Medicare for All, ideally implemented, could offer powerful advantages over our current health care financial system. Unfortunately, the political obstacles to such a system are formidable and are likely to remain so for decades. More to the point, a politically viable single-payer system would not replace our currently dysfunctional health care politics. It would be a product of that same legislative process and political economy and thus be disfigured by the same interest group politics, path dependence, and fragmentation that Laurence Seidman rightly laments.
Laurence Seidman's brief for single payer will be congenial to many JHPPL readers, and for good reasons. As someone who has spent the past seven years advocating for the Affordable Care Act (ACA), I must concede that a well-conceived, well-implemented Medicare for All system would offer powerful advantages over our current health care financing system.
Facing the imperative of an overall budget, armed with the pricing power of public monopsony, Medicare for All is indeed more likely to control costs than any market-based approach is that relies on fragmented private payers. Although insurer competition is proving helpful to restrain prices on the new marketplaces, there is little evidence that such completion can fundamentally reduce costs. Perhaps the opposite is true when these many payers bargain with concentrated groups of providers and prestigious academic medical centers that command vastly greater public legitimacy. Government price pressures are never painless or administered without at least some toxic side effects. As we have seen in Medicaid, such policies can push too hard. They remain valuable tools in the mix.
Medicare for All also offers one path to escape the pathologies and regressive impact of employer-based health coverage. Employer-based coverage imposes the singular defect that losing your job simultaneously disrupts your health insurance coverage. The ACA provides a valuable safety net through subsidized coverage on the new marketplaces, though this remains personally and sometimes financially disruptive for many individuals and families. As Seidman rightly notes, employer-sponsored insurance forces firms to waste valuable managerial attention on the complexities of health insurance coverage.
Across the political spectrum, policy experts hunger for alternatives. Tax expenditures for employer-sponsored insurance now total roughly $250 billion annually (CBO 2013). These subsidies benefit only the employed and actively insured. Because these subsidies are most generous to those with high marginal tax rates who buy the most generous plans, they are among the most regressive in the American tax code. The ACA's “Cadillac tax” provisions chip away at these tax expenditures. It would be better to do more, though the broad popularity of current policies limits what can be done.
Medicare for All may be better for population health. If every American had reliable (and similar) health insurance coverage, big-city emergency departments would be less Dickensian places than they currently are. Medicare for All would also relieve state governments of many Medicaid safety net responsibilities. Right now, many states carry out these responsibilities unenthusiastically, and not well.
Though Medicare for All is ideologically radical, it holds at least the promise of simplicity to voters, consumers, policy makers, and employers. As Seidman observes, Medicare has a five-decade track record of basic administrative competence and broad public support.
Assuming the Can Opener
For all of these reasons, my argument with Seidman comes from someone who shares the goals of universal coverage and inclusive social insurance but who wonders whether Medicare for All is really the best fix. My point is not (merely) that Medicare for All seems politically out of reach for the foreseeable future. More to the point, if Medicare for All actually were enacted, it would necessarily replicate many of the defects its proponents associate with both the ACA and our pre-reform financing system.
Seidman writes what must be called one of the great assume-the-can-opener openings I've seen: “It is striking how many problems facing the Affordable Care Act … would disappear if the nation were instead implementing Medicare for All.” To state the obvious, the short-term political obstacles (where short-term is defined in units of decades rather than years) make this a distant proposition. If our current problems vanish, they will do so only through one of the most prolonged vanishing acts in American history.
During the 1970s and 1980s, a broad liberal-left coalition, including many single-payer advocates, came to recognize that Medicare for All was unlikely to get through the US Congress within our lifetimes. Our political system demanded a more incremental model, one less disruptive to the status quo, less frightening to the myriad of “protected publics” — veterans, senior citizens, and others who hold implicit political veto power over what can be done (Starr 2013). After the Clinton health care debacle, alliances exemplified by Health Care for America Now (HCAN) (Kirsch 2012) negotiated the ambitious but incremental reform that became the ACA.
It is therefore ironic that the ACA goes by the moniker of Obamacare. Its key features were negotiated long before anyone thought that Barack Obama would be a serious presidential contender. Then in 2008, as Mark A. Peterson (2011) has detailed in the pages of this journal, Democrats won a great electoral victory that yielded the largest and most cohesive liberal legislative majority in fifty years.
By March 2010, the ACA became law. It was (and remains) an incredibly close thing. The public option — the one element of the ACA most dear to its progressive advocates — proved to be a bridge too far. Although Senator Joseph Lieberman was the most vocal Democratic opponent, the public option faced quiet and powerful opposition from much of the supply side of the medical care economy.
