Strategists say Warren ‘Medicare for All’ plan could appeal to centrists

https://thehill.com/policy/finance/469707-strategists-say-warren-medicare-for-all-plan-could-appeal-to-centrists

Image result for Medicare for All

Sen. Elizabeth Warren’s “Medicare for All” funding plan has come under fire from her rivals for the Democratic nomination, but some in her own party say her framing of the issue could ease the concerns of centrist voters.

The Massachusetts senator and leading Democratic presidential candidate said when she released her funding plan earlier this month that it “doesn’t raise middle-class taxes by one penny.”

She estimated that Medicare for All would require $20.5 trillion in federal spending and said that would be paid for with taxes that would directly fall on employers, corporations, wealthy individuals and financial institutions.

For Democratic strategists, Warren’s approach could be a way to soothe voters’ worries about Medicare for All while advancing key progressive ideas.

“The fact that she has devised a plan that would benefit middle class Americans without taxing [them] is certainly reassuring to a lot of people,” said Brad Bannon, a Democratic strategist who isn’t working for any of the presidential campaigns.

“What Warren’s plan does is giving voters bold change without raising middle class taxes,” Bannon added.

The plan has stoked controversy, with some critics questioning Warren’s claims that it will avoid raising taxes on the middle class.

A key component is payments that employers would make to the federal government, estimated to raise $8.8 trillion.

Some policy experts say that Warren’s proposed employer contribution is a tax that would ultimately be paid by workers. But others argue that burdens on the middle class wouldn’t go up because employers would be shifting from making payments to private insurers to payments to the federal government.

Supporters of Warren’s plan also note that the plan makes clear that Warren would eliminate premiums, deductibles and copays, which should be a relief for voters with questions about Medicare for All.

Adam Green — co-founder of the Progressive Change Campaign Committee (PCCC), which has endorsed Warren — said that “Warren’s Medicare for All financing plan is functionally like an $11 trillion tax cut for middle class families,” because it eliminates out-of-pocket health costs for workers and targets tax increases at the wealthy and corporations.

Warren is one of the leading candidates in the Democratic primary, and health care is one of the most prominent issues in the race. But her plan also came after she faced intense pressure to provide details on how she would fund Medicare For All.

She had avoided saying in debates whether she’d raise taxes on the middle class to pay for Medicare for All, leading to criticism from more moderate candidates such as former Vice President Joe Biden. Sen. Bernie Sanders (I-Vt.), the other top-tier candidate with a Medicare for All plan that would do away with private insurance, has said he would directly raise taxes on the middle class to pay for his plan.

Because Warren’s plan claims it won’t raise taxes on the middle class, it “takes some of the starch” out of attacks she’ll receive from Biden, Bannon said. It also “puts her up as a great selling point in the battle against Sanders,” he added.

The release of Warren’s plan also allowed her to provide answers to a question that debate moderators had consistently pressed her on, even as she rose in the polls and voters viewed her debate performances favorably.

“In each of the last debates, while pundits were obsessing about magic words around taxes, voters were consistently saying Elizabeth Warren won,” Green said.

Strategists also said they see Warren’s Medicare for All plan as an effort to reinforce that she is the candidate with detailed policy solutions.

Michael Fraioli, a Democratic strategist who had worked on Rep. Tim Ryan‘s (D-Ohio) now-defunct presidential campaign and is unaffiliated, said that Warren — who has used the slogan “I have a plan for that” — needed to provide details on her “signature issue” of Medicare for All.

Warren’s Medicare for All funding plan isn’t the only area where she’s taken steps to make her proposals for big changes to the economy seem more palatable to moderate voters. For example, Warren stresses that she’s a capitalist, unlike Sanders, who describes himself as a democratic socialist.

But it remains to be seen how effective Warren’s health care funding plan will be in easing the concerns of voters who have reservations about Medicare for All. 

Some of the fiercest critics of her plan have been her more centrist rivals in the Democratic primary, such as Biden.

