The groups said that Americans “deserve a stable healthcare market that provides access to high-quality care and affordable coverage for all.”
This week, a coalition of healthcare and employer groups called for achieving universal health coverage by expanding financial assistance to consumers, bolstering enrollment and outreach efforts, and taking additional steps to protect those who have lost or are at risk of losing employer-based coverage because of the economic downturn caused by the COVID-19 pandemic.
The Affordable Coverage Coalition encompasses groups representing the nation’s doctors, hospitals, employers and insurers. They include America’s Health Insurance Plans, American Hospital Association, American Medical Association, American Academy of Family Physicians, Blue Cross Blue Shield Association, Federation of American Hospitals and the American Benefits Council.
They have banded together to advocate for achieving universal coverage via expansion of the Affordable Care Act, which is supported by President Biden. Biden also intends to achieve universal coverage through a Medicare-like public option — a government-run health plan that would compete with private insurers.
WHAT’S THE IMPACT
Despite a lot of pre-election talk about universal healthcare coverage from elected officials and those vying for public office, achieving this has remained an elusive goal in the U.S. In a joint statement of principles, the groups said that Americans “deserve a stable healthcare market that provides access to high-quality care and affordable coverage for all.”
“Achieving universal coverage is particularly critical as we strive to contain the COVID-19 pandemic and work to address long-standing inequities in healthcare access and outcomes,” the groups wrote.
The organizations support a number of steps to make health coverage more accessible and affordable, including protecting Americans who have lost or are at risk of losing employer-provided health coverage from becoming uninsured.
They also want to make Affordable Care Act premium tax credits and cost-sharing reductions more generous, and expand eligibility for them, as well as establish an insurance affordability fund to support any unexpected high costs for caring for those with serious health conditions, or to otherwise lower premiums or cost-sharing for ACA marketplace enrollees.
Also on the group’s to-do list: Restoring federal funding for outreach and enrollment programs; automatically enrolling and renewing those eligible for Medicaid and premium-free ACA marketplace plans; and providing incentives for additional states to expand Medicaid in order to close the low-income coverage gap.
THE LARGER TREND
The concept of universal coverage is gaining traction among patients thanks in large part to the COVID-19 pandemic. In fact, A Morning Consult poll taken in the pandemic’s early days showed about 41% of Americans say they’re more likely to support universal healthcare proposals. Twenty-six percent of U.S. adults say they’re “much more likely” to support such policy initiatives, while 15% say they’re somewhat more likely.
As expected, Democrats were the most favorable to the idea, with 59% saying they were either much more likely or somewhat more likely to support a universal healthcare proposal. Just 21% of Republicans said the same. Independents were somewhere in the middle, with 34% warming up to the idea of blanket coverage.
More than 21% of Republicans said they were less likely to support universal care in the wake of the COVID-19 crisis. Seven percent of independents reported the same, while for Democrats the number was statistically insignificant.
During his campaign, President Joe Biden said he supported a public option for healthcare coverage. He also pledged to strengthen the Affordable Care Act. By executive order, Biden opened a new ACA enrollment period for those left uninsured. It begins February 15 and goes through May 15.
As I was writing the draft of this article, I was checking my symptoms and awaiting the results of a test I underwent for Covid-19. This virus has upended my life, as it has for every last one of us, no matter where we fall on the socio-economic scale.
But the consequences fall more heavily on those at the bottom end of the wage distribution. That includes those risking their health as they sell us groceries, check our vitals, and sanitize our hospitals. Easily lost amid the chaos, however, is how this crisis may be an opportunity to improve employee protections — and not temporarily but permanently.
During bull markets, employers and policymakers often paint the hardships befalling low-wage workers as stemming from those workers’ personal failures. But when markets crash, we learn how these workers’ troubles were indicative of persistent, system-wide weaknesses.
As Warren Buffett wrote of the insurance failures exposed by 1993’s Hurricane Andrew, “It’s only when the tide goes out that you learn who’s been swimming naked.” Pundits cite Buffet to refer to firms that appear healthy during bull markets, only to get eaten alive during downturns. This month, however, the markets exposed a new group of skinny dippers: a government and an economic system that fail workers, and employers who haven’t or can’t fill this gap in public policy.
