Medicare ‘buy-in’ proposals would lead to single-payer system, long waits, care rationing

Many Democratic politicians, including those seeking the party’s presidential nomination, believe bigger government is the solution to America’s health care woes. But a handful of centrist Democrats worry full-fledged “Medicare for all” will spook independents.

So they have unveiled several seemingly moderate plans that would allow people to buy into Medicare before they turn 65. Lawmakers insist these proposals wouldn’t abolish private insurance or force everyone into a one-size-fits-all federal health plan. They’d simply offer another coverage option.

Voters shouldn’t buy this spin. Medicare buy-in plans would eventually lead to single payer. Government rationing and long waits for health care would soon follow.

Last month, Sens. Tammy Baldwin, Debbie Stabenow and Sherrod Brown introduced the Medicare at 50 Act, which would let Americans 50 or older buy a privately administered Medicare plan through “Obamacare” exchanges. Reps. Joe Courtney, Brian Higgins, John Larson, and Peter Welch have sponsored companion House legislation.

They claim “Medicare at 50” is more feasible than Medicare for all because it would be less expensive and wouldn’t force anyone off his or her current insurance plan.

That’s true in the short term. But in the long run, the proposal would lead to Medicare — and only Medicare — for everyone.

Here’s why. Medicare’s reimbursement rates are lower than those for private insurance. That’s part of the appeal for proponents of expanding government-run coverage. They argue that Medicare’s massive customer base gives the program the negotiating leverage to extract better prices from health care providers than private insurers.

But Medicare’s payments don’t cover the cost of treating the program’s beneficiaries. For every dollar hospitals spent treating Medicare patients in 2017, they received only 87 cents in reimbursement. Hospitals balance their books by charging private insurers more.

Proponents of Medicare for more also boast that Medicare, unlike private insurers, doesn’t need to turn a profit. Medicare spent more than $700 billion on reimbursements and administrative expenses in fiscal year 2018 but collected only about $123 billion in premiums, co-pays, coinsurance and rebates.

Because Medicare can swallow huge losses and force providers to accept cut-rate reimbursements, it would be able to market plans at much lower prices than private insurers. As people migrated to the cheaper Medicare plans, providers would shift additional costs onto private insurers. That would drive premiums up further.

Medicare plans would thus become even more appealing. The cycle would repeat until everyone older than 50 had opted for Medicare. Exchange customers younger than 50 would find themselves paying ever more for coverage, if insurers were willing to serve that market at all. Eventually, Congress would sweep the wreckage of the private insurance market into the ballooning Medicare system.

Some House members have proposed an even more ambitious buy-in scheme. The “Medicare for America Act,” introduced by Reps. Rosa DeLauro and Jan Schakowsky in December 2018, would automatically enroll the uninsured and those who now buy coverage in the individual market in Medicare.

It would also make Medicare significantly more generous by slashing deductibles, imposing an out-of-pocket spending cap and expanding coverage for prescription drugs, dental, hearing, vision, and long-term care benefits.

Large employers would have to provide benefits comparable to the new plan or contribute 8 percent of their annual payroll to a new Medicare trust fund. Employers typically spend more than 8 percent of payroll on health benefits. Many would jump at the opportunity to cut costs by dumping employees onto the government plan.

Consequently, Medicare for America is a de facto, if not de jure, single-payer bill.

Government-run health care leads to doctor shortages, long waits for treatments and low-quality care. In the United Kingdom’s single-payer system, one-quarter of residents are waiting for some sort of medical appointment or treatment. Some people simply need a new prescription; others have been waiting months for diagnostic tests or appointments with specialists.

In Canada’s single-payer system, patients waited a median of 19.8 weeks for specialist treatment after being referred by a general practitioner last year. In 2016, more than 60,000 Canadians traveled abroad and paid out of pocket for care.

Medicare buy-ins might sound harmless. But these plans would inevitably lead to single payer — and the rationing that accompanies government-run health care.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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