Reading Elizabeth Warren’s Healthcare Plan, Part 5

Part 1: Quotes directly from Elizabeth Warren’s official website about her healthcare plan, from which I am drawing all of my information for subsequent posts

Part 2: Reviewing her plans for dealing with pharmaceutical prices

Part 3: How she will “improve the ACA” to get her transition to M4A started

Part 4: All the other things she’ll do before starting the transition to M4A, including some Medicaid changes, increasing access for rural and underserved patients, making antitrust enforcement stricter, and a variety of other incremental changes

Combine all the details from parts 2, 3, and 4 and you have the most likely scenario of how the healthcare system will end up with a Warren administration

Ok, now we’re to the more interesting stuff. As a reminder, this is how I’ve categorized all of Elizabeth Warren’s plans:

  1. General details that will apply regardless of how close she gets to achieving Medicare for All (M4A)
  2. Her plan to transition to M4A
  3. Her vision of what M4A would look like if it is achieved

Let’s talk about her transition to M4A! I think I could sum it up by calling it her “Medicare for 50+ and a public option” plan.

Just as a reminder, the current non-Veterans Administration health insurance market in the USA is divided into a lot of different segments, here are the main ones: Private insurance through an employer (AKA employer-sponsored insurance), private insurance not through an employer, Medicaid (for the poor), Medicare (for age 65+).

In Elizabeth Warren’s transition to M4A, she’s going to impact all four of those segments. She will first lower the Medicare age to 50. So anyone age 50+ who doesn’t already have insurance will be auto-enrolled, and anyone 50+ who is already paying for insurance will probably switch since Medicare will be free for them.

So what about the people ages 0-49? She’s going to create a Medicare “public option.” Let me define that term. It basically means that Medicare (a publicly run insurance plan) will be listed as an option alongside all the other private plan options.

So, for example, if someone is getting private insurance on the open market (usually on healthcare.gov), Medicare will be listed there as an option they could choose. This will probably be the cheapest plan for many since the premium will be $0 for anyone <200% of the FPL, and it will be capped at 5% of income for anyone between 200% and 400% of the FPL.

For people who already have employer-sponsored insurance, they can choose to decline their employer’s insurance and get on the Medicare option instead. Employees looking for better coverage, a broader network, and/or less cost sharing would probably go for that. If an employee does that, the employer would be responsible to pay Medicare directly for that employee’s premium.

And as for Medicaid, each state will have the option of continuing their Medicaid program as is, or they can dissolve their Medicaid program altogether and instead use that money to pay Medicare to cover all those people.

What about the benefits and network of this Medicare public option? They would be the same as traditional Medicare. So any provider that already takes Medicare or Medicaid would be required to also take Medicare public option patients.

My assessment: Given that her goal is to get as many people onto Medicare as possible in this transition, she’s found a way to make it easier and cheaper for people in every segment to do that. Think about it from the perspective of a state. Continue putting so much effort and expense into running Medicaid, or just pay Medicare to cover all those people instead? I don’t know if it would end up being cheaper for states to do that, but if it is (and I’d guess she’s planning on designing it to be so), it would be a no-brainer for most states that aren’t morally opposed to turning more power over to the federal government.

Now think about it from the perspective of an employer. Continue dealing with the complexity and frustration of negotiating good insurance for your employees, or just get a guaranteed great network and cheap premiums (since Medicare doesn’t have to negotiate prices with providers!)? Again, a no-brainer for most.

The only group of people I can think of that might continue to have a large percentage on private insurance is people ages 0-49 who make more than 400% of the FPL and work for a large employer that has leveraged their size to negotiate a better health insurance deal than Medicare.

With regards to designing a transition to M4A that gets more people on a public plan, this is an elegant way to do it. Instead of “taking away” people’s private insurance, it induces people to willingly leave their private insurance for something that will be cheaper and probably also have a broader network, more comprehensive coverage, and lower cost sharing.

My recommendation: If you are thinking solely about getting to M4A, I can’t see anything wrong with this method of doing it. Remember I’m ignoring political feasibility and considerations of how it will be paid for.

I’ll end this post with the same caveat as the last one. People need to remember that getting everyone covered with insurance is not the only thing to worry about in a healthcare system. The other big issue long term for our country is the continuously rising cost of healthcare, which will become even more the government’s problem once it has the full responsibility for paying for it. Elizabeth Warren does talk about some cost savings that will come along with achieving M4A, and I’ll wait to address those more after I’ve discussed her vision for what M4A would look like. More to come!

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