The proposal also has drawn criticism from some Democratic-leaning economic policy experts, in addition to many tax experts on the right. For example, Larry Summers, a key player on economic policy in past Democratic presidents’ administrations, argued in a Washington Post op-ed on Tuesday that “the combined tax impact of Warren’s various plans is extreme.”

Jim Kessler, executive vice president for policy at the center-left think tank Third Way, said he thinks Warren tried to ease people’s concerns with her funding plan, but “there’s a lot of skepticism out there by reasonable people.”

“It needs to hold up to scrutiny and I’m not sure it can,” he said.

GOP politicians have also already started to attack Warren over her Medicare for All plan.

Senate Majority Leader Mitch McConnell (R-Ky.) said on the Senate floor Tuesday that Warren’s proposal was “breathtaking.”

“In order to take away employer-sponsored insurance from 180 million Americans, Democrats want to kill American jobs and bring the economy to a screeching halt,” McConnell said.

Democratic strategist Craig Varoga said that Republicans will likely ignore the fact that Warren’s funding mechanisms are targeted on businesses and wealthy people, and instead hone in on her proposing around $20 trillion in tax increases.

“Republicans will not discuss the specifics of Warren’s funding mechanism, only the size of it, and they will reduce it to bumper-sticker simplicity, that it’s the biggest tax increase in American history,” he said. “It doesn’t matter whether that’s accurate or not, or how it polls 12 months before the election, that’s what they will say, and Trump will say it louder than anyone.”

The Progressive Change Institute, also co-founded by Green, is planning in the coming days to make public the results of a poll, done in partnership with Public Citizen and Business for Medicare For All, that finds that a majority of registered voters support Medicare for All, both nationally and in battleground states.

However, a recent poll released by the Kaiser Family Foundation (KFF) and the Cook Political Report found that most Democratic voters in four key battleground states think Medicare for All is a good idea, but that most swing voters in those states view it as a bad idea.

Both the Progressive Change Institute and the KFF surveys were conducted before Warren released her funding plan. 

Ashley Kirzinger, associate director for public opinion and survey research at KFF, said it is “yet to be determined” how the plan will resonate with the public, given that Republicans will use it against Warren but that people become more favorable toward Medicare for All when they learn it will eliminate their out-of-pocket costs.

“People are still learning how it works,” she said.

 

Hillary Clinton: Warren’s ‘Medicare for All’ plan would never get enacted

https://thehill.com/policy/healthcare/469407-hillary-clinton-warrens-medicare-for-all-plan-would-never-get-enacted?utm_source=Sailthru&utm_medium=email&utm_campaign=Newsletter%20Weekly%20Roundup:%20Healthcare%20Dive%2011-09-2019&utm_term=Healthcare%20Dive%20Weekender

Image result for Medicare for All

Hillary Clinton said Wednesday that she does not think Sen. Elizabeth Warren’s (D-Mass.) “Medicare for All” plan could ever get enacted and that she backs a public option instead. 

“You just don’t think that that plan would ever get enacted?” interviewer Andrew Ross Sorkin asked Clinton at The New York Times DealBook Conference.

“No, I don’t. I don’t, but the goal is the right goal,” the former secretary of State responded.

“I believe the smarter approach is to build on what we have. A public option is something I’ve been in favor of for a very long time,” Clinton said. “I don’t believe we should be in the midst of a big disruption while we are trying to get to 100 percent coverage and deal with costs.”

Amid the raging health care debate among the Democratic presidential candidates, Clinton, the party’s 2016 nominee, appears to line up more with former Vice President Joe Biden and South Bend, Ind., Mayor Pete Buttigieg, who are pushing for an optional government insurance plan, rather than Warren and Sen. Bernie Sanders (I-Vt.), who are pushing government insurance for all.