In response to the novel coronavirus, the stock market has been mostly in a free fall since late February. The low-wage service sector is facing widespread layoffs. And the tumbling markets have uncovered other deep inequalities among workers, who fall into two groups: those with access to employment protections like affordable healthcare, remote work accommodations, paid time off, and job security — and those without.
This second group, which includes the working class, often lack healthcare or face high out-of-pocket expenses. There are nearly 24 million uninsured working-age adults in the United States. Those with only a high school diploma or who did not complete high school are the least likely to be insured. Moreover, racial and ethnic minority groups face significant barriers to “good jobs.” They form 60% of the uninsured population but only 40% of the total population.
A quarter of all U.S. workers have no access to paid sick leave. Work-from-home options are slim, but many can’t afford not to work. Among workers at the bottom 10th of the earnings distribution, only 31% have paid sick leave. For comparison, 94% of the top 10% of earners have paid sick leave.
While many professionals enjoy protections that can help them ride out the pandemic with their livelihoods and family’s health intact, workers in the low-wage service sector have few options or resources to stay home to care for themselves, let alone their loved ones. And that burden to provide care largely falls on women. The workers lacking healthcare and paid sick leave are also the most vulnerable to layoffs and lost hours. The fate of service workers in travel and food services indicate what’s to come. Similarly, gig economy workers, migrant laborers, and those in the informal economy are particularly vulnerable.
How did we get here? Since the late 1970s, executives have prioritized boosting dividends for shareholders over protecting their employees, whose work has been outsourced, digitized, and downsized. In our book, Divested: Inequality in the Age of Finance, Ken-Hou Lin and I show how this shift in corporate governance undermined workers’ bargaining power. Although insurance coverage increased from the Affordable Care Act, overall working conditions, protections, and pay have diminished.
A more robust safety net would help to mitigate the consequences for workers today as it shores up the economy against future downturns. For years, U.S. policymakers have considered universal healthcare impractical because of its large scope and high startup costs. But as new unemployment claims surge to historical levels and Americans face the medical precarity of a pandemic, this crisis has laid bare the underlying problem of linking healthcare to employment.
Sick leave and universal healthcare would ease the stressors workers face and ensure the sick have time to recover, making them more productive when they return to work. Without the costs of insuring workers, employers could pay more. An income boost would generate more spending and stimulate the economy.
Broader protections would also support the self-employed, contract workers, and prospective entrepreneurs. The United States has lower rates of self-employment (6.3%) than countries with universal healthcare (e.g., Spain has 16%), and a lower share of employment at small businesses than any OECD country except Russia. Reducing the reliance on big businesses would free workers to find jobs that better fit their skills, creating a more nimble and innovative economy.
The current moment provides an opportunity to make lasting changes to the status quo and improve conditions for all workers. As sociologists have theorized, crises and crashes expose cracks in the systems upholding inequality. And history provides a clue for how crises can provide opportunities to transform society in ways that reduce inequality. After the Great Crash of 1929, unemployment spiked, reaching 25% by 1933. In less than three years, Franklin D. Roosevelt’s New Deal reduced unemployment to 9%.The New Deal achieved this feat through a vast and broad range of public works and conservation projects.
The New Deal transformed American society — from erecting iconic buildings and statues, to saving the whooping crane, to developing the rural United States, to planting a billion trees. New Deal workers built and renovated 2,500 hospitals, 45,000 schools, and 700,000 miles of roads. The New Deal hired 60% of the unemployed, including 50,000 teachers and 3,000 writers and artists, such as Jackson Pollock and Willem de Kooning. The New Deal modernized, preserved, and employed the country, while reducing inequality between the haves and have-nots.
Facing a similar economic threat in the wake of the pandemic, we have a comparable once-in-a-century opportunity to make lasting changes that address the pressing problems of today, from inequality to climate change.
In today’s crisis, we could double down on the “trickle-down” approach of the 2008 financial crisis: stimulus to the banks, corporations, and their investors combined with tax cuts and temporary wage support as a short-term Band-Aid for immiserated workers. But Lin and I find that this approach left many workers flailing and worsened inequality, because the banks deposited, rather than invested, the stimulus funding and corporations borrowed the money to buy back their stocks, enriching top executives and shareholders.
