Many Democratic politicians believe that most Americans oppose (single-payer) Medicare-for-All if it replaces their private insurance. Instead, as Democratic presidential hopeful Pete Buttigieg contends, they want to be able to make decisions for themselves as to what insurance works best for them. Consequently, Buttigieg supports creation of a public option to compete with, rather than replace the private insurance market. Buttigieg calls this Medicare-for-All Who Want It (MFAWWI).
The public option is a health insurance premium, like you would buy from a private insurer, but because it is subsidized through taxes and because it would have lower administrative fees, the monthly payments are lower. The public option was included in early drafts of the Affordable Care Act, aka, Obamacare, but cut due to strong opposition by the health insurance lobby and their surrogates in Congress known as the Republican Party. Let’s face it, why would Anthem or Cigna want to compete with a publicly funded insurance plan that could easily undercut their profits?
The ultimate goal of a public option is to force private insurers to lower the cost of health insurance premiums – drastically – or put them out of business if they can’t or won’t compete. In other words, it’s a mechanism to move the country toward single-payer (even if you don’t want it); something the Buttigieg campaign acknowledges: “If corporate insurers are unable or unwilling to lower costs or offer plans that are dramatically better than what’s available today, competition from this public insurance alternative will naturally lead to Medicare for All.” Therefore, while Buttigieg spars with Sanders over Medicare-for-All during debates, they both have the same goal, just different ways of reaching it.
If and until that happens let’s take a look at what Buttigieg and his advisors envision under a Buttigieg administration. Here are the key elements of his plan:
- The public option is available to anyone who wants it. If your payment for employer provided health insurance is too expensive, then you can quit it and purchase the public plan.
- If your employer offers health insurance and you prefer the public option, the same amount of money your employer pays toward private insurance will be used to pay for your share of the public plan.
- If private insurance plans are too expensive, your employer can enroll all employees in the public option; i.e., when your employer goes searching for health insurance, the public option will be considered to be just like any other insurance program.
- The lower cost of the public option should help small businesses that want to offer their employees health insurance but currently can’t afford to, due to the higher cost of private plans.
- In states where Republican majority legislatures have refused to expand Medicaid eligibility, low income individuals will be automatically enrolled in the public option.
- The public option will compete with private plans offered through the Obamacare exchanges.
- Income-based subsidies will ensure that individuals and families who are not eligible for Medicaid and can’t afford the cost of a private plan will be able to purchase the public option.
- For individuals who fall through the cracks, i.e. have not enrolled even when eligible for subsidies, the public option will pay for treatment and then automatically enroll them in the public option (so much for If You Want It).
- Income based subsidies will be expanded to ensure that individuals can afford to purchase private plans or the public option.
- To expand access to Medicaid, work requirements that limit eligibility will be repealed.
- Cost sharing reduction payments that are made to people who purchase their insurance through the insurance exchanges will be expanded. These payments help to compensate individuals who have financial difficulty coming up with the cash to pay deductibles and copays, which would delay access to treatment.
- Buttigieg’s plan will expand subsidies to low income individuals and families and cap insurance premiums at 8.5% of income for middle-income people purchasing insurance through the exchanges. The public option will be comparable to a gold-level plan on the exchange.
- Many seniors on traditional Medicare cannot afford supplemental insurance to offset the cost of treatment (Medicare only covers 80% of the costs). Medicare also does not cover prescription drugs, dental, vision, hearing, and long-term care, thus many seniors are faced with high out-of-pocket expenses they can’t afford. Buttigieg’s plan would cap out-of-pocket expenses, with lower income seniors having lower caps.
- Out-of-network providers will be required to charge no more than twice the amount that Medicare would pay for the same service.
- Non-profit hospitals will have to reinvest in activities that support the needs of the community.
- Insurers will be required pay for mental health and substance abuse services as they would any other medical condition. Additionally, Buttigieg would remove Medicare’s 190 day lifetime limit for inpatient psychiatric treatment.
- Enhance transparency to allow consumers to see what providers charge so that they can compare pricing. This is important for those with high deductible plans who may have to pay the first $500 to $5000 in medical care in cash or on a credit card.
- Establish a national data base to allow consumers, providers, and insurers with information that can be used to enhance cost effective, quality care.