Clinton, though, tried to shift the debate back to highlighting the contrast between Democrats and Republicans, pointing to the fact that the GOP is trying to repeal the Affordable Care Act, including backing a lawsuit currently in the courts to overturn the entire law. 

“Yeah, we’re having a debate on our side of the political ledger, but it’s a debate about the right issue, how do we get to health care coverage for everybody that we can afford?” Clinton said, noting the GOP is “in court right now to strike the entire law down.”

 

Warren bets the White House on Medicare for All

https://www.axios.com/elizabeth-warren-medicare-for-all-plan-reaction-13aa5d21-f489-4c8b-b834-77d742d74148.html

Image result for Medicare for All

Elizabeth Warren, who rose to the top with big liberal bets, is banking a big slice of her presidential run on full-throated support for Medicare for All. 

Why it matters: Warren is taking a beating on social media after claiming middle class Americans won’t pay higher taxes to fund health care coverage fully paid for by taxpayers, according to data from NewsWhip provided exclusively to Axios. At the same time, her poll numbers nationally are slipping.

The bigger picture: Numerous prominent Democrats have told us Trump will feast on Warren’s plan to eliminate private insurance to force everyone onto Medicare. They worry she has no wiggle room to backtrack if she wins the nomination because her entire reputation is wrapped around not buckling on big debates like health care. 

By the numbers: Of the 50 biggest stories over the last two weeks about Elizabeth Warren’s plan to pay for Medicare for All, 70% were negative, according to NewsWhip data.

  • Criticism around how to pay for the plan has been accompanied by a rapid descent in the polls. After briefly overtaking Joe Biden atop the 2020 Democratic polling average on Oct. 8, Warren has tumbled and now trails Biden by 7.2 points.

Between the lines: The blowback against Warren is a natural consequence of her emergence as a top threat in the race, illustrated by the incoming she faced in the October debate.

  • It is a reversal of a trend we saw in the summer, in which Warren was the beneficiary of glowing stories and subsequently climbed in polling.
  • The criticism picked up following the debate after she danced around questions of whether the plan would require a middle-class tax hike.

Between the lines: While not explicitly about Warren, a Yahoo Finance article from late October that calculates the taxes necessary to pay for Medicare for All was the biggest article associated with Warren in 2019 on social media with 820k interactions (likes, comments, shares).

  • According to NewsWhip data, the criticism picked up steam in the wake of her announcement of how to pay for the plan, which requires an additional $20.5 trillion of federal spending.

The top negative stories in the last two weeks:

  1. The Democratic plan for a 42% national sales tax (Yahoo) — 820k interactions
  2. Warren agrees Medicare-for-All could result in two million jobs lost: ‘This is part of the cost issue’ (Fox News) — 43k
  3. Warren says health insurance workers laid off under ‘Medicare-for-all’ can work in auto, life insurance (Fox News) — 42k
  4. Elizabeth Warren Says Massive Job Loss Is Part of the Cost of Medicare-For-All (IJR) — 40k
  5. Elizabeth Warren Wants To Pay for Medicare for All With a $9 Trillion Tax That Will Hit the Middle Class (Reason) — 40k

Our 2020 attention tracker is based on data from NewsWhip exclusively provided to Axios as part of a project that will regularly update throughout the 2020 campaign.

 

 

 

 

Execs flirt with ‘Medicare for All’ at HLTH19

https://www.healthcaredive.com/news/execs-flirt-with-medicare-for-all-at-hlth19-despite-trump-admin-warnings/566373/

Despite Trump administration warnings about “Medicare for All” and other expansions of public coverage upending the private market, some executives at HLTH last week seemed more agnostic about the Democrat-backed plans, some of which would eliminate private insurance altogether.

​”It’s a symptom of a pricing issue, and a rate issue,” Vivek Garpialli, CEO of Medicare Advantage plan provider Clover Health, said. “Until we see a better idea, it’s actually not a bad framework to have a debate around and, unless a better one comes along in the next three, five, 10 years, it probably is inevitable.”