Last week, the president signed into law a sweeping $2 trillion plan that combines money for states, loans for distressed businesses, and tax relief, paid leave, unemployment benefits, and cash for most citizens. But this plan only gives workers temporary benefits. Although the bill has stricter oversight and restricts buybacks, it is unlikely to reduce inequality unless it addresses the structural conditions making some workers more vulnerable.
While a New Deal approach may be infeasible amid a contagious virus, we can and should enact permanent policies protecting all workers. Sick leave and healthcare should be universal rights. We could adopt a “flexicurity” labor policy modeled on the Danish one. The Danes provide both flexibility for employers to hire and fire workers as needed and security for workers through generous benefits and retraining opportunities during unemployment.
Meanwhile, in my household, after 2.5 weeks of symptoms—from a dry cough to a tight chest to a low fever—my test results came back negative. Thanks to the healthcare and insurance provided by my employer, I will continue to do the work I care about.
While I am on the mend, the workers who sell our groceries, serve us food, clean our workplaces, and drive us to the doctor also need to take care. In this pandemic, they are risking their health and lives. And they deserve the same level of care as the people they serve: access to both preventative medicine and comprehensive treatment, and time to take a break, recover, and care for their loved ones. The coronavirus is our chance to extend these protections during times of crisis and far into the future.
How can the United States better control its health care costs and quality and still achieve universal coverage? The strongest choice is not Medicare for All, which would eliminate private insurance; it’s the public option, which would allow people to choose from Medicare or private insurers. But the public option can only succeed in controlling costs and quality and achieving universal coverage if it is implemented without the financing gimmicks that characterize Medicare.
In this article, we define the principles that can make the public option the legitimate and powerful competitor to private insurance firms and how this competition would expand access and improve cost and quality. But first we’ll clarify how extremely important the universal coverage is.
Universal Health Care Coverage: Life and Death Politics
Universal health care coverage is central to the physical, fiscal, and political well-being of a nation. Nowhere is that more evident than in the United States, the wealthiest nation in the world, which still has 28.3 million people without health insurance. Americans have literally died, gone bankrupt, become disabled, and stayed in dead-end jobs that offer insurance. And yet, despite the lack of universal coverage, the United States spends more as a percentage of GDP than any other nation and its quality of care is erratic. Even with its world-class resources and medical technology, it ranks the lowest among developed nations in avoiding preventable deaths.
Universal coverage has a long history in other developed countries. It began as primarily employer-based health insurance coverage in the 1880s in Germany, morphed into government-backed universal coverage in England in 1948, marched across Western and Eastern Europe in the ensuing 25 years, and then into Latin America, Africa, Asia, and Canada, making the United States the exception among developed countries. Finally, after 65 years and 12 presidents, the United States passed the Affordable Care Act (ACA) in 2010 to significantly reduce the 45 million Americans who did not have insurance.
The passage of the legislation was hard fought and its results, nine years later, are mixed. On the plus side, the ACA insured more than 20 million additional Americans, lowering the percentage of the U.S. population that was uninsured from 17% in 2008 to 10% in 2016, and fewer people have suffered financial shocks since being insured through the ACA. Although the data are early, it may help make Americans healthier.
But there are negatives too. The ACA’s slogan, “if you like your plan or doctor, you can keep it,” proved to be false for many. And 14.7 million of the more than 20 million were insured through Medicaid, the U.S. health insurance for the indigent, which the important Oregon Health Insurance Experiment found had no effect on health status (but it did have a positive effect on self-reported mental health status). Health care remains unaffordable to millions: Premiums for insurance purchased on ACA-related exchanges rose by a staggering 26%, which helps explain why unsubsidized enrollment declined by 2.5 million people between 2017 and 2018. Those newly insured who were not covered by Medicaid faced ACA policies with substantial deductibles of at least $1,400 for an individual or $2,800 for a family. Finally, the small numbers of insurers that agreed to participate in the ACA had little incentive to compete on price, lower out-of-pocket costs, or by offering a broad choice of providers.
