Medicare For All: The Steps Between Here and There

-- Posted by Neil H. Buchanan

In my new Verdict column, "Disdainful Economists, Hubristic Jurists, and Fanatical Republicans: A Recipe for Single-Payer Health Care?" I try to figure out what the "end game" is for the great debate over the U.S. health insurance system.  That is, if Republicans (in Congress and/or on the Supreme Court) succeed in damaging or killing the Affordable Care Act, what would happen next?  I suggest that one possible answer is ... wait for it ... single-payer health care in the United States!

(As an aside, I hope that people will read the column simply for the section in which I explain the recent mini-controversy over arrogant remarks by Jonathan Gruber, an Obama Administration economist, who repeatedly mocked the "stupid voters" who had to be fooled for their own good.  Short version: He's just saying what all economists -- liberal and conservative -- think.  "We're smart.  Everyone else is an idiot.")

The logic in my column is basically this: Republicans are having some success convincing people that anything resembling a well-regulated private health care system is bound to fail.  The public will hate the status quo ante, which we know because they hated the status quo ante enough that we ended up with the ACA.  In fact, the post-ACA status quo would probably be even worse (for reasons that I discuss in the column).  No one will trust the government to do anything right, but no one will be happy with an unregulated mess.  Time for something tried-and-true.  Which part of the health care system does nearly everyone like?  Medicare, of course.  It has low administrative costs, it is already "scaled up," and it has been in place since the end of the Baby Boom.  And, of course, some people think that it is not run by the government (which is weirdly a plus in this circumstance).

As I concede at the end of the column, I am not putting a high probability on this outcome.  The higher probability is that we will muddle along for decades, with too many people dying prematurely from lack of care, too much money being spent on executive salaries and marketing materials -- and cost-shifting strategies -- and everyone wondering why the health care sector continues to absorb twice as much of our (slow growing) economy than every other country on the planet.  At some point, however, the pressure could become too strong.  At least, I am willing to imagine that happening, as one plausible outcome.

How might the transition happen?  The most straightforward approach, of course, would be simply to announce that on a particular date, everyone will be covered by a single-payer plan.  That would require a huge amount of work regarding transition rules, but at least it would be "simple" in the sense that there would be as few moving parts as possible.  Those transition rules, however, would be huge, because we would need to figure out how to allow health insurers to shut down in an orderly way, how to handle transitions of ongoing care, and so on.

How best to smooth the transition?  One idea is to lower the eligibility age for Medicare in increments, until everyone is covered.  Sounds good, sort of, but let's think about this.  (Another aside: The suggestions by "fiscal centrists" to increase, rather than decrease, the Medicare eligibility age have been definitively shown to be budgetary losers, rather than winners.)  What concerns might arise from this transition?

Suppose that the plan is to reduce the eligibility age by two years every year.  So, in Year 1, the age is lowered to 63, to 61 in Year 2, and so on.  One problem is that there will be a bunch of gaming around the transition period.  If I am 60 in Year 1, then I know that I will be covered in Year 2.  If I am 57 in Year 1, then I will become eligible in Year 3.  In either case, do I continue to pay private health care premiums for a year or two, or do I hope for the best and expect to deal with the fallout once I am safely in Medicare's embrace?  It is easy to imagine people making foolhardy decisions, worsening their overall health and increasing overall costs to the public system.

Another question: Why do the kids come last?  At the point where we are covering 47-year-olds, why should their children still be covered by private insurance?  Would employers discontinue (or radically change the terms of) family health insurance coverage if the parent/employee is no longer covered?  Would the answer then be to come at it from both ends, with Year 1 seeing coverage not only for 63-and-up but for children 0-2?  We then meet in the middle a decade or so later?

It seems likely that there would be a tipping point at which it made no sense to maintain the slow transition.  Years in which, say, only people between 24 and 41 could be uncovered would obviously be untenable.  The likely logic would be: "What are we doing?  We have proved that Medicare can be expanded, so there is no reason to wait."  A transition would come to be seen as ridiculous.  However, this does not mean that the "right" amount of transition time is none at all.  I do not think it useful to imagine an economic model of "optimal transition," but it does seem plausible to foresee a relatively short period in which we prove that Medicare can add millions of people to its rolls.  (Doctors and hospitals, by the way, would have it easy.  They already deal with Medicare, and they would simply find that more of their patients are covered under that system.)

These are just a few preliminary thoughts about a possible transition path from a dysfunctional system to a system that works.  There would certainly be all kinds of claims for compensation from health insurance companies, including most likely an effort to press a "regulatory takings" challenge to the whole idea.

Most of the questions, however, are political in the sense that Professor Gruber's remarks clumsily capture.  How would we label the new Medicare taxes, which would in fact simply be replacing (at a lower overall cost) the private health insurance payments that many employees never see, but that are very much part of their "employment compensation"?  Would the fact that a big chunk of the economy would suddenly show up as "government spending," even though the overall system would be cheaper, matter?  I guarantee you that politicians of all stripes would be trying to figure out how to use words to "fool stupid voters" into supporting or opposing the transition.

The problem for anti-single-payer people, however, is that the momentum would be unstoppable, once the transition began.  That has been true of the ACA, and it will be even more so with Medicare For All.  That is why the fighting is so fierce now.  As I noted in my column, however, the people who hate "Obamacare" might be paving the way for something much bigger.  I would like single-payer to happen because people like it on its merits, but we might require this ugly transition period.  That would be a waste, but better than continuing on our current course indefinitely.