Democratic candidates hoping to take on incumbent President Donald Trump in 2020 are pitching a slate of proposals to give the current healthcare system a major facelift. Former Vice President Joe Biden endorses a public option and bolstering the Affordable Care Act, while Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., are stumping for a Medicare for All-type system that would terminate private insurance.

The debate itself is a “good example of the fact that the status quo needs to change,” Tom Richards, global strategy and business development leader at Cigna, told Healthcare Dive.

Many healthcare tech startups have configured their products to be compatible within multiple platforms or companies, including myriad providers, Medicare, insurance on the ACA exchanges or employer-based coverage, so the payer platform doesn’t matter as much to them — or their margins.

“So long as innovation is maintained, I think it could go either way,” Pranay Kapadia, CEO of voice-enabled digital assistant startup Notable, said.

But executives, even on the startup side, seemed leery about the uncertainty Medicare for All would inject into the system.

“At the end of the day, the government is already unable to fully fund its obligations, from Social Security, to Medicare, to Medicaid,” Ali Diab, CEO of employer-sponsored insurance startup Collective Health, said.

“Unless someone proposes a means to actually fund it that’s credible, I just don’t see a way for the government to take on more of the financial burden,” he said, though he clarified he didn’t have an opinion on the politics either way.

Moving to some form of a nationalized healthcare system could drag down profit margins across the industry (especially for payers). Cost estimates for the plans vary in the tens of trillions, from Sanders’ $33 trillion to Warren’s $52 trillion, both spread out over a decade.

Democratic backers say Medicare for All will drive down overall costs in the long run, despite hiking federal spending. Warren, who released her plan Friday, pledged there would be no middle-class tax increases and that Americans’ pocketbooks would be helped overall due to the elimination of premiums and other out-of-pocket costs.

But industry isn’t so sure the government could implement such a sweeping plan, even if it wanted to.

“I just don’t see the legislators getting their act together to make this happen and, frankly, I don’t want to wait for them,” Marijka Grey, executive leader for transformation implementation at 150-hospital CommonSpirit Health, said.

At HLTH, Trump administration officials kept up their drumbeat of criticism of the idea.

It would “hand the reins to government bureaucrats to fix all our problems” and is marked by an “unwarranted confidence in government central planners,” CMS Administrator Seema Verma said, while White House policy official and ex-pharma lobbyist Joe Grogan said Democrats “cannot accept no one is smart enough to design a healthcare system for all Americans.”

Few Democrats have released comprehensive healthcare proposals, though 11 of the remaining 16 candidates support some version of single-payer healthcare.

“Quite frankly, branding-wise it’s not horrible,” Adam Boehler, the former head of CMS’ innovation center, said. “In my opinion, it’s the content versus the brand in terms of whether something will work or not.”​

 

 

 

 

Elizabeth Warren’s $20.5 Trillion Plan to Fund Medicare for All

https://www.thefiscaltimes.com/2019/11/01/Elizabeth-Warren-s-205-Trillion-Plan-Fund-Medicare-All

Image result for Medicare for All

Elizabeth Warren on Friday detailed how she intends to pay for Medicare for All without raising costs for middle-class households. The senator from Massachusetts said her plan will cover everyone in the country without raising overall spending, “while putting $11 trillion back in the pockets of the American people by eliminating premiums and virtually eliminating out-of-pocket costs.”

Warren’s plan relies in large part on redirecting existing spending toward a universal, federal health care system, while adding new revenues from taxes on the wealthy, the financial sector and large corporations. “We can generate almost half of what we need to cover Medicare for All just by asking employers to pay slightly less than what they are projected to pay today, and through existing taxes,” Warren said.

Some key details from the Warren plan:

Much lower cost estimate: Warren starts with the Urban Institute’s estimate that the federal government would need $34 trillion more over 10 years to pay for Medicare for All, but she slices that number dramatically — down to $20.5 trillion — by using existing federal and state spending on programs including Medicaid to fund a portion of her proposal, along with larger assumed savings produced by a streamlined system paying lower rates to hospitals, doctors and other health care providers.