So what the United States needs, and Americans want, are lower premiums and out-of-pocket costs for health care, a sufficient number of competitive private insurers to honor the promise “if you like your plan or doctor, you can keep it,” and, as surveys reveal, no exclusion for pre-existing conditions, no lifetime limits on benefits, and coverage for children up to age 26 on parents’ insurance.
The Medicare for All option, which would eliminate all private insurers, is clearly not the answer Americans want. They do not want to lose their private health insurance to a public bureaucracy or to pay its $3.2 trillion annual price tag in the form of higher taxes.
How the Public Option Can Cure the U.S. Health Care System
The aim of improving health care affordability, continued private insurance, and better access to quality providers can be achieved with the public option, but only if it is implemented with rates that reflect realistic underwriting and accurate and fair cost accounting.
The Medicare component of the public option is wildly popular: 85% of Medicare beneficiaries are satisfied with the federal program. And why not? Many doctors accept it, and the beneficiaries pay only a fraction of the cost, passing the rest onto future generations. The U.S. Congress, Democrats and Republicans alike, gives away benefits to users whose value substantially exceeds what they pay. Each beneficiary on average receives $310,000 more in benefits than they paid. The unpaid bills — $37 trillion at last count — have been kicked down the road to future generations in the form of bigger federal deficits. The Galen Institute reports that Medicare’s annual deficits are responsible for one-third of U.S. federal debt.
Yet, Medicare’s enormous scale confers genuine administrative and purchasing efficiencies. Medicare spends up to seven times less than private insurers on administrative costs. It also pays hospitals 40% less and providers 2 to 3.5 times less than private insurers do for the same services. Some contend that providers merely shift Medicare and Medicaid’s unpaid charges to private insurers, but that charge has been refuted. Rather, it is plausible that these payments appropriately help to squeeze out the one-third of health care expenditures that many experts view as sheer waste.
The public option can take advantage of these efficiencies but only if it is implemented without the financing gimmicks that have artificially lowered the costs of Medicare at the expense of our progeny and that would allow it to unfairly compete with private insurers.
To assure that all insurers play on a level playing field, public-financing principles must conform to those of private insurers. For one, the public option’s expenses must be financed by current users, not future generations. In other words, it should be pay as you go, just like private insurance. The public option’s accounting also should include all its expenses, such as the unfunded liability for Medicare employees’ post-retirement benefits, which are often buried in some fund other than Medicare’s. It must also account for the cost of the money that American taxpayers and debt holders have invested in building Medicare’s infrastructure, including its buildings, equipment, and workers. After all, private insurers incur costs to build the infrastructure that allows them to market their products; yet, under current accounting practices, Medicare gets these assets for free. To keep it real, expert accountants would routinely audit the public option’s financial statements to certify that its expenses are accurately stated, just as they do for private insurers.
Private insurers will be forced to compete with the public option’s lower costs through improved pricing, service, and quality. They can offer, for example, low-cost policies that transport enrollees from high-cost states to high-quality, low-cost ones such as Utah. Or they can emulate Ashley Furniture’s sending an enrollee to low-cost Mexico for an orthopedic procedure, replete with an American surgeon who was paid three times Medicare’s rate payments to the patient of $5,000 plus all her travel and out-of-pocket costs. (For political reasons, Medicare cannot emulate policies that favor certain states or send its enrollees out of the United States.) To help the private insurers to compete, new legislation should allow bundling of health, life, casualty, disability, and any other products, as well as the ability to sell across state lines. This enhanced competition among insurers and providers would lower costs, thereby increasing access to coverage and likely improving the quality of care.
We personally believe that the United States would be better off emulating three European countries — Germany, Switzerland, and The Netherlands — which are lauded for the quality of their universal coverage health care systems and yet spend far less on them than the United States. These countries are fiscally much healthier than nations with government-run health insurance systems akin to Medicare for All. But the reality is this model is politically untenable in the United States because it relies entirely on private insurers and would require eliminating highly popular Medicare and giving people vouchers for buying private-insurance policies.
Americans generally like both private insurance and Medicare but universally deplore their costs. Medicare for All eliminates private insurers and increases taxpayers’ burden. The public option keeps private insurers and controls health care costs. However, it will require legislative and governmental administrative backbone and independent oversight to assure that the public option achieves these goals legitimately — without resorting to Medicare’s financing gimmicks.