If it followed the path of traditional Medicare, it would end up paying for a lot of coverage that has little medical value.
In the first congressional hearing held on “Medicare for all” in April, Michael Burgess, a Republican congressman from Texas and a physician, called such a proposal “frightening” because it could limit the treatments available to patients.
The debate over Medicare for all has largely focused on access and taxpayer cost, but this raises a question that hasn’t gotten much attention: What treatments would it cover?
A good starting place for answers is to look at how traditional Medicare currently handles things. In one sense, there are some important elements that Medicare does not cover — and arguably should. But a little digging into the rules governing treatments also reveals that Medicare allows a lot of low-value care — which it arguably should not.
Many countries don’t cover procedures or treatments that have little medical value or that are considered too expensive relative to the benefits. American Medicare has also wrestled with the challenge of how to keep out low-value care, but for political reasons has never squarely faced it.
You might remember the factually misguided “death panel” attack on the Affordable Care Act, which preyed on discomfort with a governmental role in deciding what health care would or would not be paid for. (This discomfort also extends to private plans, exemplified by the backlash against managed care in the 1990s.)
Perhaps as a result, Americans don’t often talk about what treatments and services provide enough value to warrant coverage.
You can divide current Medicare coverage into two layers.
The first is relatively transparent. Traditional Medicare does not cover certain classes of care, including eyeglasses, hearing aids, dental or long-term care. When the classes of things it covers changes, or is under debate, there’s a big, bruising fight with a lot of public comment. The most recent battle added prescription drug coverage through legislation that passed in 2003.
Over the years, there have also been legislative efforts to add coverage for eyeglasses, hearing aids, dental and long-term care — none of them successful. Some of these are available through private plans. So a Medicare for all program that excluded all private insurance coverage and that resembled today’s traditional Medicare would leave Americans with significant coverage gaps. Most likely, debate over what Medicare for all would cover would center on this issue.
But there is a second layer of coverage that receives less attention. Which specific treatments does Medicare pay for within its classes of coverage? For instance, Medicare covers hospital and doctor visits associated with cancer care — but which specific cancer treatments?
This second layer is far more opaque than the first. By law, treatments must be “reasonable and necessary” to be approved for Medicare coverage, but what that means is not very clear.
We think of Medicare as a uniform program, but some coverage decisions are local. What people are covered for in, say, Miami can be different from what people are covered for in Seattle.
Many treatments and services are covered automatically because they already have standard billing codes that Medicare recognizes and accepts. For treatments lacking such codes, Medicare makes coverage determinations in one of two ways: nationally or locally.
Although Medicare is a federal (national) program, most coverage determinations are local. Private contractors authorized to process Medicare claims decide what treatments to reimburse in each of 16 regions of the country.
In theory, this could allow for lots of variation across the country in what Medicare pays for. But most local coverage determinations are nearly identical. For example, four regional contractors have independently made local coverage determinations for allergen immunotherapy, but they all approve the same treatments for seasonal allergy sufferers.
There are more than 2,000 local coverage determinations like these. National coverage decisions, which apply to the entire country, are rarer, with only about 300 on the books.
When Medicare makes national coverage decisions, sometimes it does so while requiring people to enter clinical trials.
It has been doing this for over a decade. The program is called coverage with evidence development, and its use is rare. Fewer than two dozen therapies have entered the program since it was introduced in 2006. But it allows Medicare to gather additional clinical data before determining if the treatment should be covered outside of a trial. To be considered, the treatment must already be deemed safe, and it must already be effective in some population. The aim is to test if the treatment “meaningfully improves” the health of Medicare beneficiaries.
Only one therapy (CPAP, for sleep apnea) that entered this process has ever emerged to be covered as a routine part of Medicare. The others are in a perpetual state of limbo, neither fully covered nor definitively not covered. CAR-T cell therapy, a type of cancer immunotherapy, which appears to be very successful but is also very expensive, is one of the most recent to enter this process.
Despite the complexity of all these coverage determination methods — local, national, contingent on clinical trials — the bottom line is that very few treatments are fully excluded from Medicare, so long as they are of any clinical value. And this suggests that it’s not very likely that Medicare for all would deny coverage for needed care.