Total health care spending stays about the same: Warren projects about $52 trillion in national health care spending over 10 years, close to estimates for the existing system, despite covering more people and offering more generous benefits, including long-term care, audio, vision and dental benefits. Applying Medicare payment levels across the health care system is projected to produce substantial savings that would be used to finance the expanded size and scope of the plan.

Heavy reliance on employer funding: The employer contribution to Medicare for All is pegged at $8.8 trillion, with employers required to contribute to the federal government 98% of what they would pay in employee premiums. Businesses with fewer than 50 employees would be exempt.

Public spending continues: State and local governments would be still on the hook for the $6 trillion they currently spend on Medicaid, the Children’s Health Insurance Program and public employee premiums.

New taxes on the wealthy: Warren proposes a new 3% tax on household wealth over $1 billion — and that’s on top of her proposed wealth tax, which calls for a separate 3% tax on wealth over $1 billion (and a 2% tax on wealth between $50 million and $1 billion). Combined with an annual capital gains tax on the top 1% of households, her proposal projects that the new health-care-focused wealth taxes would produce $3 trillion.

Taxes on business and finance: Warren says she can raise $3.8 trillion through “targeted” taxes on big business and financial transactions, including a financial transaction tax of .01% on the sale of stocks, bonds and derivatives.

Reduced tax evasion: Cracking down on tax evasion is projected to bring in $2.3 trillion. “The federal government has a nearly 15% ‘tax gap’ between what it collects in taxes what is actually owed because of systematic under-enforcement of our tax laws, tax evasion, and fraud,” Warren said. “By investing in stronger enforcement and adopting best practices on tax reporting, withholding, and filing, experts predict that we can close the tax gap by a third.”

Revenue increase from higher take-home pay: Employees would no longer pay premiums for health insurance, providing a pay hike and higher tax revenues, estimated to total $1.4 trillion.

Abolishing the Overseas Contingency Operations fund: Warren is calling for reduced military spending, with a focus on what some call the “slush fund” that covers the cost of overseas military operations. Eliminating this off-budget spending is projected to save $800 billion.

Immigration reform: Expanded legal immigration would bring in $400 billion in revenue as more incomes are subject to taxes, Warren says.

A record tax cut? Once the new revenues and cost savings are added up, Warren says her plan will deliver what amounts to an historic tax cut. “No middle class tax increases. $11 trillion in household expenses back in the pockets of American families. That’s substantially larger than the largest tax cut in American history.”

Warren won plaudits from some analysts and policy wonks for releasing a plan, but the details she laid out are also being picked apart by critics and rivals, with some experts already expressing doubts about her assumptions and numbers. Here’s some of the reaction:

Congratulations from a conservative: “Kudos to Senator Warren for actually releasing a plan,” said Scott Greenberg, formerly an analyst with the right-leaning Tax Foundation. “There are a lot of things in here that will draw attacks from the left and from the right, and it might have been politically easier not to release it at all. But Warren has stuck by her commitment to explain her proposals.”

Criticism from a key rival: “The mathematical gymnastics in this plan are all geared towards hiding a simple truth from voters: it’s impossible to pay for Medicare for All without middle class tax increases,”  said Kate Bedingfield, deputy campaign manager for Joe Biden. Bedingfield argued that employees would end up paying the tax on employers.

Dire warnings from the White House: “It is the middle class who would have to pay the extra $100 billion or more to finance this kind of socialist government takeover of health care,” said Larry Kudlow, President Trump’s top economic adviser. “It would have a catastrophic effect on the economy and all these numbers that we’re seeing, all these numbers, on incomes per household, on wage increases, on jobs, all these numbers would literally evaporate and by the by, so would the stock market.”

