Would Medicare for All Save the U.S. Money?

Would Medicare for All Save the U.S. Money?

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Tuesday, November 26, 2019

Would Medicare for All Save the U.S. Money?

Politico’s policy magazine, The Agenda, on Monday rolled out a special issue focused on Medicare for All, with much of the package centered on a key question: Would switching to a single-payer system really save money?

In one piece, Politico invited an “all-star team” of six policy wonks from across the ideological spectrum to debate the issue, and the responses were predictably divergent.

Yes, Medicare for All is the best way to cut health-care costs: “A single-payer system may be the only plausible way to get a grip on our health care costs without harming patients,” said Don Berwick, who was the administrator of the Centers for Medicare and Medicaid Services under President Obama and has advised Elizabeth Warren on her Medicare for All plan. “Without it, it’s hard to find a route to the administrative simplification, purchasing power, and investments in better quality of care and prevention that can get at the fundamental drivers of cost increases that don’t add value. Whether it’s realistic or not depends on building public confidence in the benefits of that strategy.”

No, costs would go up: Other experts argued that total spending would rise as uninsured people gained coverage and use more health care. “That’s a very good thing for their health, but it comes with a cost that taxpayers have to finance,” said Kate Baicker, Dean of the University of Chicago Harris School of Public Policy. To lower overall costs, Medicare for All would have to sharply reduce the price of care — which isn’t necessarily impossible, but could lead to other problems. “I’m not sure that we can lower overall health spending without restricting access to care in ways that people might not like, such as through denying coverage, or even shortages caused by cutting back on reimbursement rates,” Baicker said.

We can’t count on politicians to fight the health-care industry: “This question really comes down to politics, not economics,” said Sherry Glied, dean of New York University’s Robert F. Wagner Graduate School of Public Service. Congress has had a hard time cutting hospital or doctors’ prices, and it’s hard to see them slashing the pay of health-care workers whose votes they want. “Today, health care is the largest employer in over 55 percent of U.S. congressional districts ― a political reach the defense industry must envy,” Glied noted. “Under a single-payer system, the entire livelihood of all those health care providers would depend on choices made by federal legislators and regulators. That’s an extraordinarily potent political force, with unparalleled access to members of Congress.”

Lanhee Chen, the director of domestic policy studies at Stanford University who served as chief policy adviser for Mitt Romney’s 2012 presidential campaign, agreed, suggesting that “the politics will make it almost impossible for single-payer to be fiscally sustainable.”

Read the full piece at Politico, including more on lowering hospital costs, a discussion of the benefits and limitations of price transparency in health care and why Medicaid for All might hold more promise than Medicare for All.

More from Politico’s package:

Cost Isn't the Only Concern With Medicare for All

The part of the Politico special issue that was gaining traction in the political world Tuesday was an article raising a different question about Medicare for All, one focused on job losses rather than the direct costs of the system.

Massive cost reduction is a crucial feature of the Medicare-for-All proposals from Democratic candidates Elizabeth Warren and Bernie Sanders, with a big chunk of the trillions in savings coming from the reduction of overhead and labor costs throughout the health care system, much of it related to insurance billing and payment. That almost certainly means job losses, with as many as 2 million people made redundant in a government-run, single-payer system, according to some estimates — and that could be a major political problem for Democrats, says Politico’s Rachana Pradhan.

To be fair, not all Democratic proposals for universal health care would eliminate private insurance, Pradhan points out. “But under the most ambitious schemes, millions of health care workers would be at least displaced if not laid off, as the insurance industry disappears or is restructured.”

Critics take aim: Pradhan’s highlighting of the jobs issue provided fresh ammunition to critics who oppose Medicare for All. The Partnership for America's Health Care Future, an alliance of hospital, health insurance and pharmaceutical lobbyists, sent an email Tuesday citing the analysis to warn that Medicare for All “could threaten jobs and restrict access to care.” Joe Biden, who opposes Medicare for All and proposes to build on the Affordable Care Act with a public option instead, also sent an email referencing the report. “Simply put, we’re not going to beat Donald Trump next year with double talk on health care. And we’re certainly not going to beat him by trying to kill millions of jobs in communities around our country,” a Biden spokesperson said.