A 2018 study in Health Affairs found only 3 percent of Medicare claims were denied in 2015. And traditional Medicare doesn’t limit access to doctors or hospitals either, as it is accepted by nearly every one. (This is in contrast with Medicare Advantage.)
Medicare has a troubled history in considering cost-effectiveness in its coverage decisions. Past efforts to incorporate it have failed. For example, regulations proposed in 1989 were withdrawn after a decade of internal review.
As a result, Medicare covers some treatments that are extremely expensive for the program and that offer little benefit to patients. The Medicare Payment Advisory Commission recently studied this in detail. In a 2018 report to Congress, it noted that up to one-third of Medicare beneficiaries received some kind of low-value treatment in 2014, costing the program billions of dollars. If Medicare for all followed in traditional Medicare’s path, it could be wastefully expensive.
The United States has had a historical unwillingness to face cost-effectiveness questions in health care decisions, something many other countries tackle head-on. Some Americans favor Medicare for all because it would make the system more like some overseas. And yet, in choosing not to consider the value of the care it covers, Medicare remains uniquely American.
Sen. Lindsey Graham, R-S.C., promised to revive ACA repeal in Congress if Republicans can win back a majority in the House and reelect President Donald Trump in 2020, according to an interview on South Carolina radio show “The Morning Answer with Joey Hudson,” featured by The Hill.
“This is what 2020 is about: If we can get the House back, and keep our majority in the Senate, and President Trump wins reelection, I can promise you, not only are we going to repeal Obamacare, we are going to do it in a smart way where South Carolina would be the biggest winner,” Mr. Graham said.
Mr. Graham, who failed to pass an ACA repeal plan in 2017, called “Medicare for All” and other Democratic presidential candidates’ healthcare plans “crazy.”
“Medicare for All is $30 trillion, and it’s going to take private sector healthcare away from 180 million Americans,” he said. Instead, he proposed giving states the power to determine healthcare policy through block grants and other smaller reforms. This would allow states to test conservative healthcare policies against liberal ones, he said.
“This election has got a common thing: Federalism versus socialism,” Mr. Graham said. “What I want to do is make sure the states get the chance to administer this money using conservative principles if you are in South Carolina, and if you want Medicare for All in California, knock yourself out.”
Opponents of the public option have funded an analysis that warns more rural hospitals may close if Americans leave commercial plans for Medicare.
With the focus on rural hospitals, the Partnership for America’s Health Care Future brings a sensitive issue for politicians into its fight against a Medicare buy-in. The policy has gone mainstream among Democratic presidential candidates and many Democratic lawmakers.
The estimate assumed Medicaid wouldn’t lose anyone to Medicare, and plotted out various scenarios where up to half of the commercial market would shift to Medicare.
The analysis was commissioned by the Partnership for America’s Health Care Future, a coalition of hospitals, insurers and pharmaceutical companies fighting public option and single-payer proposals.
In their most drastic scenario of commercial insurance losses, co-authors Jeff Goldsmith and Jeff Leibach predict more than 55% of rural hospitals could risk closure, up from 21% who risk closure today according to their previous studies.
Leibach said the analysis was tailored to individual hospitals, accounting for hospitals that wouldn’t see cuts since they don’t have many commercially insured patients.
The spotlight on rural hospitals in the debate on who should pay for healthcare is common these days, particularly as politicians or the executive branch eye policies that could cut hospital or physician pay.
On Wednesday, Sen. Elizabeth Warren (D-Mass.) seemingly acknowledged this when she published her own proposal to raise Medicare rates for rural hospitals as part of her goal to implement single payer, or Medicare for All. She is running for the Democratic nomination for president for the 2020 election.
“Medicare already has special designations available to rural hospitals, but they must be updated to match the reality of rural areas,” Warren said in a post announcing a rural strategy as part of her campaign platform. “I will create a new designation that reimburses rural hospitals at a higher rate, relieves distance requirements and offers flexibility of services by assessing the needs of their communities.”
