Analysis Shows Single-Payer Health System Would be Messy

The highly anticipated analysis released yesterday by a nonpartisan organization on Medicare-for-all told us this much: Transitioning the United States to such a single-payer health-care system would be messy. Very messy.

In a 30-page report that laid out more questions than answers, the Congressional Budget Office detailed the pros and cons of moving the country’s health-insurance system — currently a patchwork of government programs, employer-sponsored coverage and subsidized private plans for individuals — into a unified single-payer system.

“The transition toward a single-payer system could be complicated, challenging, and potentially disruptive,” the CBO wrote in its report, which was requested early this year by House Budget Committee Chairman John Yarmuth (D-Ky.). Yarmuth said he’ll hold a hearing on the idea of a single-payer system later this month.

The CBO report only intensified an already heated debate over Medicare-for-all that’s been playing out on Capitol Hill this week, as Democrats weigh different ways to extend coverage to the remaining 29 million uninsured Americans. 

Medicare-for-all would set up a single-payer system in which private insurance would be abolished and the government would  provide coverage to Americans.

On Tuesday, the House Rules Committee held a day-long hearing on a sweeping plan by Rep. Pramila Jayapal (D-Wash.) that would scrap all private health coverage in favor of a generous but expensive government-backed set of medical benefits.

And yesterday, several Democrats jumped to reintroduce more-measured legislation which would allow people to keep their employer-sponsored plans but would make Medicare-like coverage available to those who wanted it.

— Medicare for America, from Rep. Rosa DeLauro (D-Conn.) and Jan Schakowsky (D-Ill.), would gradually, over a six-year period, transition those in the Obamacare marketplaces and Medicaid into coverage that’s more comprehensive than what traditional Medicare plans currently cover. Any employer-sponsored plans would have to provide premium benefits, but employees could also put their employer’s health insurance contribution toward one of the new Medicare plans.

— Choose Medicare, from Sens. Chris Murphy (D-Conn.), Jeff Merkley (D-Ore.) and Dianne Feinstein (D-Calif.), would preserve the marketplaces but supply them with a Medicare-type plan people could purchase with the help of Obamacare subsidies. Employers could also choose a new “Medicare Part E” plan to cover their workers instead of buying commercial coverage. Thirteen other Senate Democrats — including three running for president — have signed on to the measure.

The Democrats backing these types of plans say they’re a more realistic way of improving the U.S. health-care system than the dramatic overhauls suggested by Jayapal and Sen. Bernie Sanders (I-Vt.).

The CBO, in its report issued yesterday, didn’t give a specific estimate for the cost of Jayapal and Sanders’s bills, which would almost certainly cost tens of trillions of dollars over a decade. But it cautioned that several components of these measures — including covering long-term care for seniors and the elderly and virtually zero cost-sharing — would add heavily to the cost of any single-payer system.

Long-term care is a particular challenge to cover, the agency noted, because most of those services are currently provided by family members as unpaid labor. And a balance must be struck between requiring people to share in the cost of their care — to discourage overuse of medical services — and ensuring they don’t face heavy financial burdens when they need care.

The CBO also warned that lawmakers and policymakers would face a host of decisions about which medical benefits would be covered, how much doctors and hospitals would be paid and how prescription drug prices would be negotiated — all factors that play into the total cost of Medicare-for-all and the quality of health coverage Americans would get under it.

Here’s one way to think about it. Employers and households currently foot the bill for just under half of all national health-care spending — about $3.5 trillion in 2017. The government pays the rest, through programs such as Medicare and Medicaid. But under Medicare-for-all, the government would take on most of that spending.

“Shifting such a large amount of expenditures from private to public sources would significantly increase government spending and require substantial additional government resources,” the CBO wrote.

But the agency also acknowledged that total national health spending wouldn’t necessarily increase under Medicare-for-all — in fact, there’s a possibility it might decrease depending on the services covered, provider payment rates and patient cost-sharing requirements (I discussed this question in this Health 202). It would almost certainly cost less to administer; the CBO noted that administrative costs average 6 percent of Medicare spending but 12 percent of private insurers’ spending.

The political hurdles to passing Medicare-for-all were quickly evident in Republican — and industry — reactions to the report, my Washington Post colleague Amy Goldstein reports. Chip Kahn, president of the Federation of American Hospitals, called a single-payer system “a high-stakes gamble.”

“Is it worth the risk of upending health care for every American when the law on the books already contains a road map to universal coverage?” Kahn said in a statement.


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