach more viable. It builds on, rather than replaces, the existing health care system in a way that pushes it inexorably toward single-payer. AmeriCare isn’t an easy plan to get through Congress. It would face fervent opposition from doctors who fear lower payment rates, from a health insurance industry that knows AmeriCare will shrink its role dramatically, and from a pharmaceutical industry that doesn’t want the federal government to negotiate drug prices.
