Universal Healthcare Or Medicare-For-All

The great debate

A great debate is taking shape about American health care as awareness has grown that, compared with the rest of the developed world, we spend almost twice as much per capita for outcomes that are poorer in aggregate than other high-income countries.Senator Bernie Sanders and other announced 2020 presidential candidates are cosponsoring Medicare-for-All (M4A). Moderate Democrats suggest updating Obamacare or expanding the Medicare program to Americans between the ages of 50 and 65. Republicans pledge to have a healthcare plan before the 2020 election. Opposed to Obamacare since its enactment, their efforts to repeal and replace it in 2017 failed despite majorities in both houses of Congress and the support of a Republican President. 
 

When asked in a recent poll, 70% of the respondents wanted M4A. When asked whether they were willing to pay higher taxes to fund the program or to give up provider choice, the approval rating dropped to 38%. It’s clear that most Americans want universal access to affordable healthcare and provider choice, not M4A.

As human resource professionals,many of you have important roles in employer-provided healthcare insurance. Some may be assigned to negotiate the next health insurance agreement for your company that provides the best coverage at the lowest price. Once the contract is finalized you may be responsible to meet with employees to explain the cost of the plan and the new benefits options that are available to them. As employees need medical care you also may administer the ongoing healthcare benefit program.

Employer-provided healthcare coverage has been very successful over the years. Most employees like the health plans that they have through their employers. Today approximately 60% of the companies in the United States provide a health insurance benefit to their employees.  More than 155 million Americans have health insurance through their employers. This is the largest segment of healthcare coverage that is provided in America today. Managing this employee benefit has not been easy.The Kaiser Family Foundation reports that from 2005 to 2017 the basic policy cost for a family of four has grown from $6,500 to $18,500.Employee contributions have grown from $1,500 to $5,400 per year and the average deductible has grown from $250 to $1,250 per year. 

M4Aas proposed by Senator Sanders and Congresswoman Jayapal would be a very difficult and disruptive way to provide universal healthcare in the United States.  While it would eliminate co-pays and deductibles and add dental, vision and long-term care to Medicare, it would literally eliminate the health insurance industry and create new expanded government functions. As drafted, the bill would dictate hospital operating budgets. It would require the Secretary of Health and Human Services (HHS) to establish a national hospital-operating budget that would roll down to each region and each hospital. A new government agency would have the power to dictate hospital staffing for nurses and physicians. The bill also calls for negotiating drug prices on a national basis. 

The New Democrat Coalition that includes 100 moderate members supports attaining universal health coverage by addressing the shortcomings of The Affordable Care Act and stabilizing insurance markets while working to hold down the cost of insurance.Another approach is the bill proposed by Congressman Brian Higgins, (D-NY), the Medicare Buy-in and Healthcare Stabilization Act of 2019 (H.R. 1346).This bill proposes that anyone who is between the ages of 50 and 65 could buy into the Medicare program on a premium basis. To lower costs, it also would require the HHS Secretary to negotiate drug prices for Medicare part D.

Two facts that are true about today’s healthcare debate are that there is no perfect solution and several more solutions will be proposed as we get closer to the 2020 election.

We believe that the most viable approach to universal healthcare in America should begin by adapting what works well in the world’s first universal healthcare system, established in Germany with the enactment of the Sickness Insurance Law in 1883. Medical insurance is mandatory with income-based premiums that average approximately 15% of employee income. The premiums are paid by employers and employees through payroll withholding.  Germans can choose from more than 100 private not-for-profit insurance plans (called sickness funds) that compete for their business.  There is government buy-in for low-income employees and the unemployed. There is no premium penalty for pre-existing conditions. Germany also has a small private insurance segment in their healthcare market.

How can we adopt Germany’s approach to our market? Which elements could help us to hold down costs?  United States companies have been able to provide health insurance for employees with no tax penalty since 1942.  We should build on the system that is in place instead of replacing it with M4A.

Here’s what we propose as Allcare in Healing American Healthcare, our book published in January. All employers should be required to provide health insurance. The choice is an important component of the Allcare plan. It’s based on redesigning Medicare for people under 65 years of age. Our analyses have determined that the cost of this new competitor would be approximately 30% less than the current cost of commercial insurance. Allcare creates new competitive pressures for insurers while providing a new option to employers and individuals for healthcare coverage. Allcare could save American employers as much as $175 billion a year in health insurance premiums.

Currently, 15 million Medicaiden rollees are employed. By requiring all employers to provide health insurance for their employees and families, the cost of the Medicaid program could drop by as much as 30% per year.
 
There are many other aspects of healthcare delivery that need to be addressed as a part of a universal healthcare program.All the proposed legislation thus far to improve healthcare requires developing a national program to negotiate drug prices. Several studies have pointed out that on a per capita basis, we use many of the same drugs as people in countries with universal healthcare, but we pay as much as 2 ½ times more for them. This problem needs to be addressed and it will help to bring down the costs of all health insurance plans. Other authors such as Steven Brill in his book America’s Bitter Pill have pointed out that hospitals markup the medical devices and drugs that they administer to their patients. In some cases, the markups are more than 100% of their actual cost to the hospital.Hospital markups of these important supplies should be limited to their inventorying costs.

High administrative expenses also raise the cost of care. In America, administrative expenses total of 14% of the national cost of care. Japan spends about 3% on administrative expenses, about the same percentage as the complex Medicare program that is administered by private sector contractors. We should develop a charge master for all hospital and clinic charges so that it is very clear what all of the charges are to reduce to cost of billing.

By addressing these critical and interrelated issues in the pharmaceutical, hospital and insurance markets, we can substantially reduce the cost of health insurance coverage. We can provide universal healthcare at a lower cost while increasing competition and providing high-quality care that all Americans deserve - not eliminating whole industries.

Edward Eichhorn is a Veteran Medical Products and Services Developer and Founder of Medilink Consulting Group LLC, where he advises medical societies and commercial clients on marketing and strategic planning projects. He is the co-author of “Healing American Healthcare” (2019) with Dr. Michael Hutchinson. Visit http://www.medilinkconsulting.com

Dr. Michael Hutchinson is a Neurologist and Biophysicist. He is senior faculty at the Icahn School of Medicine at Mount Sinai in Manhattan, with 30 years of clinical experience. He is certified in neurology and neuroimaging, and is past president of the American Society of Neuroimaging. He holds a PhD in molecular physics and invented parallel MRI in 1987, now the standard for clinical MRI. He is the co-author of “Healing American Healthcare” (2019) with Edward Eichhorn.  Visit www.mountsinai.org