Then there is the minor matter of raising taxes by perhaps 8 percent of gross domestic product (GDP) as we move health care spending more fully onto public budgets. To Seidman's credit, he acknowledges the need for a large tax increase to bring health care onto the public budget. This is a subject that often attracts embarrassed hand-waving among single-payer advocates. Seidman identifies important elements that should be in the mix: a payroll tax, a valued-added tax, an income tax surcharge. That is a heavy lift.
It may be an even heavier lift. Seidman's essay claims that we might reduce health care spending from 18 percent to 15 percent of GDP. I find this politically implausible. We're not going to wring nearly one-fifth out of our health care economy while we simultaneously impose radical changes to health care financing. Such contraction is the precise opposite of what we did in establishing Medicare. It will be a miracle if we hold medical spending steady at 18 percent given our aging population. In one 2013 analysis, Michael E. Chernew (2013: 861) calculates that “if the gap between inflation-adjusted per beneficiary Medicare spending and GDP growth per capita drops to zero — a level never sustained for a significant period — Medicare spending will rise from 3.7 percent of GDP to 5.1 percent in 2035.” Under any financing system, we will probably require substantially greater revenue to prevent health care from deeply damaging the federal budget. Neither political party has acknowledged this reality.
Although the electorate and its congressional representatives like to believe that they support fiscal discipline, the evidence to back up these protestations is thin. The ACA's most unpopular elements are those concerned with cost control or deficit reduction: the Independent Payment Advisory Board, the Cadillac tax, the employer mandate, reduced subsidies to Medicare Advantage plans, the medical device tax, reduced Medicare reimbursement rates to hospitals, the individual mandate. At least the first five of these items are unlikely, politically, to survive in current form.
The Inherent Complexity of Medicare for All
Medicare for All would prove to be a more complex policy than many of its proponents fully consider or admit. Because the ultimate source of policy complexity is political, I wonder how different our policy dilemmas would really be if we were to somehow enact a single-payer system.
The initial sales pitch would be admirably simple: we will mail a Medicare card to every American. Yet because single payer upends so many things the ACA seeks to leave intact, Medicare for All would raise intricate and divisive transitional issues. The ACA's major sales pitch to the healthy and insured was, “If you like your insurance, you can keep it.” This pledge proved politically damaging when it could not be fully kept for a very small proportion of Americans who do not receive marketplace subsidies and who had previously purchased rather minimal or risk-selected plans.
Medicare for All would be fundamentally more disruptive for tens of millions of people. As a matter of basic accounting, a huge reform that creates millions of winners creates millions of losers, too: affluent workers receiving generous tax expenditures, too many constituencies to count across the supply side of the medical economy who are likely to be squeezed in a new system, individuals subject to small or large tax increases, to name a few. This list includes some of the most powerful and organized constituencies in American politics. They would have to be accommodated in complex, sometimes unappetizing, ways.
It is in the writing of detailed legislation that one confronts the specific issues that must be addressed. To my knowledge, no fully articulated single-payer proposal was ever drafted. This is telling. Medicare for All would require a serious rewrite of state-federal relations, radical surgery to the Employee Retirement Income Security Act (ERISA), the digestion of various Medicaid functions now performed by state governments, and a myriad of other granular details.
Then there are the legal and constitutional challenges. Some would argue that Medicare for All avoids the ACA's constitutional minefields exemplified by the individual mandate. It doesn't. The basic issues in National Federation of Independent Business v. Sebelius, 132 S. Ct. 2566 (2012), went beyond whether a mandate is a tax or other niceties. The real fight concerned the constitutional propriety of a post–New Deal expansive federal government that seeks to regulate and humanize our national health care market.
Medicare for All would stake an even greater claim to contested views of federalism and the reach of national government. At this writing, one awkward sentence of the ACA has produced a specious but dangerous Supreme Court challenge in King v. Burwell (759 F.3d 358 (4th Cir. 2014), cert. granted, 135 S.Ct. 475 (2014)). I'm confident that constitutional-conservative advocates and judges would identify more plausible concerns and glitches in any single-payer plan.
Many of the most sensitive challenges that now bedevil the ACA would be sensitive challenges to a Medicare for All system, as indeed they long have been within Medicare and Medicaid. Within any financing system, we would require new care models for complex patients. We would face the economic, organizational, and human challenges of end-of-life care. We would make difficult decisions about network adequacy and patient cost sharing and face difficult questions in designing essential health benefit provisions for autism, substance use disorders, and cancer. We would face difficult questions regarding safety net reimbursement rates. We would face our society's tenuous commitment to the well-being of our most disadvantaged citizens. Federalizing care for dual-eligible Medicare-Medicaid recipients might be done in a way that resembles states with the most expansive Medicaid programs. Just as plausibly, national policies could resemble the policies of far less generous states.