Warren is a co-sponsor of the Medicare for All legislation by Sen. Bernie Sanders (I-Vt.), who is credited with the party’s leftward shift on the healthcare coverage question. But she is trying to differentiate herself from Sanders, and the criticisms about the potentially drastic pay cuts to hospitals have dogged single-payer debates.
Most experts acknowledge the need for a significant policy overhaul that lets rural hospitals adjust their business models. Those providers tend to have aging and sick patients; high rates of uninsured and public pay patients over those covered by commercial insurance; and fewer patients overall than their urban counterparts.
But lawmakers in Washington aren’t likely to act during this Congress. The major recent changes have mostly been driven by the Trump administration, where officials just last week finalized an overhaul of the Medicare wage index to help rural hospitals.
As political rhetoric around the public option or single payer has gone mainstream this presidential primary season, rural hospitals will likely remain a talking point in the ideas to overhaul or reorganize the U.S.’s $3.3 trillion healthcare industry.
This was in evidence in May, when the House Budget Committee convened a hearing on Medicare for All to investigate some of the fiscal impacts. One Congressional Budget Office official said rural hospitals with mostly Medicaid, Medicare and uninsured patients could actually see a boost in a redistribution of doctor and hospital pay.
But the CBO didn’t analyze specific legislation and offered a vague overview of how a single-payer system might look, rather than giving exact numbers.
The plight of rural hospitals has been used in lobbying tactics throughout this year — in Congress’ fight over how to end surprise medical bills as well as opposition to hospital contracting reforms proposed in the Senate.
And it has worked to some extent. Both House and Senate committees have made concessions to their surprise billing proposals to mollify some lawmakers’ worries.
It took only one question — the very first — in Tuesday night’s Democratic presidential primary debate to make it clear that the issue that united the party in last year’s congressional elections in many ways now divides it.
When Jake Tapper of CNN asked Senator Bernie Sanders whether his Medicare for All health care plan was “bad policy” and “political suicide,” it set off a half-hour brawl that drew in almost every one of the 10 candidates on the stage. Suddenly, members of the party that had been all about protecting and expanding health care coverage were leveling accusations before a national audience at some of their own — in particular, that they wanted to take it away.
“It used to be Republicans that wanted to repeal and replace,” Gov. Steve Bullock of Montana said in one of the more jolting statements on the subject. “Now many Democrats do as well.”
Those disagreements set a combative tone that continued for the next 90 minutes. The health care arguments underscored the powerful shift the Democratic Party is undergoing, and that was illustrated in a substantive debate that also included trade, race, reparations, border security and the war in Afghanistan.
In the end, it was a battle between aspiration and pragmatism, a crystallization of the struggle between the party’s left and moderate factions.
It is likely to repeat itself during Wednesday night’s debate, whose lineup includes former Vice President Joseph R. Biden Jr. and Senator Kamala Harris of California. He supports building on the Affordable Care Act by adding an option to buy into a public health plan. She released a proposal this week that would go further, eventually having everyone choose either Medicare or private plans that she said would be tightly regulated by the government.
Democrats know all too well that the issue of choice in health care is a potent one. When President Barack Obama’s promise that people who liked their health plans could keep them under the Affordable Care Act proved to be untrue, Republicans seized on the fallout so effectively that it then propelled them to majorities in both the House and Senate.
On Tuesday night, Representative Tim Ryan of Ohio evoked those Republican attacks of years ago on the Affordable Care Act, saying the Sanders plan “will tell the union members that give away wages in order to get good health care that they will lose their health care because Washington is going to come in and tell them they have a better plan.”
Republicans watching the debate may well have been smiling; the infighting about taking away people’s ability to choose their health care plan and spending too much on a pipe-dream plan played into some of President Trump’s favorite talking points. Mr. Trump is focusing on health proposals that do not involve coverage — lowering drug prices, for example — as his administration sides with the plaintiffs in a court case seeking to invalidate the entire Affordable Care Act, putting millions of people’s coverage at risk.
It was easy to imagine House Democrats who campaigned on health care, helping their party retake control of the chamber, being aghast at the fact that not a single candidate mentioned the case.
