As the 2020 election looms closer, health care has choked out virtually every other issue to stand alone as the primary focus of several top-tier candidates in the Democratic primary race.
While Sen. Bernie Sanders (I-VT) and Sen. Elizabeth Warren (D-MA) have each put forward a “Medicare for All” plan, candidates like South Bend Mayor Pete Buttigieg and former Vice President Joe Biden have taken a softer position, proffering smaller ideas that would reportedly cost much less.
On Wednesday, I had the opportunity to speak with health care policy expert and American Enterprise Institute (AEI) Scholar Joe Antos about “Medicare for All.”
In part one of this interview, which you can read here, Antos breaks down the complexity of the current Medicare system, and discusses the damage that a “Medicare for All” system could cause, such as rationing of care, the raising of taxes on the middle class, provider flight, and innovation drain.
In part two below, Antos talks about a more “free market” approach to health care, understanding “universal” coverage, the way in which conservatives and Republican lawmakers should approach health care legislation, and the ultimate damage that a “Medicare for All” system could do.
DW: Is it realistic to think that someone could keep their doctor if we were to move to a “Medicare for All” system? A friend of mine from another country claims that she can see whatever doctor she wants under their plan, which is essentially a state-run plan.
ANTOS: That may be the case, as long as your doctor remains in practice. There’s a generational issue that may explain your friend’s comment. Young, healthy people typically do not have a doctor that they see regularly. In that sense, you could see any doctor you like, but you would not much care who it is. Older people or those with chronic conditions become attached to their doctors, so being able to keep their doctor is a more serious concern. One other point: older, more established doctors may be more likely to leave the active practice of medicine under a plan that sharply cuts their payments. In such a case, their patients would have no choice but to establish a relationship with a new doctor.
DW: Some people claim that the United States is a free market healthcare system, but that’s obviously not quite true. What are the differences between what we have and what a truly free market system would look like?
ANTOS: It is not very clear what people mean when they say “free market healthcare.” Our system is a mix of public and private coverage, with nearly everyone receiving a government subsidy. Private health insurance is subject to state and federal regulations, and providers are subject to licensure and other government regulations that are supposed to protect patients from unqualified providers – but also protect providers from competition. As a practical matter, government would have a role in a “free market” system, but it would be sharply reduced from what we see today.
One vision of a free market system would emphasize the role of consumers making their own decisions about their health care and bearing the full financial consequences of those decisions. Insurance would still play a financing role, with high-deductible plans accompanied by health savings accounts becoming even more common than we see today. To be workable, consumers and their physicians need information about treatment alternatives, provider performance, and cost. Both consumers and their doctors need strong financial incentives to select cost-effective care from efficient providers.
We’ve been edging our way toward a consumer-driven system for some time.
The latest Kaiser Family Foundation-HRET survey found that employer-sponsored coverage has shifted away from unmanaged fee-for-service plans. Between 2014 and 2019, enrollment in high-deductible plans with health savings accounts grew from 20% to 30% of the market. HMOs grew from 13% to 19% of total enrollment. Preferred provider organizations, which are fee-for-service plans with provider networks, shrank from 58% to 44% of total enrollment. That is a direct response by employers and employees to the high cost of unmanaged care.
However, we are sending consumers into the battle completely unarmed. It’s very hard to know what anything costs. It’s very hard to know what your insurance will pay for until after you have received the medical service. It’s very hard to judge how effective a treatment may be and whether there are alternatives that might be better. Patients depend on their physicians for good advice, and physicians often do not know whether a specialist is in your insurer’s network or what your plan will cover.
Lower back pain is a good example of the challenges we face as consumers, and how large employers are beginning to address them. In most cases, back surgery is the treatment of last resort. Patients with lower back pain need physical therapy, which in many cases will resolve the problem as long as the patient consistently follows the exercise regimen at home. Unnecessary spine surgeries are expensive, debilitate the patient for extended periods of time, and may not be effective.
Several large corporations, including Wal-Mart and Boeing, have contracted with well-known medical centers to evaluate their employees with lower back pain. Instead of an incentive to do more surgeries that is seen in unmanaged fee-for-service plans, these contracts reward appropriate care. The patients are assured that their care is being managed by high-quality providers, and the savings comes from reducing unnecessary use of high-cost treatment.
This example also highlights the critical role of the physician in guiding the patient’s decisions about the course of treatment. Health care is complex. To be successful, consumers need the guidance of their physicians, whose financial incentives should promote cost-effective care.
DW: Proponents of universal healthcare systems say that their primary goal is to get everyone covered because everyone should have good health care. What is the more optimal, free market-based plan, and how do we get there?
ANTOS: One of the things that advocates often get wrong is that health insurance does not guarantee appropriate care. The political focus for the last decade has been on expanding insurance coverage, with far less attention paid to what that coverage actually buys.
