Relatively Modest Health Reform May Create More Value Than ‘Medicare for All’

Twelve years ago, February, Barack Obama stood in front of a freezing crowd on the steps of the Old State Capitol in Springfield, Illinois, and launched his campaign for the presidency. A major theme of his campaign was the need to provide health coverage for then estimated 50 million Americans who lacked it. Fulfilling this promise in the face of a serious financial crisis consumed the first third of his first presidential term and brought us the 2010 Affordable Care Act (ACA). 

Obama expended every dime of his political capital on arresting the country’s slide into a depression and on his health policy agenda. His reward: loss of control over Congress in 2014, the rise of the Tea Party, and eventually a president named Donald Trump. Much of this was a reaction to what sadly became known as “ObamaCare.” 

As we enter a new political cycle, like swallows returning to Capistrano, aspiring Democratic presidential candidates have returned to universal coverage through the strategy of “Medicare for All,” as a rallying point. If anything, true Medicare for All is a far more ambitious policy goal than either Obama or President Bill Clinton and First Lady Hillary Clinton advocated: It abolishes private insurance (which covers about half of Americans) and places health spending (and provider incomes) firmly under the control of the federal government. 

Although it is still early days, it seems likely that a successful Democratic president in 2020 would need Johnsonian majorities in Congress to sunset a one trillion dollar industry and dramatically reduce the income of another. Paul Krugman, no conservative, has recently written:

“And there’s one big fact on the ground that any realistic health strategy has to deal with: 156 million Americans—almost half the population—currently receive health insurance through their employers. And most of these people are fairly satisfied with their coverage. A Medicare for All plan would in effect say to these people: ‘We’re going to take away your current plan, but trust us, the replacement will be better. And we’re going to impose a bunch of new taxes to pay for all this, but trust us, it will be less than you and your employer currently pay in premiums.’

The thing is, both claims might well be true! A simple, single-payer system would probably have lower overall costs than a hybrid system that preserves some forms of private coverage. But even if optimistic claims about Medicare for All are true, will people believe them?” 

In other words, will voters have enough faith in the power and competence of the federal government to believe that the benefits of Medicare for All will be worth the price paid? 

Is Universal Coverage The Most Effective Solution To The Nation’s Health Problems? 

What is concerning about the emerging 2020 policy debate is the thus far unchallenged assumption that closing the remaining insurance coverage gap is the only valid health policy goal. The ACA brought the percentage of uninsured Americans down into the high single digits for the first time in our political lifetimes and got us far closer to “universal” coverage than most people realize. 

Of the estimated 27.4 million uninsured Americans in 2017, roughly 19 million were eligible for either Medicaid or publicly subsidized coverage on the ACA exchanges (state or federally facilitated) or else declined coverage offered by their employers, mainly for reasons of cost. In the absence of a stronger individual mandate or more generous subsidies, that is as close as we get. Another four million uninsured are undocumented immigrants. That is, 83 percent of the remaining uninsured Americans either declined proffered coverage or were not citizens.

What Are We Trying To Maximize?

It might be helpful for health policy advocates to ask: Are we right in assuming that Americans’ health is best improved by getting from 90 percent to 100 percent of the population covered? This question takes on greater poignancy given that:

• 2020 may mark the first four-year-long decline in US life expectancy since the US Civil War, and that US life expectancy is only four months longer than Albania’s. According to the Economist, a 15-year-old American has less of a chance to reach age 50 than a citizen of Bangladesh!
• In 2017, 117,000 Americans, roughly the population of Odessa, Texas, either committed suicide or died of drug overdoses.
• African American women have a five-fold higher likelihood of dying in or after childbirth than Americans of other ethnicities, and the overall US maternal death rate has risen by a sickening 56 percent since 1990, while other major countries have cut it by half or more.

Is the most effective solution to these problems “universal” health coverage or somehow addressing the gaps in a crumbling society through which more and more people are tumbling to the pavement? Put another way, are there more achievable alternatives to universal health coverage that more directly address those challenges that give rise to illness, at a smaller total price tag in dollars and disruption?

There is ample circumstantial evidence that the fraying of the social and economic fabric of the country might be the real source of the declines in health status in the US. The rise in what Angus Deaton and Anne Case called “death of despair,” or indeed the rise in overall deaths in mid-life, are not randomly distributed geographically (see p. 414, figure 9). Areas that have been struggling economically for decades—what one might term “greater Appalachia,” the deep South, and much of the “desert Southwest” (which contain many of the nation’s Native American reservations)—seem to have been the worst hit. While it is entirely possible that a broader-based expansion of Medicaid might have alleviated some of this trend (for example, by bringing more generous funding of drug treatment to addiction hot spots), an alternative approach might have addressed the social causes of poor health more directly.

A Better Way Forward

Below, I advocate a three-fold approach: block grants for community-based efforts to address social determinants of health, expanded public health funding targeted at strengthening primary care and social care, and a limited expansion of Medicare targeted at the oldest and sickest uninsured.

Increase Social Funding Targeted At Social Determinants Of Health, Including Homelessness, Drug Dependency, Suicide Risk, Food Insecurity, And Domestic Violence

While poverty may be the root cause of a lot of the socially driven causes of premature death and disparities, a new “war on poverty” is probably not the most efficacious solution. Repair of the social safety net in economically troubled areas might have a more immediate and tangible effect. Some examples: drug intervention, detox and sober supports including employment, housing-first homeless initiatives with organized mental health follow-on, tighter links of emergency services to drug rehabilitation, and mental health services for those who have attempted or are contemplating suicide.