Mr. Sanders’s plan would eliminate private health care coverage and set up a universal government-run health system that would provide free coverage for everyone, financed by taxes, including on the middle class. John Delaney, the former congressman from Maryland, repeatedly took swings at the Sanders plan, suggesting that it was reckless and too radical for the majority of voters and could deliver a second term to Mr. Trump.
Mr. Sanders held firm, looking ready to boil over at time — “I wrote the damn bill,” he fumed after Mr. Ryan questioned whether benefits in his plan would prove as comprehensive as he was promising. Senator Elizabeth Warren of Massachusetts, the only other candidate in favor of a complete overhaul of the health insurance system that would include getting rid of private coverage, chimed in to back him up.
At one point she seemed to almost plead. “We are not about trying to take away health care from anyone,” she interjected. “That’s what the Republicans are trying to do.”
Mr. Delaney has been making a signature issue of his opposition to Medicare for all, instead holding up his own plan, which would automatically enroll every American under 65 in a new public health care plan or let them choose to receive a credit to buy private insurance instead. He repeatedly disparaged what he called “impossible promises.”
He was one of a number of candidates — including Beto O’Rourke, the former congressman from Texas; Senator Amy Klobuchar of Minnesota and Mayor Pete Buttigieg of South Bend, Ind. — who sought to stake out a middle ground by portraying themselves as defenders of free choice with plans that would allow, but not force, people to join Medicare or a new government health plan, or public option. (Some candidates would require people to pay into those plans, while others would not.)
The debate moderators also pressed Mr. Sanders and Ms. Warren on whether the middle class would have to help pay for a Sanders-style plan, which would provide a generous set of benefits — beyond what Medicare covers — to every American without charging them premiums or deductibles. One of the revenue options Mr. Sanders has suggested is a 4 percent tax on the income of families earning more than $29,000.
Analysts often point out that the focus on raising taxes to pay for universal health care leaves out the fact that in exchange, personal health care costs would drop or disappear.
“A health reform plan might involve tax increases, but it’s important to quantify the savings in out-of-pocket health costs as well,” Larry Levitt, executive vice president for health policy at the nonpartisan Kaiser Family Foundation, tweeted during the debate. “Political attacks don’t play by the same rules.”
A Kaiser poll released Tuesday found that two-thirds of the public supports a public option, though most Republicans oppose it. The poll also found about half the public supports a Medicare for all plan, down from 56 percent in April. The vast majority of respondents with employer coverage — which more than 150 million Americans have — rated it as excellent or good.
In truth, Mr. Delaney’s own universal health care plan could also face political obstacles, not least because it, too, would cost a lot. He has proposed paying for it by, among other steps, letting the government negotiate drug prices with pharmaceutical companies and requiring wealthy Americans to cover part of the cost of their health care.
Had Mr. Sanders not responded so forcefully to the attacks, it would have felt like piling on, though some who criticized his goals sounded more earnest than harsh.
“I think how we win an election is to bring everyone with us,” Ms. Klobuchar said, adding later in the debate that a public option would be “the easiest way to move forward quickly, and I want to get things done.”
Some Democrats are proposing a government alternative to private insurance. But allowing people to choose such a plan may destabilize the A.C.A., some experts say.
It seems a simple enough proposition: Give people the choice to buy into Medicare, the popular federal insurance program for those over 65.
Former Vice President Joseph R. Biden Jr. is one of the Democratic presidential contenders who favor this kind of buy-in, often called the public option. They view it as a more gradual, politically pragmatic alternative to the Medicare-for-all proposal championed by Senator Bernie Sanders, which would abolish private health insurance altogether.
A public option, supporters say, is the logical next step in the expansion of access begun under the Affordable Care Act, passed while Mr. Biden was in office. “We have to protect and build on Obamacare,” he said.
But depending on its design, a public option may well threaten the A.C.A. in unexpected ways.
A government plan, even a Medicare buy-in, could shrink the number of customers buying policies on the Obamacare markets, making them less appealing for leading insurers, according to many health insurers, policy analysts and even some Democrats.
