Expanding Medicare:Is This A Route to Universal

Health Care?

Leonard Rodberg

PNHP – NY Metro Chapter

February 28, 2006

Or – Can You Jump a Chasm in

Two Steps?

PNHP Goals

1. Assure universal access to care without financial barriers

2. Control the rising cost of health care

3. Simplify administration, especially for providers

“Medicare for All”

• PNHP’s early use of “single payer” and Canadian model

• Recent use of “Medicare for All” term

• Conyers’ US National Health Insurance Act (“Expanded & Improved Medicare For All Bill”) HR 676

Physicians’ ProposalWe envision a national health insurance program (NHI)

that builds upon the strengths of the current Medicare system:

• Coverage would be extended to all age groups, and expanded to include prescription medications and long term care.

• Payment mechanisms would be structured to improve efficiency and assure prompt reimbursement, while reducing bureaucracy and cost shifting.

• Health planning would be enhanced to improve the availability of resources and minimize wasteful duplication.

• Investor-owned facilities would be phased out.

Pete Stark on the Medicare Model

“With Medicare as a model, we can fill the growing gaps in health coverage and ultimately weave together a stable, comprehensive, affordable system for Americans of all ages. Medicare has shown us the power of simplicity; we need only expand its promise to the rest of our population.”

-- The Nation, Feb. 6, 2006

Stark - Medicare Early Access Act

• Eligibility: Persons 55-64 years not eligible for other group insurance

• Option of buying into Medicare insurance• Premiums based on actuarial cost of service with

75% refundable tax credit/subsidy• Former employer could pay premium and Medigap

for retirees• Endorsers: 105 co-sponsors, AFL-CIO, ARA,

Families USA

Early Access - Issues

• Affects relatively few people

• Adverse selection

• Fills gap in private coverage with subsidized premium

• No structural change

Stark-Rockefeller - MediKids Health Insurance Act - HR 3055

• Eligibility – 1st year: 0-5 years 2nd year: 6-11 years 3rd year: 12-16 years 4th year: 17-21 years 5th year: 22-23 years• Central concept: Insurer of last resort for children• Automatic enrollment with opt-out to private plans• Parents of participating MediKids pay means-tested

premium through tax system• No cost for low-income parents• Medicare-like benefits, co-pays, etc., with low-income

limits to cost-sharing• Medicaid, SCHIP continue

MediKids - Issues

• Requires premium payment by parent

• Churning: Kids move in and out

• Fills gap in private coverage with subsidized premium

• Complexity for provider

• No structural change

Jacob Hacker - Medicare PlusEnhanced Medicare coupled to employer mandate:

• Employer mandate: Choose private plan or wage-based contribution for MPlus

• Uninsured individuals would buy MPlus with contribution based on income

• MPlus is the “default” plan, but participants could choose private plans similar to FEHBP

• MPlus has enhanced benefit package (drugs, mental health, preventive services)

• Wraparound programs (e.g., Medicaid, SCHIP supplements) would continue

Medicare Plus - Issues

• Cost control? Hacker: Market dominance of Medicare Plus will enable controls

• Medicare a “poor” plan: Worth $2,300 for a single adult vs. $3,600 for average private plan

• Limited simplification• Continuing co-pays and deductibles• Enforcement of individual mandate• Should there be private plans in Medicare Plus?• Role for unions in enhancements

Forgotten History of Health Care Reform: Labor Support for National Health Insurance

“After the passage of Medicare in 1965, enthusiasm for further health insurance change waned.  Escalating costs and competing health care made it increasingly difficult for the UAW leadership to improve health care benefits for their members through collective bargaining.  [From 1969 to 1978,] the Committee for National Health Insurance, a lobbying organization independent of, but closely affiliated with the UAW, conducted research and prepared legislation in support of national health insurance.”

-- Walter P. Reuther Library of Labor & Urban Affairs

Kennedy-Corman Health Security Act of 1971

Labor’s (and Kennedy’s) Shift

“In 1978, organized labor formally abandoned its longstanding commitment to public-sector solutions to achieve universal health care. Over the following fifteen years, it embraced private-sector solutions premised on a government mandate that would require employers to pay a portion of their employees’ health insurance premiums.”

-- Marie Gottschalk, 2000

Kennedy’s Trajectory

• Employer mandate - Clinton Plan and beyond• Limited regulation of insurance industry• Kennedy-Kassebaum Bill (HIPAA) and COBRA:

Private insurance between jobs• Medicare for All: “I propose that as a 40th

birthday gift to the American people, we expand Medicare over the next decade to cover every citizen - from birth to the end of life.”

-- January 2005

Kennedy - Medicare for All Act (M4A) - S.2229

• Automatic enrollment (“lawfully present in the United States”)• Individuals can choose a private plan instead of Medicare or as a

wrap-around/Medigap (HHS contracts with private plans as in Member of Congress plans/FEHBP)

• Eligibility: 1st five years: individuals 55-64, children 0-20 years 2nd five years: individuals 45-64, 0-30 years Eleventh year: everyone eligible• Medicare and Medicaid continue unchanged• Standard Medicare benefits, co-pays, deductibles• Some benefit expansion (drugs, EPSDT, mental health parity)• Trust fund: 7% of all wages on employers, 1.7% on individuals

M4A - Issues• Individual choice of Medicare vs. private plan could

create adverse selection, high cost for Medicare• Benefits only the uninsured; no significant benefits

for the rest of us• Kennedy literature claims cost savings from

administrative simplification, reduction in uninsured, computerization, pay for performance

• No real cost control mechanism• Phase-in creates complex variations in coverage• Everyone pays payroll tax even if they’re not (yet)

eligible for the plan

Proposal for Revised Kennedy Bill

• Eliminate age-based phase-in

• Resulting plan similar to PNHP position except:

-- Limited, not comprehensive benefits

-- Co-pays, deductibles

-- Most important: Retains private insurers

Proposed PNHP Position

• Supportive, especially of automatic enrollment and public financing

• Critical, especially of (i) unnecessary, destructive role of private insurance companies and (ii) inability to control health care costs

• Compare to 1970s Dellums vs. Kennedy-Corman debates

• PNHP vs. Kennedy debates could provide platform/visibility for PNHP position