Watching the leading Democratic presidential candidates during the Iowa debates earlier this month, it’s evident that all of them support expanding access to affordable, quality healthcare. This has been a goal of the Democratic Party for nearly a century; since Franklin Roosevelt’s administration. Other than that, however, all of the candidates have different ideas about how health care should be organized for delivery, how we will pay for it, and how much it will cost. Because one goal of this blog is to educate readers, with this article I am beginning a series describing the health care plans of the (now) leading candidates. To begin the process, this article will address the fundamental principles that guide the candidate’s proposals.
Let’s start with a basic fact. Despite what Donald Trump claimed in his State of the Union address, none of the Democratic presidential candidates are advocating socialized medicine nor free health care. Here is what Trump said in all its glorious untruthiness:
“As we work to improve American’s health care, there are those who want to take away your health care, take away your doctor, and abolish private insurance entirely. 132 lawmakers in this room have endorsed legislation to impose a socialist takeover of our healthcare system, wiping out the private health insurance plans of 180 million very happy Americans. To those watching at home tonight I want you to know that we will never let socialism destroy American healthcare.
Over 130 legislators in this chamber have endorsed legislation that would bankrupt our nation by providing free taxpayer-funded health care to millions of illegal aliens, forcing taxpayers to subsidize free care for anyone in the world who unlawfully crosses our borders. If forcing American taxpayers to provide free unlimited health care to illegal aliens sounds fair to you, then stand with the radical left, but if you believe we should defend American patients and American seniors, then stand with me and pass legislation to prohibit free government health care for illegal aliens.”
Socialism is when the government owns and operates the means of production, distribution, and exchange of goods and services. Examples include public schools, police and fire departments, municipal drinking supplies and sewerage treatment plants, trash collection, and street repair. We do have socialized medicine in the United States; trust me, I know because I worked in that system all of my adult life – as an administrator in state mental hospitals. State psychiatric hospitals are socialized medicine because the employees – psychiatrists, psychologists, social workers, pharmacists, etc. – are salaried employees of the state. However, under the plans proposed by the Democratic candidates, hospitals and clinicians will continue to operate independently, to whatever extend their capitalistic bent and entrepreneurialism takes them.
None of the candidates are proposing free health care. If an undocumented worker without health insurance has to be hospitalized for treatment of appendicitis, he or she will be expected to pay with cash, credit card, or take out a loan. Under my proposed plan for universal health care, hospitals and doctors will be reimbursed for treating that same individual, but that’s because the undocumented worker will be paying into the system through a health care transaction tax; it’s not free and there are no freeloaders under my approach. If they’re going to pay for health care, they should be able to access it.
When Trump said that Democrats want to wipe out private health insurance, Republicans booed, whereas I literally stood up from my sofa and applauded. The role of private health insurance is a principal factor that differentiates the candidates. On the one hand, Senator Bernie Sanders advocates a single-payer system: a government administered health insurance plan to replace private health insurance. All of the other candidates support an incremental approach that retains private insurance and provides for expanding Medicare and/or creating a government subsidized insurance program (a public option) to compete with the private sector.
There are a number of reasons single-payer appeals to progressives, myself included (my plan is based on single-payer). First, single-payer is less costly to administer, which could reap $billions in savings. Imagine ten individuals sitting in the doctor’s office waiting room. When they checked in, they handed the receptionist their health insurance card and it’s a good bet the patients had different insurance from different companies, such as Anthem, United Health Group, Cigna, Humana, CVS Health Corp, Wellcare, Medicare, and Kaiser Permanente. Each one of these insurers has its own documents; therefore the doctor has to hire clerks to complete the different paperwork to get reimbursed. Additionally, each of the insurers compensates at a different rate. Your physician might charge $200 for a comprehensive physical, but Cigna may only reimburse the doctor $125 and Medicare may pay $75. This makes it difficult for physicians to estimate revenues. Not so with single-payer as there is a just one predetermined reimbursement rate for each procedure.
Second, the health care system exists to treat the sick, whereas the health insurance industry exists to make a profit. And profit they do. According to the Kaiser Family Foundation, the cost of health care insurance premiums has gone up every year for the past twenty years straight; over the past decade premiums for a family plan have risen an average of $800 a year. These costs are borne by employers, employees, and taxpayers, as insurance purchased through the ACA exchanges are subsidized. And everyone is paying more because out-of-pocket expenses have also risen, such as deductibles that must be paid before insurance kicks in. During his State of the Union speech Trump bragged that Americans are earning more than ever. That’s true for many Americans as median household income is at an all time high. But on the other side of the equation, Americans are also paying more for goods and services, especially health insurance and health care.
