If It Ain’t Broke, Don’t Fix It; Insurance Itself Is Not the Problem
Moderate Democrats should embrace expansion of Medicaid and Medicare as affordable alternatives to Medicare-for-All, which would undoubtedly necessitate middle class tax hikes. Liberal and conservative policy institutes alike agree that Medicare-for-All proposals would double the size of the federal budget and increase the national healthcare expenditures.
Currently, there are a few government healthcare programs that have been working for quite some time. First we have Medicare and Medicaid, which were implemented with the 1965 Social Security Act Amendments. Medicare provides subsidized health insurance and cost control for the elderly and disabled, whereas Medicaid provides premium-free coverage for low-income people.
Middle-income people who don’t qualify for Medicaid may receive generous subsidies to help cover the cost of insurance premiums, courtesy of the Affordable Care Act. These credits phase out as a person or household’s income grows, fully phasing out at 400% of the Federal Poverty Level for individuals. Altogether, these programs are slated to spend $1.4 trillion this year.
Medicare-for-All is estimated to add $32-39 trillion to the Federal budget, increasing national health expenditures by trillions. There are a few reasons for this; usership is projected to increase significantly under a copay-free system, and Medicare-for-All has no method of cutting or controlling healthcare salaries, which make up a substantial portion of the cost. Also, despite common mythology, pharmaceutical spending is too low for price controls to reduce costs at a level which outweighs the costs of decreased investment in new drugs.
There are a lot of ill-informed critics of the US healthcare system, usually stemming from ignorance on regulations and programs currently in place. In the past, insurance companies placed maximum yearly and lifetime benefits, typically from $500,000 to $1 million. This meant that if you needed a heart transplant, you might not have had the full cost covered, and could be charged hundreds of thousands of dollars out-of-pocket. The Affordable Care Act outlawed benefit caps for essential benefits.
Another great regulation is maximum out-of-pocket cost, which caps the burden that insurers can push onto patients. Currently, this cap sits at $7,900 for an individual; this means you cannot be charged more than $7,900 in copays in a given year.
Now, when it comes to deductibles and copays, I would argue that they are necessary in order to prevent patients from turning into consumers who overuse healthcare, which drives up the cost for everyone. We want to disincentivize unneeded treatment, but have large enough deductibles that low-income patients are discouraged from seeking necessary treatment, especially since early treatments can have significant cost-saving advantages, as well as positively affect health outcomes.
So again, to summarize, the Affordable Care Act secures healthcare access and affordability for the middle-class and subsidizes premiums for lower-income individuals and families. Medicaid provides healthcare access and security for the poor, and Medicare protects the elderly from skyrocketing costs associated with aging.
In my opinion, the best solution is expanding Medicare to cover persons aged 55-64, and expand Medicaid eligibility to people making up to 180% of the federal poverty level as opposed to 133% where it currently sits. The FPL is $12,490. Affordable Care Act subsidies are then shifted to middle-income people, allowing for greater decreases in premium prices for those earning between $22,482 and $49,960.
To control spending increases, all government insurance programs should negotiate reimbursement rates for healthcare services, treatments, and equipment. The government can deficit fund some healthcare, but should strive for eliminating the deficit in the long-term. It would also be greatly beneficial to increase federal grants to universities and other research institutes for developing practical new medical technologies which can lower costs for essential healthcare benefits.
Using data from Kaiser Family Foundation, Centers for Medicare & Medicaid Services, as well as from the Congressional Budget Office, I estimate these expansions would add roughly $400 billion to federal government expenditures in fiscal year 2020. These can be payed for with a series of reforms made to our tax code, some of which I outlined in this article.
We should not take a functional system and smash it to pieces in order to experiment with centrally planned healthcare. There are reforms that should be made to how doctors are paid as well as high we prevent chronic diseases from arising in the first place, but we should not seek to radically reform a system which is already very near to providing universal healthcare.
If you are a supporter of a single-payer healthcare system, I hope you reconsider or at least take note of the advantages to building on our current system; besides, the overwhelming majority of Americans oppose Medicare-for-All if it means increased taxes, which would obviously be the case.