Democrats Stage A Phony Retreat On Medicare For All
Not long ago, most leading Democrats were jostling for position aboard the “Medicare for All” bandwagon. But in the last few weeks, the political winds have shifted.
Senator Elizabeth Warren has responded to her decline in the polls by embracing a public option for the first few years of her time in the White House—and calling on Congress to pass Medicare for All in year three.
During an interview on Bloomberg Television, House Speaker Nancy Pelosi said, “I’m not a big fan of Medicare for All.” New Jersey Senator Bob Menendez recently stated that he would not vote for Sen. Warren’s Medicare for All plan, noting, “I’m not about to take away private insurance from the union members who have worked so hard to negotiate for it.”
Don’t be fooled by this supposed moderation. Every plan offered by Democrats would lead to a full-fledged government takeover of our healthcare system.
The supposed retreat from Medicare for All makes sense. Fifty-eight percent of the public opposes the idea when informed that it would eliminate private insurance. Six in ten give Medicare for All the thumbs-down when they learn it would mean higher taxes.
More worrisome for Democrats, almost two-thirds of swing voters in key battleground states like Michigan, Pennsylvania, Minnesota, and Wisconsin say eliminating private insurance would be “a bad idea,” according to a recent poll.
The Democratic Party’s moderates—including presidential front-runner Joe Biden, the surging South Bend Mayor Pete Buttigieg, Minnesota Senator Amy Klobuchar, and entrepreneur Andrew Yang—cite this data to support their case for a public option. Creating a government-run health plan would expand competition, drive down the cost of insurance, and allow people who like their plans to keep them. What’s not to like?
Plenty. A public option would lead to the exact same place as Medicare for All—and that’s a government takeover of the health insurance system.
To understand why, it’s crucial to comprehend two key facets of a public option.
First, the government-run plan could always underprice private insurers because it would not have to collect enough in premiums to cover its claims costs. It could simply tap the federal Treasury to make up the difference. Private insurers don’t have that luxury; they have to cover their costs to stay in business.
Second, most supporters of a public option envision adopting Medicare’s payment rates, which are roughly 40% less than those for private insurance. In fact, Medicare’s reimbursements don’t cover the costs that providers incur caring for the program’s beneficiaries. In 2017, Medicare only paid hospitals 87 cents for every dollar they spent on care.
To fill this gap, doctors and hospitals charge private insurers more.
If a public option became available, many Americans would drop their private coverage and opt for the cheaper public plan. Doctors and hospitals would respond to the influx of low-paying public patients by raising prices for the privately insured even more. Private insurers would pass those price hikes along to their customers.
An increasing number of those customers would then jump to the public option. And the cycle would repeat. Eventually, private insurers would no longer be able to attract customers and would drop out of the market.
A new study puts some numbers behind this theory. FTI Consulting modeled a national public option plan and found that 130,000 people would lose their private coverage in the first year, as private insurers abandoned the individual market. By 2028, consumers in one-fifth of state marketplaces would no longer have access to any private plan. In three decades, 70% of markets would have only a government option.
At that point, we’d effectively have a single-payer system—no legislation required.
And that’s exactly what public option supporters have in mind. Yale University professor Jacob Hacker—one of the first proponents of the concept—said that it’s a way to get to single-payer without having to “frighten people into thinking that they’re going to lose their private insurance.” Buttigieg admits that his public option proposal creates “a natural glide path to Medicare for All.”
The public option and Medicare for All are one and the same. The only difference is when they eliminate private health insurance.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her next book — False Premise, False Promise: The Disastrous Reality of Medicare for All — will be published by Encounter in January 2020.