By Tonic Advisors

Healthcare remains a top tier issue for the nation.  As the Democratic Presidential Primary Process gathers momentum, the candidates have each staked out their policy positions.  On the face of it, the field appears divided between “Medicare for All” as a catch phrase that polls well and “Build on What’s Working,” another catchphrase without quite the same cachet.  Medicare for All is the phrase du jour and the Kaiser Family Foundation (KFF)[1] tracking polls shows that it elicits a highly positive response.  Their data also shows a significant drop-off in support as respondents are presented with specific implications of such a policy.

In reality, we think that there are three basic positions at play though there is some overlap and they exist on a continuum rather than as discrete proposals.  The first is Medicare for All defined as a form of Single Payer universal health care.  The second builds on the ACA (Obamacare) to provide a public option for everyone.  The last is a Medicare for All “Optional” Hybrid in which everyone can get access to a Medicare-like system.  As the discussion below shows, there is some overlap between all three, but particularly between positions two and three.

In terms of framing the debate vis a vis the major candidates, on the one end there is Bernie Sanders, closest to the pure single payer approach, and on the other end there is Joe Biden who is most for expanding and modifying the ACA.  In fairness, there is little clarity for the most part in the candidates’ positions.  This article is designed to capture the three basic approaches to understand their implications.

Medicare for All Single-Payer Universal Healthcare
(Sanders, Warren???)

At one end of the spectrum, there is the view that a single payer system in which everyone is enrolled automatically (from birth to death) is the most efficient means of managing health care.  This system is often thought of as Pure Medicare for All with an emphasis on single payer financing.  There are policy issues often left unstated, such as eligibility (does citizenship status matter, residency?) and the out-of-pocket cost to the insured (deductibles, and premium contributions).  For example, currently to be eligible for Medicare one typically must have worked and paid into Medicare for 40 Quarters (10 cumulative years).  What will happen to Medicaid under Medicare for All?  Though Medicare for All seems simple, nuances remain.  As the KFF data shows, support dips as details emerge.  A general tenet of the most extreme form of Medicare for All is to prohibit private insurance.

Build on the Affordable Care Act (ACA)
(Biden, Klobuchar???)

The second school of thought is to build on what has come before. Instead of shedding the system the Affordable Care Act (ACA) put into place, build on top of it and make it better. The basic tenets of this approach are:

1. Ensure the ACA has teeth where needed to compel enforcement
2. Ensure that the Market Stabilization mechanisms eliminated under President Trump (and in some cases de-funded by the Republican Congress under Obama) are put back in place (Reinsurance, Risk Corridors)
3. Possibly modify cost sharing requirements and subsidy amounts. Modify formulas to ensure that the insurance is both initially affordable and usable
4. Consider an expansion of the ACA to increase eligibility
5. Preserve private insurance options that the public seem to value; allow private insurers funded by government dollars
6. In some cases, offer a publicly administered option if the market requires it

The Hybrid Model
(Harris, Booker, Buttigieg, Yang???)

There is a middle ground between the two ends of the spectrum, though this middle ground encompasses a lot of competing policy proposals and views.  It’s not fair to try to coalesce them into a single viewpoint.  Listed below are a number of ideas that have been discussed. Some of these could fit in the “Build on the ACA” approach.  The biggest difference between the candidates in the middle ground position is that for some, the middle ground is a transitional period of some number of years (10-20) until single payer type Medicare for all with no private insurance is realized.  For others, the hybrid model is the best of both worlds and would persist as long as market conditions would allow it.

1. Medicare-like buy in. Buy into a Medicare-like plan administered by the government.  Depending on the proposal, anyone can buy into this or a person can buy after having reached an age threshold (e.g., 40 or 50 years old).
2. Basic Medicare for All but allow private insurance buy ups (products layered on top)
3. Medicare for all, financed by tax dollars but administered by Private insurance in some cases (similar to Privately Administered Medicare Advantage for all)

As an Employer, where do you stand?

Health benefits are a double-edged sword.  On the one hand, they are a significant cost component of any business.  For every thousand employees, an employer can expect to spend about $10M in health coverage, not to mention the cost of the infrastructure internally to manage it (consultants, HR Benefits, broker fees and commissions, etc.).  On the other hand, some if not all of those costs would probably shift to taxes and fees if the government administers health care.  On the one hand, health benefits are currently an effective tool to lure the best employees.[2]  On the other hand, an employer may feel liberated by the idea that who gets hired will not affect their benefits costs.  Additionally, employees no longer motivated to work may feel liberated to leave without fear of losing health coverage making the overall work force more efficient.

Conclusion

It’s hard to say which if any of the candidates’ plans will find traction moving forward.  As the candidates continue to flesh out their plans, we will keep you posted on additional potential impacts. We anticipate that the Trump administration will unveil competing policy proposals as the primary evolves into a general election.  We will continue to make sure you understand where the candidates stand and the facts behind the promises on both sides.

PBGH is committed to keeping you informed.  This is best achieved through dialogue.   Stay tuned for upcoming meetings and conferences for opportunities to share your views and understand the views of others in the Employer community.  Please add your thoughts, comments and questions below. Let’s continue the conversation.

The opinions, beliefs and viewpoints express by the authors do not necessarily reflect the opinions, beliefs and viewpoints of Pittsburgh Business Group on Health, its board or its employees.

[1] https://www.kff.org/health-reform/poll-finding/kff-health-tracking-poll-january-2019/

[2] In a 2018 AHIP Employer-Provided Coverage Survey, 46 percent of U.S. adults with employer-sponsored health benefits said health insurance was either the deciding factor or a positive influence in choosing their current job. 56 percent said that whether or not they like their health coverage is a key factor in deciding to stay at their current job.