In urban markets, “a public option could come in and soak up all of the demand of the A.C.A. market,” said Craig Garthwaite, a health economist at the Kellogg School of Management at Northwestern University.
And in rural markets, insurers that are now profitable because they are often the only choices may find it difficult to make money if they faced competition from the federal government.
Some insurers could decide that a smaller and uncertain market is not worth their effort.
If the public option program also matched the rates Medicare paid to hospitals and doctors, “I think it would be really hard to compete,” Mr. Garthwaite said. Even leading insurers do not have the leverage to demand lower prices from hospitals and other providers that the government has.
Whether to implement a public option or Medicare buy-in has become a defining question among Democratic presidential candidates and is likely to be a contentious topic at this week’s debates.
On Monday, Senator Kamala Harris took an alternate route, unveiling a plan that would allow private insurers to participate in a Medicare-for-all scheme, akin to their role currently offering private plans under Medicare Advantage.
The recent spate of proposals reprises some of the most difficult questions leading up to the passage of the A.C.A., in many ways a compromise over widely divergent views of the role of the government in ensuring access to care.
After a shaky start, the federal and state Obamacare marketplaces are surprisingly robust, despite repeated attempts by Republicans to weaken them. They provide insurance to 11 million customers, many of whom receive generous federal subsidies to help pay for coverage.
The A.C.A. is now a solidly profitable business for insurers, with several expanding options after earlier threats to leave. For example, Centene, a for-profit insurer, controls about a fifth of the market, offering plans in 20 states. It is expected to bring in roughly $10 billion in revenues this year by selling Obamacare policies.
In spite of stock drops because of investors’ concerns over Medicare-for-all proposals, for-profit health insurers have generally thrived since the law’s passage.
But a buy-in shift in insurance coverage could profoundly unsettle the nation’s private health sector, which makes up almost a fifth of the United States economy. Depending on who is allowed to sign up for the plan, it could also rock the employer-based system that now covers some 160 million Americans.
In a recent ad, Mr. Biden features a woman who wants to keep her current coverage. “I have my own private insurance — I don’t want to lose it,” she said.
A spokesman for Mr. Biden argued that a public option can extend the success of the Affordable Care Act.
“Joe Biden thinks it would be an egregious mistake to undo the A.C.A., and he will stand against anyone — regardless of their party — who tries to do so,” said Andrew Bates, a spokesman for Mr. Biden, in an email.
Major insurers and hospital chains, pharmaceutical companies and the American Medical Association have joined forces to try to derail efforts like Medicare-for-all and the public option. Mr. Sanders denounced these powerful interests in a recent speech.
“The debate we are currently having in this campaign and all over this country has nothing to do with health care, but it has everything to do with the greed and profits of the health care industry,” he said.
Other critics of the public option, including Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, argue Democrats’ programs will lead to a “complete government takeover.”
“These proposals are the largest threats to the American health care system,” she said in a speech earlier this month.
Some experts predict that private insurers will adapt, while others warn that the government could wind up taking on the sickest customers with high medical bills, leaving the healthier, profitable ones to private insurers.
It’s uncertain whether hospitals, on the other hand, could thrive under some versions of the public option. If the nation’s 5,300 hospitals were paid at much lower rates by a government plan — rates resembling those of Medicare — they might lose tens of billions of dollars, the industry claims. Some would close.
One variant of the public option — letting people over 50 or 55 buy into Medicare — is often depicted as less drastic than a universal, single-payer program. But this option would also be problematic, experts said.
This consumer demographic is quite valuable to insurers, hospitals and doctors.
Middle-aged and older Americans have become the bedrock of the Obamacare market. Some insurers say this demographic makes up about half of the people enrolled in their A.C.A. plans and, unlike younger people who come and go, is a reliable and profitable source of business for the insurance companies.
The aging-related health issues of people in this group guarantee regular doctor visits for everything from rising blood pressure to diabetes, and they account for a steady stream of lucrative joint replacements and cardiac stent procedures.
The 55-to-64 age group, for example, accounts for 13 percent of the nation’s population, but generates 20 percent of all health care spending, according to the Kaiser Family Foundation.