Tax vs. premium: Warren’s plan will likely kick off a debate about the difference between taxes and health care premiums, and whether that difference matters, says William Gale of the Brookings Institution. “Does [the Warren plan] raise ‘taxes’ on the middle class?,” Gale asked Friday. “Short answer — it does not raise ‘burdens’ on the middle class.”

Cost reduction is crucial: “The key to Warren’s plan for financing Medicare for all is aggressively constraining prices paid to hospitals, physicians, and drug companies. We’d still have the most expensive health system in the world, but it would be less expensive than it is now,” said Larry Levitt of the Kaiser Family Foundation. “Warren’s plan to aggressively constrain health care prices under Medicare for all would be quite disruptive. On the other hand, every other developed country has managed to figure it out, so we know it’s possible.”

And the battle is ultimately political: “In laying out the specifics of her Medicare for all plan, Warren’s challenge is more about politics than arithmetic,” Levitt continued. “She is taking on the wealthy, corporations, and pretty much every part of the health care and insurance industries. Those are some powerful enemies.”

So don’t expect major legislation soon: “Experts will argue for months whether [Warren is] being too optimistic — whether her cost estimates are too low and her revenue estimates too high, whether we can really do this without middle-class tax hikes,” said economist Paul Krugman. “You might say that time will tell, but it probably won’t: Even if Warren becomes president, and Dems take the Senate too, it’s very unlikely that Medicare for all will happen any time soon.”

 

 

Other countries show Medicare for All doesn’t have to mean getting rid of private insurance

https://www.cnn.com/2019/10/15/politics/private-health-insurance-medicare-for-all-international-comparison/index.html?utm_source=The+Fiscal+Times&utm_campaign=27ee43ca78-EMAIL_CAMPAIGN_2019_10_16_09_52&utm_medium=email&utm_term=0_714147a9cf-27ee43ca78-390702969

Image result for Other countries show Medicare for All doesn't have to mean getting rid of private insurance

Bernie Sanders often points to Canada and Europe as models for universal health care coverage.

