In the post-ACA environment, with 27+ million people still uninsured and health care costs rising, some advocate a public option to supplement private coverage, others want single-payer, “Medicare-for-All,” which would eliminate private coverage. Advocates claim either approach will better control costs, primarily by limiting growth in provider payments closer to Medicare than private payer rates and claiming to reduce administrative costs. Most would also eliminate premiums and out-of-pocket payments in exchange for taxes (including payroll, income, and unearned income). Lacking many details, proposals generally do not address potential access problems as providers react to lower payments, some proposals would eliminate value-based payments and alternative delivery models and instead expand fee-for-service, and few specify taxing levels enough to fully pay for implementation. It is unclear what would happen to Medicare Advantage nor whether supplemental coverage would be permitted in most proposals.
Proposals that merely address coverage without delivery transformation are unlikely to control costs and may jeopardize improvements in performance and quality. The following are additional concerns and questions that should be answered before adopting any proposal:
What requirements and incentives will there be for providers to improve quality, performance, and what other accountability standards are part of the proposal?
With increased government bureaucracy and control of health care spending and a diminished or nonexistent role for private payers, who will drive innovation and positive disruption to improve health care delivery and performance
What is the net impact on health care spending from all sources (taxes, premiums, out-of-pocket expenses), what is the net impact by payer type (private, federal, state and local), what are the distributional effects of proposed changes in financing (income, age, health status, geography)? Does the stated increase in tax rates (if stated) fully fund the proposal?
What are the assumptions for cost control? How realistic are they (i.e., that government will hold the line on payment rate increases, that administrative costs will decrease significantly)? What is the risk of higher taxes if costs controls are insufficient?
What are the impacts on provider payment rates and the mix of payments by payer type?
How will changes in provider payment rates and the mix of payers affect access to care? The healthcare workforce pipeline? What about the potential for provider strikes over rates? Has the proposal factored these effects in?
What is the impact of either Medicare expansion or Medicare for All on the financial solvency of the current Medicare program?
WHY IT MATTERS
Increasing inefficient, traditional FFS Medicare or a Medicare-like public option will undermine efforts toward transformative payment and delivery reform, including shared risk, total cost of care and population health models.
It could also aggravate the current fiscal situation of Medicare as the Part A Trust Fund is projected to begin depleting its reserves in 2026, which could increase pressure to raise taxes, including Medicare payroll taxes.
Conversely, reducing the role for private plans, especially employer plans, reduces the impetus for innovation and positive disruption to increase the effectiveness and efficiency of care and improve the consumer experience.
While employers and employees would reduce their direct health care expenses, they would likely pay more in taxes to pay for single-payer proposals.
Coverage through the public option, Medicare expansion is likely to provide less value than current employer-sponsored coverage and depending on how it is structured, could lead to adverse selection against employer plans.
Also of Interest
Access all Public Policy resources on ACA changes.