Job losses are part of the package: Economists disagree on how severe the job losses would be, and much depends on the details of any reform plan that can manage to become law. Both Warren and Sanders have spoken about retraining workers who lose their jobs, and Sanders in the past has suggested that a lower-priced health care system could actually support more workers. But economist Robert Pollin, who has worked with both Warren and Sanders on their plans, says that job elimination is unavoidable. “You can’t have it both ways. You can’t have savings through administrative simplicity and more jobs. The government won’t need these people,” Pollin told Pradhan. “The savings don’t come out of the sky. The main way we save money is through administrative simplicity. That means layoffs. There’s just no way around it.”

The problem would particularly acute in places that have built their economies with a focus on health care. Pittsburgh is one such city, with about 140,000 people now employed in health care, making up roughly 20% of the regional workforce, Pradhan reports. In addition, nearly 10,000 people work directly for health insurers, and thousands more as brokers. How many of those jobs would be eliminated by a single-payer system?

The bigger issue: The job loss problem points to a larger question, Pradhan says: How much should the U.S. spend on health care? Of course, there’s no easy or obvious answer to that question, but experts from across the political spectrum generally agree that the U.S. system is too expensive, even as it fails to cover the whole population. But that hard -to-deny fact doesn’t help us answer the question of how to go about changing the system. Single-payer proponents say job losses are simply the price we have to pay in order to build a more efficient system, one that brings overall health care spending closer to the levels seen in other wealthy countries, but that’s a tough sell to those who depend on the system for their livelihood.

The bottom line: The U.S. health care system is both enormously wasteful and a provider of millions of good, middle-class jobs. Reducing costs will be hard to do with eliminating jobs, and that’s a conundrum that health-care reformers will have to deal with more explicitly than they have done so far. “This is a genuine political problem that reformers would be unwise to ignore,” Eric Levitz of New York magazine wrote Tuesday. “But it is also a testament to how wasteful the existing system is.”

Read Pradhan’s full report here.

Quote of the Day

“If we have a nominee that supports Medicare for all at the top of the ticket, our majority in the House is in serious jeopardy, not to mention a potential majority in the Senate. That is not a smart strategy.”

– Tyler Jones, a South Carolina Democratic strategist, in a New York Times piece on the broad swath of Democratic party leaders who are “sounding increasingly vocal alarms to try to halt political momentum” for the single-payer health-care plan proposed by Sens. Bernie Sanders and Elizabeth Warren.

“Warnings are being issued at all levels of the Democratic Party, from union members who fear losing hard-won benefits, to candidates running in swing districts, all the way up to former President Barack Obama, who offered a pointed warning about the risks of overreach at a gathering of donors in Washington, D.C., this month,” The Times’s Lisa Lerer and Katie Glueck report.

Number of the Day: 12.6% of Heart Patients Cut Back on Medicines to Save Money

More than one in eight American adults with heart disease delays filling prescriptions, takes lower doses than prescribed or skips doses because of the high out-of-pocket costs, according to a new study published in the journal Circulation and highlighted by Reuters.

The 12.6% “cost-related medication nonadherence” rate translates to an estimated 2.2 million patients, including nearly 1.5 million patients missing doses, 1.6 million taking lower doses and 1.9 million intentionally delaying filling their prescription in order to save money.

People younger than 65 were more than three times as likely as seniors covered by Medicare to cut back on prescribed medications.

“Despite decades of evidence showing the effectiveness of medications like blood pressure lowering drugs and cholesterol lowering statins, none of these drugs can have an opportunity to work unless the patient can afford them,” one of the study’s authors told Reuters.

The study analyzed data from 14,279 adults collected from 2013 through 2017 by the National Health Interview Survey, which is conducted annually by the National Center for Health Statistics at the U.S. Centers for Disease Control and Prevention.

Photo of the Day

A turkey awaits a pardon from Iowa Governor Kim Reynolds outside the Governors mansion. (Reuters)

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