But the Vermont independent senator’s “Medicare for All” plan differs substantially from the insurance systems that exist up north and across the pond. Canadians and most European countries have private insurance industries alongside their government programs.
One of the most controversial provisions of Sanders’ Medicare for All proposal is that it essentially eliminates private insurance — allowing the industry to only offer benefits for services that are not covered by the federal program, such as cosmetic surgery. More than 150 million Americans buy private policies through their employers, and tens of millions more purchase private insurance through Medicare Advantage or on the individual market exchanges.
Sanders has made Medicare for All a centerpiece of his 2020 presidential campaign. Rivals ranging from President Donald Trump to former Vice President Joe Biden, who is also seeking the Democratic nomination, have gone the other way and argue that Americans should not be forced to give up policies they like. Sanders has defended his stance, slamming the private insurance industry for putting profits over patients.
But public and private insurance co-exist in Canada and many European countries. These developed nations require that everyone have coverage — with private insurance typically providing additional benefits, helping to pay out-of-pocket costs or allowing faster and broader access to medical providers. In some nations, such as the Netherlands and Switzerland, residents satisfy their coverage mandate with policies from private carriers.
In many developed nations outside of the US, residents expect a lot from their health systems but they are conscious of the cost, said Chris James, an economist specializing in health care for the Organisation for Economic Co-operation and Development, a consortium of 36 developed countries.
“It becomes a tricky political balance between those competing sets of demands,” James said. “They want more generous public provisions but they don’t want to pay too much more tax.”
How health care coverage works in other countries varies widely.
Canada, for instance, has a regionally administered public health insurance program, which is paid for by provincial and federal tax revenue, according to a 2017 report from The Commonwealth Fund. Patients don’t pay for hospital care and doctors’ visits. However, the universal program, known as Canadian Medicare, doesn’t cover outpatient prescription drugs, rehabilitation, home care, dental benefits, vision care and some other services. Some two-thirds of Canadians are covered by private plans, often through their employers, to cover these treatments. The insurers are mostly for profit.
England, meanwhile, has the very comprehensive National Health Service, paid for by taxes. Services are generally free, though there are some copayments for prescription drugs and some services, including dental care for most adults. Still, about 11% of residents sign up for private health insurance plans, which provide faster access to care, particularly elective hospital procedures, according to The Commonwealth Fund.
“They use it to jump the queue,” said Robin Osborn, senior adviser with The Commonwealth Fund.
The system is very different in other countries, however.
In the Netherlands, residents are required to buy private insurance, which is heavily regulated and paid for by payroll taxes paid by employers, premiums paid by enrollees, annual deductibles, copayments and general taxes. Lower-income folks receive government subsidies to help them afford the cost, James said. Some 84% of the Dutch also buy additional private coverage to pay for dental care, eyeglasses, physical therapy and other services, mostly from non-profit insurers, according to The Commonwealth Fund.
Germans are also mandated to have coverage. They can choose from more than 100 non-profit “sickness funds,” which covers a wide array of services, including drugs, physical therapy and dental work. Most are funded through payroll contributions that are split between workers and companies. About 11% of residents, mainly younger workers with higher incomes, opt out of this program and buy private coverage, which may offer a wider range of services with lower premiums, according to The Commonwealth Fund. Some of the private insurers are non-profit, while most are for profit.
Denmark, meanwhile, has a national health care system paid for mainly by income taxes, but 42% of residents buy additional coverage to help pay for prescription drugs, dental care and physical therapy, mainly from the non-profit Danmark, according to The Commonwealth Fund. Additionally, 30% have supplemental policies from for-profit insurers to give them expanded access to private providers.
“These systems each have carved out a role for private insurance,” Osborn said. “The universal coverage provides a comprehensive package of benefits that is generous. The private insurance, depending on the system, often enables people to get care that is either faster, has a slightly higher level of amenities or additional benefits.”
The Sanders campaign says that private insurers in other countries are very different from the American companies Sanders is fighting against.
“For the most part, for-profit, private insurance companies do not play a large role in other countries’ health care systems and, to the extent that they do play a role, they are tightly managed and kept in line by the government,” said Warren Gunnels, senior adviser to the campaign.

 

 

Don’t Confuse Changes in Federal Health Spending with National Health Spending

https://www.urban.org/urban-wire/dont-confuse-changes-federal-health-spending-national-health-spending?utm_source=The+Fiscal+Times&utm_campaign=27ee43ca78-EMAIL_CAMPAIGN_2019_10_16_09_52&utm_medium=email&utm_term=0_714147a9cf-27ee43ca78-390702969

There has been confusion over estimates, like ours, that measure the effect of single-payer (i.e., Medicare for All) proposals on both federal spending and total national health spending.

The two are not the same, and too frequently, people use estimates of both and make misleading apples-to-oranges comparisons.

Federal spending versus national spending

Federal health care spending is the money the federal government spends on health care, whereas national health spending includes all health spending, regardless of who pays for it.

Federal health care spending includes spending on Medicare, Medicaid, the Children’s Health Insurance program, Affordable Care Act Marketplace premium subsidies, the Veterans Administration, US Department of Defense health care programs, support for health care professionals and hospitals providing uncompensated care, as well as other federal programs.

Changes in federal health spending represent amounts that would either need to be added to the federal budget (and funded through tax increases or additional government debt) or which would lead to cuts in other federal programs to free up sufficient federal funds.

National health care spending includes spending by the federal government, state and local governments, households, and employers. National health expenditures (NHE) are estimated annually by the Centers for Medicare and Medicaid Services (CMS) as the National Health Expenditure Accounts. Using our models’ projections and extending the CMS’s estimate for spending categories we do not model, we estimate that NHE for the 10-year period from 2020 to 2029 will total approximately $52 trillion dollars under current law.