A cookie-cutter “federal” initiative here won’t work. The approach taken in Grand Junction, Colorado, is going to look much different than the one taken in Hardwick, Vermont, or Pine Bluff, Arkansas. Moreover, neither businesses nor faith-based organizations should be excluded from funding; the funding model should be flexible enough to encompass both for for-profit and not-for-profit organizational models. The federal agency that provides matching funding should help foster local “incubation” of bright ideas and help scale-up the ones that show measurable health status improvement. The key is broad-based community participation, underwriting compelling business/care models, and the potential to employ many of those at risk in helping others.

Guarantee Universal Access To Primary Care Services Through Public Health Expansion

By international standards, the United States grossly underinvests in public health. At $85 billion a year, public health spending was less than 2.5 percent of total US health outlays in 2017. Strengthening the primary care end of this public system is a high-leverage, cost-effective way to reach the remaining uncovered, as well as those loosely connected to a regular source of care. (Almost 17 percent of the US adult population does not have a regular source of care.

If we cannot, for political reasons, guarantee every citizen comprehensive health coverage, we can guarantee that every person who wants a primary care physician or regular source of primary care can have one. This approach proposes increasing the capacity of the federally qualified health centers (FQHCs) and public hospital systems’ community care networks in the near suburbs where the poor and near poor have been pushed by gentrification.

Care in the FQHCs is provided not just by physicians but also advanced practitioners, social workers, and rehabilitation specialists. FQHCs are an excellent resource for providing the prenatal care minority populations need to identify and close maternal death risks. There is clear evidence that FQHCs reduce health spending and service demand.

FQHC funding was significantly increased (nearly doubled) under the ACA, then reduced along with other public health funding in the out years, both by appropriations cuts and the 2012 sequester. But expanding the FQHCs is far less expensive than funding more “Insurance” coverage for a meaningful percentage of those who remain uninsured. Assuring access to primary care through public provision might cost merely single-digit billions per year, rather than the $21 trillion 10-year price tag for Medicare for All.

Concerns about controlling the total cost of care could be alleviated by agreeing that public programs (Medicaid, Medicare, and the Veterans Health Administration) would capitate both the FQHCs and organized primary care groups for managing the total cost of their expanded patients base. Emphasis would be given to capitating those dually eligible for Medicare and Medicaid. One of the only definitive pieces of good news from the now nearly 15-year experiment with accountable care organizations (the physician group practice demo began in 2005) is that organized physician groups including the FQHCs can succeed in managing population health at risk! 

Medicare Expansion Targeted At Older Uninsured Americans

It is one thing to be 26 years old, immortal, and uninsured. It is quite another to be 52 years old, diabetic, and uninsured. Nearly nine million, or more than 30 percent, of the uninsured are older than age 45. These, the sickest of the uninsured, are much sicker yet when they become eligible for Medicare at age 65, and they stay more expensive for seven years after enrollment. Expanding Medicare coverage to those stranded in midlife without coverage would directly address the bulge in midlife death rates Deaton and Case identified in their troubling 2015 paper.

As Paul Starr, an advocate of breaking the age 65 barrier for Medicare enrollment, has pointed out, most of the newly eligible have already been contributing to Medicare for decades, and even with income-related subsidies, enrolling them would be less expensive per capita than the current Medicare population.

If current enrollment trends were replicated, half of the newly covered under age 65 folks would choose Medicare Advantage, which controls rates for out-of-network services and is much cheaper than coverage under the ACA exchanges. These newly enrolled folks would be ideal candidates for enhanced Medicare models that incorporate chronic care management and some long-term care services, such as CareMore and SCAN have developed in Southern California.

Blurring the lines between acute “sick care” and chronic care is the key to reducing long-term health cost trends for Medicare. The newly enrolled would join roughly nine million younger than age 65 folks who are already on Medicare because they are receiving Supplemental Security Income (SSI) benefits from Social Security. However, the two-year waiting period faced by SSI folks for Medicare eligibility, a relic of a prior age, has limited enrollment of the many chronically ill mid-lifers, many of whom are unwilling to run the gauntlet to get Social Security disability coverage.

Creating a Medicare buy-in option for uninsured folks under the age of 65 who are not disabled would be politically complex. Hospital opposition effectively prevented adding Medicare expansion for people younger than age 65 to the ACA. If it creates the potential for corporate employers to terminate coverage of older workers, the downstream effect of voluntary Medicare buy-in after age 50 would be to damage hospital earnings by accelerating the erosion of their privately insured patient base. Navigant discovered that the difference between a “leak-proof” Medicare buy-in, which prevented employers from dumping older workers, and a leaky one that permitted this cost a hypothetical $1.4 billion health system $90 million dollars in lost earnings. Solving the leakage problem would neutralize hospital opposition and add the sickest of the uninsured to coverage by the most cost-effective method.

Summing Up

There is ample room for improvement in US health outcomes by reducing disparities between population groups and addressing the spike in mortality in mid-life. We should redouble efforts to close gaps in states that have not expanded Medicaid coverage under the ACA. But elimination of private insurance and installation of a single government-run universal health plan is a bridge too far in the likely political environment of the 2020s and frankly does not make as much policy sense as the ideas outlined above.

Thus, political leaders should close gaps in social care, expand the public-health primary care infrastructure, and execute limited coverage expansion for mid-life Americans. Costing out this alternative pathway is beyond the scope of this conceptual essay.

Author’s Note

The author is national adviser (part-time contractor) to Navigant Healthcare, a health care consulting firm. However, the opinions in this blog post are his own and not those of Navigant.