Could There Be Bipartisan Compromise On Healthcare?

One Solution: Medicare For All -- Through Vouchers
By Daniel Stone, M.D.

Despite endemic pessimism, the flagging efforts to forge a Republican consensus on “repeal and replace” might set the stage for overdue efforts at compromise. Congress will be tempted to move on to more promising areas such as tax reform and infrastructure funding. That temptation should be resisted. The threat to the nation posed by the current state of American healthcare calls for Congress to resurrect the long lost spirit of bold bipartisanship.

            Before considering opportunities for compromise, the obstacles confronting the GOP reform efforts are worth considering.  Republicans face the same stubborn reality that confronted the framers of the Affordable Care Act (ACA): Expensive services cannot be covered by cheap insurance. The cost of U.S. healthcare has simply priced low income and even middle income individuals out of health insurance. Without subsides, they get left behind.

            The healthcare cost quandary affects far more Americans than the 3% of the public currently covered through the ACA exchanges or those covered through the Medicaid expansion.  We spend about 17% of GDP on healthcare, or about 7% more than the average developed country. That 7% translates into $1.3 trillion in excessive expense, or about 2.5 times the U. S. military budget. Health outcomes data suggest that we derive no significant benefit from that mountain of wasted resources.

            Americans are either seniors now or seniors of the future so we should all be concerned about Medicare. Although its payment system is efficient, Medicare must buy healthcare services in the same overpriced market as the commercial plans. The program’s expenses now account for about 14% of the federal budget and will increase by an estimated 60% over the next decade. The Part A trust fund, which pays for hospital expenses, is projected to go broke by about 2030. Republicans have proposed reducing Medicare expense via a voucher program to cap costs. Democrats reject such a program due to concerns that inflation would erode the voucher’s value, allowing low income seniors to be priced out of healthcare.

            Democrats and Republicans both complain about the high cost of the commercial health insurance sold to employers and individuals. Democrats focus on the 15-20% overhead devoted to corporate expenses like advertising, executive salaries and shareholder profit, rather than to healthcare.  In contrast to the commercial plans, Medicare’s overhead, absent these costs, runs in the 3-4% range. Allowing access to a Medicare option for younger individuals and employees would allow billions of dollars of commercial insurance overhead to be directed toward productive care. Republicans generally oppose a Medicare option for the public due to their concern that it would increase the government’s role in healthcare.

            A healthcare compromise, giving Democrats a Medicare option for employers and exchanges in return for a Republican inspired voucher system for Medicare, could offer a pathway to practical cost savings if the legitimate concerns of both sides were adequately addressed. For Democrats, protection for seniors’ healthcare access in a Medicare voucher system could be achieved by providing a floor to the value of the voucher to serve as a safety net.  One possible means of preserving the voucher’s value would be to peg it to the price of Medicare Advantage programs in specific regions. Under Medicare Advantage, the federal government pays a fixed amount per beneficiary to a private insurer. The insurer then accepts responsibility to provide all necessary services for that price.

            The same Medicare options offered to seniors under a voucher plan could be provided to employers and the insurance exchanges as the Medicare Option. Republicans could be reassured that the program would limit the government’s involvement in healthcare, as Medicare Advantage programs are administered by private insurers. The care under the Medicare Advantage and other Medicare options would continue to be provided by physicians in community based private practices, not by the government.

            Offering Medicare Advantage and other Medicare plans along with the current array of private insurance offerings would enhance competition in the commercial insurance marketplace. If private commercial plans offered better care or more cost effective care, individuals would be free to choose them. When individuals choosing the Medicare Option reached retirement, they could simply keep their same Medicare plan, with government funding replacing the funding provided by their employer. No longer would retirement mean a different plan and possibly different providers. Finally, allowing Medicare Advantage plans to compete in the commercial insurance market would speed the growth of these plans and provide the economies of scale needed to improve the quality of their networks.

            The opportunity to achieve savings, improve healthcare choices, enhance competition and improve the financial security for Medicare should attract support from a broad spectrum of Americans and from the political leaders of both parties. Nevertheless, achieving large scale compromise would not happen easily.   The insurance companies, pharmaceutical companies and others that profit from the inefficiencies of the current system can be expected to feed partisan antagonisms and fight to protect their stake in the status quo.

 

Daniel Stone, M.D., is a Los Angeles-based geriatrician. A version of this article originally appeared at The Health Care Blog.