When the Medicare for All Act had its first hearing in the House Rules Committee on Tuesday, it became evident that the gap between perception and reality of what this bill does is very wide.
People know what they want from health insurance. But they can be suckers for labels and packaging.
Multiple public opinion polls indicated over some time that Obamacare was not popular. However, when the public was asked about individual components of the Obamacare law, such as coverage for people with preexisting conditions or for dependent student children up to age 26 — opinion was solidly favorable.
Opinion on “Medicare for all” is precisely the opposite. The name tag is solidly favored. The components, however — elimination of your own private insurance plan, for example – are distinctly not.
Why do people like “Medicare for all,” the label, but not the reality?
Medicare covers the elderly who could not possibly cover themselves. So “Medicare” sounds good to nonelderly people who fear for their insurability.
What people do not understand is that Medicare’s cost is growing out of control, even though its administered pricing (read “price control”) is unsustainably low. If applied to all hospitals and physicians, it would put many out of business.
People believe that healthcare under Medicare is delivered by government or by other entities that are not motivated by and need not earn a “profit.” They do not understand that Medicare services are paid for by government, but are provided by doctors who must earn a profit to feed their families, and by hospitals that must earn a profit for their owners (or even if nominally “not for profit,” cannot run losses and survive).
People hear very real horror stories about bad behavior by insurance companies. They therefore assume that if “Medicare for all” cuts healthcare costs, all of the savings will come from insurance company executives. They do not understand that the claimed savings come from reduced reimbursements of the doctors and hospitals they trust, and that the vast majority of insurance company employees who seek only to serve the public will be caught in the crossfire.
People have also been told that Medicare is cheap to administer. They do not understand that Medicare is actually under-administered, such that unscrupulous providers can file false claims and be undeservedly paid with limited risk of discovery.
This is not a simple story, but here’s one basic truth: The Medicare guarantee to the elderly is essential. Medicare should guarantee a system that is financially sustainable and delivers better quality coordinated care. And the current, deficient Medicare system should not be made even more costly with first-dollar, fee-for-service coverage and then extended to the entire population. This would bankrupt hospitals and providers and threaten even the best private and nonprofit systems on which people rely today.
There is a better way. Give every household a refundable, single-purpose credit to buy an efficient health insurance plan. Use the Obamacare standards that specify essential services. Prohibit discrimination against people with preexisting conditions, cancellation of policies for immaterial errors on applications and other unfair acts. Compensate insurance plans that attract sicker-than-average enrollee populations. Thus, direct private insurance plans to earn their keep by delivering, not denying, quality care that individual consumers choose for themselves. The insurance plans and their care providers will love it.
Also allow people to choose more expensive, fee-for-service plans, so long as they pay the excess over the premium of an efficient plan out of their own pockets.
Do not give households a pittance and tell them to buy their own care service by service, a la carte, with high-deductible health plans and health savings accounts. Most people do not want to, and cannot, in effect, become their own doctors. And in times of stress when people are seriously ill — which is when the big bucks are spent — people cannot, and will not, economize.
As the opinion polls about healthcare show, what is obvious to many people is just not true. The current healthcare system is headed off a cliff, and Medicare is the primary driver. Expanding Medicare to cover everyone will only make things worse.
Instead, we should empower consumers to choose the care they want based on value — quality per dollar spent. It works everywhere else in the economy. It will work in healthcare.
Joseph Minarik is the senior vice president and director of research for the Committee for Economic Development. He was chief economist at the Office of Management and Budget under President Clinton.