Buttigieg’s plan addresses many of the problems people face when trying to afford health insurance. MFAWWI is projected to cost $1.5 trillion over 10 years ($150 billion a year), far, far below the projected 32.5 trillion projected in a study conducted by the Mercatus Center at George Mason University. In part, this is because the Mercatus study examined the financial impact of shifting all costs over to a government administered single-payer plan. In contrast, employers and consumers will continue to pay something toward their health insurance. The major cost for Buttigieg’s plan comes from funding subsidies to help pay for insurance and out-of-pocket expenses. Nonetheless, given that his plan aims to expand services to $27+ million Americans and to lower costs for the other 300 million, his cost estimate is questionable.
Like Obamacare, Buttigieg’s plan uses subsidies to underwrite the cost of care for low and now middle income individuals and families. This will allow individuals to buy into gold-level plans that, like Medicare, pays for about 80% of the bills, with the insured paying the difference. This means that subsidies will need to cover most of the difference, i.e. the remaining 20% of the bill plus copays and deductibles. Another reason why $150 billion a year sounds overly optimistic.
Like all Democratic presidential candidates, Buttigieg’s plan is also based on saving money through lower administrative costs and by negotiating the price of medications. Additionally, Buttigieg would roll back the Trump corporate tax cuts, which he projects would generate $1.4 trillion in revenues. Nonetheless, there’s no guarantee that rolling back corporate taxes would generate the amount Buttigieg needs to fund his proposal or that the funds would specifically go toward paying for health care. The $1.4 trillion he is referring to is actually projected federal spending increases over the next ten years minus projected lost revenues due to the corporate tax cuts.
Another interesting aspect of this proposal is automatic enrollment into the public plan, whether you want it or not. It makes sense to automatically enroll people who may be indigent, homeless, or off the grid to ensure that providers are compensated. Nonetheless, that’s not consistent with the MFAWWI logo.
Imagine you see a beautiful, matted and framed print of a Manet painting that you think would look perfect in your living room. You could purchase it, or you could buy a jigsaw puzzle of that same painting, put it together, glue it to a backing, and frame it. Both would provide you with the same image, but one would be distorted by the lines where the jigsaw pieces fit together. This analogy comes to mind when comparing Buttigieg’s incremental approach to single-payer. Buttigieg has identified a number of financial problems that create obstacles to affordable health care and for each of these problems he has created a solution. However, this is not a holistic approach to fixing the nation’s health care financial system. It’s more like putting your finger into a hole in a dike to stop it from leaking only to find that more holes keep popping up elsewhere.
In contrast, the fundamental structure of single-payer solves many of these issues right off the bat. Why have a complicated approach to addressing out-of-network billing when, under single-payer, there is only one network? Why have a multiple layers of income based subsidies when, under single-payer, everyone has access to the same level of care regardless of income? Why have cost sharing reduction payments, based on income, to help pay for out-of-pocket expenses, when, under single payer, there aren’t any deductibles, copays, or coinsurance? Why have different approaches and cost structures for private insurance plans, Medicare, Medicaid, the public option, and so on when, under single-payer, there is just one insurance plan?
Buttigieg says the answer to these questions is that most
Americans want to keep the health insurance plan they have. But if that were the case, he wouldn’t need
to offer the public option to those with employer-based, market-based, or
government provided health insurance such as Medicare, Medicaid, and
Tricare. He would only have to have a
plan for those who don’t have insurance for whatever reason. Rather than a complicated approach, Buttigieg
might just try to explain how single-payer works and why it is the best option
for ensuring affordable, quality universal health care for all Americans.
 My doctor told me that the best health insurance plan he and his partners could find for their business (which employs a total staff of 17 including doctors, nurses and clerks), costs employees $1,200 a month, but has a $10,000 deductible! Obviously, if Buttigieg’s plan was available, he’d switch to it.
 Over those ten years, the U.S. population is likely to increase by another 15 million people, which Buttigieg’s plan does not account for.
 As noted in my previous article there is a difference between being satisfied with the health care you receive and being satisfied with the cost of your health insurance. With health care premiums rising every year, with deductibles increasing, and with insurers denying more and more claims, fewer and fewer Americans are satisfied with their private insurance plans.