The Affordable Care Act (ACA) relied on a mandate and penalties to force people to buy health insurance. Although the mandate was not effective, the idea was that the threat of a penalty would make younger, healthier people buy coverage that they would not otherwise purchase. Because premiums in the health insurance exchanges were high, coverage options were not attractive, and the financial penalty was small, exchange coverage attracted an older, sicker population.
A better approach would change the culture of health insurance. Instead of the ACA’s approach, which mandates consumers to buy expensive coverage, we could adopt automatic enrollment. Under that method, everyone would be automatically enrolled in a high-deductible health plan financed by restructuring existing federal health insurance subsidies. Consumers would not be charged a premium for this basic plan, but they could buy better coverage if they wished to. Anyone not wishing coverage could drop out, but few would take the time to do so. This approach makes insurance coverage the default without imposing unaffordable costs on consumers.
Under automatic enrollment, everyone would be eligible for a basic subsidy tied to their income level. Catastrophic expenses would be covered, but the benefit could be expanded to allow free or low-cost primary care. Covered California, which operates the ACA exchange in that state, requires all plans to offer such basic services, which has helped promote enrollment.
Implementing automatic enrollment would not be as difficult as skeptics think, but enrollment would take time to expand. Uninsured people who should be automatically enrolled can be identified through normal interactions with state and local government agencies. Enrolling a child in school, getting a driver’s license, voting, and other activities can be used to enroll the uninsured in this default system. Similarly, public health clinics and hospital emergency rooms can help enroll people who otherwise do not have coverage.
Automatic enrollment is not an instant solution, but it is also not disruptive. The measure of success is not how many people are newly covered by the default plan in any one year. Instead, the goal is to set up a process that will eventually cover everyone without locking them into unaffordable plans.
DW: Do you think Conservatives need to be more aggressive in offering their own solutions, instead of just pointing out the flaws in “Medicare for All” style systems?
ANTOS: Conservatives should offer their own proposals, but to be useful, the proposals need to be developed carefully. All too often, proposals focus on broad themes without the detailed specifications to implement those themes through legislation. It is important to work through the implications of one’s proposal to avoid overlooking problems that could make it technically and politically unworkable. The flight of Democrats from Elizabeth Warren’s plan demonstrates the importance of thinking through the details, and not ignoring the potential for a negative response from the public.
Republicans have too often reacted to Democratic initiatives rather than taking positive actions of their own. I think that partly explains the 2017 collapse of repeal and replace efforts in Congress. Well-developed conservative proposals can fill the policy void, but they must be realistic about how much any single piece of legislation can change the system. Realistic proposals should build on the best of what already exists, rather than pretending that we can start with a clean slate.
It’s very important to move away from simply reacting, and embrace a positive political approach. In my opinion, that means supporting the goal of making affordable coverage available to everyone. Affordability is not measured solely by the subsidies that help people pay for insurance, although subsidies targeted on those most in need are an essential part of any reform. We also have to improve the efficiency of the system to slow the growth of health spending, without rationing care and driving out innovation.
This takes hard work. The emphasis by liberals on expanding coverage is the easier message. Improving system performance is much more complicated, and that is what conservative proposals should focus on.
DW: What damage, aside from fiscally, could a “Medicare for All” system cause to patients, to doctors, etc?
ANTOS: I see a large waiting room filled with millions of people as doctors decide that another line of work makes more sense. Seriously, we will have growing access problems. The promise of free health care means that patients will have no financial reason to question whether a service is necessary. The reality of reduced provider payment rates means that physicians will have a strong incentive to try to make up their income losses by providing more services, especially those services that Medicare overpays. We could see increases in the volume of services that are not very effective, not very harmful to the patient, and more highly remunerative than more necessary care.
The broader effects on the economy could be very damaging. Warren has admitted that thousands of people now employed in the health industry would lose their jobs, but she claims that they will just shift to good jobs in other industries. That’s not so simple if you don’t have the skills needed for that next good job. If it exists. That’s the rub. Warren’s proposals to tax companies, individuals with high incomes, and wealth would create a serious drag on the economy. What she overlooks is that those taxes will take vast sums out of more productive sectors and pump it into the notoriously inefficient health sector. By and large, the wealth of this country goes into productive investments that create jobs, largely outside the health sector.
Access to care will become more difficult once it becomes “free.” The fiscal drag from “Medicare for All” will result in lost jobs and lower productivity, economy-wide. Business investments that would have been made in the U.S. will move to other countries with more favorable tax codes. It is not unreasonable to expect a recession that we might not recover from unless we come to our senses about our health system. Nearly one-fifth of our economy is in the health sector. That provides plenty of leverage for bad health policy to do serious damage.
I’d like to thank Joe Antos for speaking with me about such a critical issue. For more information, check out Antos’ profile on the American Enterprise Institute’s website here, and follow him on Twitter.