What increases or decreases in these estimates mean

It is possible, for example, for federal spending to increase while national health spending decreases, if new federal programs take over some of the expenses currently paid for by employers and households and do it at a lower cost.

But if a federal program takes over some of the private spending and ends up providing more generous benefits, total national spending could still increase. Regardless, it is important to separate changes in federal spending from changes in national spending to understand the implications of any health care reform approach.

In our most recent report, we estimate that a broad single-payer reform (referred to as Reform 8: Enhanced Single Payer in the report) would increase federal government spending by $34 trillion over the 2020–29 period, $34 trillion beyond what the federal government already spends on health care.

However, this reform would shift almost all of the spending currently done by households, employers, and state governments over to the federal government. All people, regardless of whether they have insurance coverage today, would be covered by the new federal program.

How single-payer reform would affect federal and national spending

Under the single-payer enhanced reform, the new federal government program would provide more covered benefits than typical insurance offers today (including typical medical benefits but adding a new home- and community-based long-term services and supports benefit and adult dental, vision, and hearing benefits). All the costs would be covered by the federal government; no one would pay premiums or out-of-pocket costs (i.e., no deductibles and no copayments or coinsurance), including undocumented residents.

As a result, many people would get insurance for the first time, and many others would get significantly more generous insurance than they currently have. And with their new or improved insurance, many people would use more medical care than they do today.

The federal government would limit the fees paid to doctors, hospitals, and prescription drug manufacturers, which would help lower the program’s costs, compared with what it would be otherwise. In addition, the system would be simpler than our current “patchwork” system, so the administrative costs of running the program would be lower than in most private insurance plans; this also helps offset some of the new costs.

However, by our estimates, the increase in spending for people with this new generous coverage would outweigh the savings from lower prices for health care providers and lower administrative costs. As a result, total national spending would increase, even taking into account greatly reduced household, employer, and state government spending.

For this approach to reform, federal spending would increase by $34 trillion over 10 years, but health spending by individuals, employers, and state governments would decrease by $27 trillion, so national health spending would increase by $7 trillion over the same 10-year period, from $52 to $59 trillion.

The figure below illustrates our estimates. In the first bar, we divide the $52 trillion estimated current-law spending on health care over 2020–29 into three pieces: $17 trillion in federal spending; $27 trillion in private spending and state and local government spending for medical care and dental care that would be subsumed into the new single-payer program; and $8 trillion in spending (a mix of government and private spending) that would not be affected by a single-payer program.

figure 1

The $8 trillion includes costs associated with an array of expenses, such as medical care for members of the military and their families while military members are deployed, services provided to foreign visitors, acute care provided to people living in institutions (e.g., prisons and nursing homes), and the value of new construction and equipment put in place by the medical sector. This spending also includes long-term services and supports by states and individuals that would continue under reform. For our purposes here, we refer to this $8 trillion in spending as “spending not affected by single-payer.”

The taller second bar shows that the total national spending under a single-payer program would be higher than under current law. The $17 trillion in federal spending under current law would be shifted to help fund the new program, and the federal government would take over the $27 trillion in current health care spending by employers, households, and state and local governments.

Fully funding a new single-payer program would require an additional $7 trillion in federal spending beyond that repurposed $44 trillion. The $8 trillion in spending not affected by the  single-payer program would continue to be funded by a mix of government and private sources.

Thus, it is not appropriate to compare an estimated increase in federal spending of $34 trillion over 10 years with a current-law level of national health spending of $52 trillion over the same period and conclude these are savings in national health spending.

And although many advocates believe that a single-payer system would increase federal spending but with the benefit of reducing national health spending, our estimates contradict that. According to our analysis, a broad single-payer reform, similar to current Medicare for All bills, would increase federal spending and increase national spending.

But as our full report also shows, a single-payer program can be designed to decrease national health spending, as can other approaches to achieving universal coverage.