In the 2020 election campaign, healthcare looms as a major issue.
Many Republicans want to repeal the Affordable Care Act and slash Medicare. Eliminating Obama’s signature policy and reducing Medicare are centerpieces of their effort to end Democratic “big government.” They like the traditional system based mainly on insurance provided by employers.
Many conservatives believe healthcare should be left to private sector insurance and emergency care. The U.N. World Health Organization rates U.S. medical services as only average, except for its top-flight emergency rooms. The country also ranks first world-wide with the highest healthcare costs.
Medicare gives most older Americans, who lack coverage under employer plans, regular access to hospital and doctor care. Drug costs are subsidized. If they cannot afford the program’s premiums or co-pays, Medicaid can help.
Under Medicare, people can choose their doctors. In addition to Medicare payments, they either come up with cash or use supplementary coverage, provided by private insurers.
Medicare Advantage, a popular form of the program, tempts insurers to cheat the government by claiming they paid doctors for more care than they actually did. Last week, the massive extent of this cheating was revealed, with more bad news expected. Many major insurers appear to be involved.
Congress has blocked Medicare from selecting drugs based on their price. Suppliers have an incentive to charge as much as the market will bear, far above actual cost. Their prices are not regulated. They may expect that co-pays would be raised.
Because Medicare covers so many people who might otherwise have no protection, some Democrats propose universal health insurance – “Medicare for all.” Most likely, they would propose to fix it first, piling one unlikely promise on top of another. But it sounds politically appealing.
This proposal is a form of so-called “single payer” insurance. A government agency pays all bills with some co-pays to screen out those not truly ill. “Single payer” raises taxes but eliminates insurance premiums, and is thus expected to lower net outlays by individuals.
But the cost of hospitals and doctors remains uncontrolled. The single payer may still face higher prices. One obvious solution is that the single payer also employs the doctors and owns the hospitals.
Such a system exists in the U.S. – the Veterans Administration. Because any system is only as good as the people who run it, it works better in some places than others. In Maine, it works well. Full disclosure: I’m a participant.
Because some managers elsewhere falsified their records and delayed service, the VA system has come under pressure. The Trump Administration’s solution is to make it easier for veterans to use outside doctors at government expense. This outsourcing is part of the GOP effort to reduce government programs.
The ACA is a hybrid between the traditional insurance system and a government payer. It is supposed to control prices through the operation of an open market in which people can choose their coverage. Insurers are required to cover more people.
After a recent change, made when the GOP Congress went after the ACA mandate, individuals no longer must buy insurance or pay a penalty.
If not covered by employer plans, individuals may exercise their choice through state exchanges in which insurers compete. Originally, a non-profit public option was proposed in each exchange, but it was blocked by a single senator representing insurance interests. The obvious fear was that people would turn the lower-cost public option into a single payer.
The ACA has its problems. It has survived because of a handful of GOP senators, including Susan Collins, and Chief Justice John Roberts’ swing vote on the U.S. Supreme Court. The lack of cost control and the loss of required participation make it an imperfect solution.
Recently, a Columbia University expert has suggested that, instead of the ACA or copying single-payer Canada, the U.S. should consider the German model, the world’s oldest health insurance plan. Less costly than the American system, it uses a combination of employer, employee and government financing.
Private insurers in Germany are subject to strong regulation, and they compete on price and quality. An individual’s co-pays are capped at a fixed percent of annual income, less than co-pays in the U.S.
Americans prefer choice and competition, and the German system provides it. Government regulates prices but does not replace insurers. Along with adding drug price regulation, this plan merits more attention.
Healthcare is an immediate and costly problem. Candidates need to skip anti-government cost-cutting bravado on the right or unrealistically generous promises on the left and look for real solutions.