In all of these matters, Medicare for All cannot offer itself as the replacement of our depressing health politics. It would have to arise as another product of that very same process, passing through the very same legislative choke points, constrained by the very same path dependencies that bedevil the ACA. Any politically feasible single-payer plan would include a dense thicket of provisions for the myriad of protected publics ranging from veterans to public employees to retirees to affluent professors whose health coverage is more generous than a national plan can uniformly provide.
Such realities would render Medicare for All an inferior, more convoluted product to what Seidman (and I) would wish to see. Imagine the national policy debate over abortion, contraception, HIV prevention, immigration policy, and other matters in a national Medicare plan. Imagine liberal discomfort with a single-payer plan with President Mitt Romney's hand on the tiller, acting in partnership with Speaker of the House John Boehner and Senate Majority Leader Mitch McConnell. The same congressional committee chairs will remain in place to bedevil Democratic and Republican administrations with self-interested micromanagement of Medicare procurement and other rent-seeking behavior. The same justices would sit on the Supreme Court.
As a political symbol, single payer stands as a reproachful alternative to the ACA's incremental reform. It is important to explore and explain the substantive merits of a single-payer system. It's important to remember, though, that enactment of a single-payer system requires the comprehensive defeat of its ideological opponents, who are backed by a dense alliance of health care constituencies along with other economic interest groups.
To repeat: the most uncomfortable shortcomings of the ACA reflect compromises that didn't arise from avoidable strategic errors. These shortcomings were required by our political system, by prevailing voter preferences, and by the political economy of our $2.9 trillion health care colossus. And these compromises were sadly necessary during the heady period of 2009–10, when Liberal Democrats seized a larger and more cohesive legislative majority than they are likely to win again for many years.
Ironically, the one political pathway to such a system might be the ACA's catastrophic legal or political failure. Such an event would radicalize liberal constituencies while discrediting incremental market-based reforms. Fortunately, this seems unlikely. Premiums have proved affordable and have attracted a stable risk pool with sufficient representation of young and healthy consumers (Kliff 2014b). The ranks of uninsured adults have declined by roughly 30 percent, with particularly strong declines in states that have implemented the ACA's Medicaid expansion (Long et al. 2014). In these same expansion states, hospitals report declining burdens of uncompensated care and other heartening care measures (Kliff 2014a).
I am heartened by such progress. Yet I confess that my participation, as an advocate and observer, in these past years of partisan trench warfare has made me pessimistic about the available paths to effective and humane health policy. As Seidman rightly implies, incremental health politics leaves in place, and further complicates, what Steven Teles (2013) calls our health care “kludgeocracy.”
Our already-baroque health care financing and delivery system does not work well. It could use some serious simplification that our political system apparently can't deliver. Indeed, our political system seems specifically designed to thwart this kind of change. Any future president who is even tempted to try such a radical redesign will surely be chastened by the experience of President Obama, who so dramatically succeeded, yet who has paid so dearly for his success.
What to Do?
For the foreseeable future, the main health policy challenge is to make the ACA work. One challenge is to make the new marketplaces more attractive, accessible, and useful for ordinary people who seek affordable coverage that will actually protect them if they need it. Consumers need more human and automated decision supports to help them navigate the different-tiered plans and to match available offerings to their individual circumstances. We need to pursue comparative effectiveness research and explore new delivery models required to improve care under any broad financing system. We need new revenue sources to stabilize the federal budget in the event that health expenditures rise more quickly than we expect to see.
We should also explore ways of making health coverage less burdensome and costly to employers. Seidman — and many conservatives — are right to note the toxic impact of employer-based coverage from many perspectives. The employer mandate has been modestly helpful in easing the transition to an exchange-based health care system. Over time, it seems wise to weaken and perhaps abandon this requirement once the new marketplaces function effectively.
We would also be wise in supporting politically generative measures within the general framework of the ACA. I hope that the public option returns in some form as a viable choice within the new marketplaces. One possibility would be to allow individuals over the age of sixty the option of purchasing public insurance coverage. Many Americans would welcome this option, which would also provide needed competition and market discipline of providers.
Policies like this may someday pave the way to a Medicare for All system. More likely, these would allow the possibility of public insurance carving out a complicated coexistence with private coverage. This may be the best outcome. If we keep our shoulder to the wheel in pursuing the messy, frustratingly incremental process of health reform, we can create a more humane and disciplined health system. That's no small accomplishment. I'm not sure what else we can do either.