Third, health insurance company executives earn multimillion dollar salaries that adds to the cost of insurance premiums. One study found that “UnitedHealth Group CEO David Wichmann earned a cool $18.1 million in total compensation in 2018 – 316 times the median salary of a company employee.” CVS Health executive Larry Merlo earned $21.9 million that same year, a hefty 618 times the median salary of his company’s employees.
In addition to executive salaries, health insurance companies have large budgets for advertising that contributes to the cost of the health insurance we and our employers pay. As a result, administrative costs for the private health insurance industry is estimated to be four to eight times higher than Medicare’s administrative costs; one reason why Sanders refers to his approach as Medicare-for-All. Additionally, based on a study by the Urban Institute, Medicare does a much better job at controlling costs and expenditures.
Trump’s partly correct when he says Democrats want to take away your private health insurance. Actually, not all the Democratic presidential contenders, just Senator Bernie Sanders who understands the advantages of single-payer. And when you think about it, why shouldn’t that be the case? We have a dynamic economic system and companies come and go in response to technology, competition, and other changes in the market-place. Montgomery Ward used to be the biggest and wealthiest retailer in the United States. Today, the company no longer exists. In a market-based, capitalist society, why do we need private health insurance when the government can do the same job for less and in the process save its citizens money to provide them with the same product?
In response to the above question, the other candidates have taken the position that the country’s not ready for such a radical change. Instead, we should approach the expansion of health care to all Americans in incremental steps. Considering that 90% of Americans do have some form of health insurance, and with the understanding that most Americans are satisfied with their current health care, wouldn’t it make more sense to find ways to build on the existing system?
Democratic presidential candidates who take the incremental path want to protect the Affordable Care Act, expand Medicaid to all of the states (surprise, those states that have not expanded Medicaid eligibility have Republican majorities), and provide Medicare and Medicaid with the power to negotiate drug prices. Some also want to expand Medicare by lowering the age of eligibility to 50 or 55. Most of these candidates also believe the best way to expand access, while at the same time controlling costs is to offer a public option.
A public option is a health insurance agency administered by the federal government and subsidized through taxes, which would reduce the cost of premiums making these plans affordable and highly competitive. This should force private insurers to find cost savings that can be passed on to consumers thereby bringing the cost of health insurance premiums down, rather than up as they’ve done over the past twenty years. As noted above, there are a number of ways to find savings including reducing executive compensation, finding efficiencies in how paperwork is handled, reducing advertising costs, reducing dividends to stockholders, and even though they wouldn’t admit it, by rejecting more claims.
The cost of health insurance premiums is based on a number of factors, including the number of people in the insurance risk pool. Larger companies with a lot of members can find more savings than small insurers. Consequently, a public option would probably put a lot of small insurers out of business and could lead to mergers and acquisitions in order to obtain economies of scale. Failure to reduce the cost of premiums could result in the insurer going out of business, which in turn would push more consumers toward the public option. Off the record, most Democrats believe the public option will slowly and inevitably lead to single-payer.
The Sanders approach is to take the big leap and go full
tilt into single-payer to reduce costs and ensure all Americans have access to
health care. The other Democratic
candidates, acknowledging past lost battles and understanding that the
insurance industry and its powerful lobby will be a formidable obstacle to any
change, have decided to pursue an incremental approach. In upcoming articles I’ll describe the
various plans the candidates have put forth and I’ll conclude by describing the
challenges all the candidates will face in bringing their plans to
 Although in some communities some of these activities, such as trash collection, are contracted out. Nonetheless, they are paid for through our taxes and provided because they serve the common good of all citizens.
 In health care jargon this is called prospective payment.
 Employer provided health care is also tax subsidized as employers get a tax break if they provide their employees with health insurance.
 The legislation sponsored by Washington Congresswoman Pramila Jayapal is also a single-payer plan.
 There is a difference between satisfaction with health care and satisfaction with health insurance. Polls indicate that the majority of Americans are satisfied with their doctors and the care they receive. However, most are dissatisfied with the cost of their health insurance premiums, especially the high deductible plans more employers are offering in order to save money.