“You’d have to do it carefully,” said Representative Donna Shalala, a Florida Democrat who served as the secretary of health and human services under President Bill Clinton.
Linda Blumberg, a health policy expert at the Urban Institute, a nonpartisan think tank, agreed. “The idea of Medicare buy-ins was taken very seriously before there was an Affordable Care Act,” she said. “In the context of the A.C.A., it’s a lot more complicated to do that.”
Many dismiss concerns about whether insurers can compete.
“Any time a market shrinks in America, insurers don’t like it,” said Andy Slavitt, the former acting Medicare administrator under President Obama and a former insurance executive. Mr. Slavitt noted that insurers raised similar concerns about the federal law when it was introduced. “They’ll figure it out,” he said.
In Los Angeles County, five private insurers that sell insurance in the A.C.A. market already compete with L.A. Care Health Plan, which views itself as a kind of public option, said John Baackes, the plan’s chief executive.
The insurer offers the least expensive H.M.O. plan in the county by paying roughly Medicare rates. “We’ve proved that the public option can be healthy competition,” he said.
But the major insurance companies, which were instrumental in defeating the public option when Congress first considered making it a feature of the A.C.A., are already flexing their lobbying muscle and waging public campaigns.
In Connecticut, fierce lobbying by health insurers helped kill a state version of the public option this spring. Cigna resisted passage of the bill, threatening to leave the state. “The proposal design was ill-conceived and simply did not work,” the company said in a statement.
Blue Cross plans could lose 60 percent of their revenues from the individual market if people over 50 are shifted to Medicare, said Kris Haltmeyer, an executive with the Blue Cross Blue Shield Association, citing an analysis the company conducted. He said it might not make sense for plans to stay in the A.C.A. markets.
Siphoning off such a large group of customers could also lead to a 10 percent increase in premiums for the remaining pool of insured people, according to the Blue Cross analysis. More younger people with expensive medical conditions have enrolled than insurers expected, and insurers would have to increase premiums to cover their costs, Mr. Haltmeyer said.
Tricia Neuman, a senior vice president at the Kaiser Family Foundation, which studies insurance markets, said a government buy-in that attracted older Americans could indeed raise premiums for those who remained in the A.C.A. markets, especially if those consumers had high medical costs.
But some experts countered that prognosis, predicting that premiums could go down if older Americans, whose health care costs are generally expensive, moved into a Medicare-like program.
“The insurance companies are wrong about opposing the public option,” Ms. Shalala said.
Dr. David Blumenthal, the president of the Commonwealth Fund, a foundation that funds health care research, said a government plan that attracted people with expensive conditions could prove costly.
“You might, as a taxpayer, become concerned that they would be more like high-risk pools,” he said.
Jonathan Gruber, an M.I.T. economist who advised the Obama administration during the development of the A.C.A., likes Mr. Biden’s plan and argues there is a way to design a public option that does not shut out the private insurers.
“It’s all about threading the needle of making a public option that helps the failing system and not making the doctors and insurers go to the mat,” he said.
Many experts point to private Medicare Advantage plans, which now cover one-third of those eligible for Medicare, as proof that private insurers can coexist with the government.
But the real value of a public option, some say, would stem from the pressure to lower prices for medical care as insurers were forced to compete with the lower-paying government plans, like Medicare.
Washington State recently passed the country’s first public option, capping prices as part of its plan to provide a public alternative to all residents by 2021.
“It’s couched in this language in expanding coverage, but it does it by regulating prices,” said Sabrina Corlette, a health policy researcher at Georgetown University.
The hospital industry would most likely fight just as hard to defeat any proposal that would convert a profitable group of customers, Americans who are privately covered at present, into Medicare beneficiaries.
Private insurers often pay hospitals double or triple what Medicare pays them, according to a recent study from the nonprofit Rand Corporation.
While Ms. Shalala supports a public option as an alternative to “Medicare for All,” she is clear about how challenging it will be to preserve both Obamacare and the private insurance market. “You can’t do it off the top of your head,” she said.