How would Medicare for All really work?

By Albert DiPiero MD MPH

As the hype for Medicare For All ramps up ahead of the 2020 presidential election, it seems important and imperative to at least start discussing how this would work. There is now a draft version of a House Democrats' proposal, sponsored by Rep. Pramila Jayapal (D-Wash.). This Bill starts to provide specifics, as reported in Modern Healthcare:

Extensive power given to the Secretary of HHS who would oversee regional directors, who oversee all hospitals, healthcare facilities and physicians in specific geographic areas

All facilities would receive a lump-sum annual global budget (facilities mean hospitals, nursing homes, federally qualified health centers, home health agencies and independent dialysis facilities)

Physicians could seek to be paid a salary from hospitals or other facilities under the global budget; or they could continue under the current fee-for-service system ; such a fee schedule would be set by the HHS secretary;

Neither institutions nor physicians would be allowed to charge patients anything for their care

The bill proposes very generous benefits with no-cost sharing

“ The legislation goes on to detail industry profits, citing a single year's data showing nearly $20 billion in profits for insurers, $125 billion for the 20 largest drugmakers and $15.2 billion for for-profit hospitals. “

This is the first detailed salvo in what will be a long discussion over the next few years. Some initial thoughts: global budgets are are well-known and effective tool for controlling spending in many nations, especially for facilities such as hospitals. What I look for in these proposals: a) what is being optimized; and b) have the tradeoffs been surfaced. For example, will we give unlimited access with no cost sharing for all healthcare diagnosis and treatment? … and pay for it out of … reductions in reimbursements for the providers cited above (insurers, hospital physicians, drugmakers)? And since there is not an unlimited supply of providers, what would restrain overuse of the system? Versus allowing out-of-pocket expenses to restrain demand, thus allowing some people with the means to access care more easily and more rapidly than those with less means. The key to watch for and discuss in all these proposals are the tradeoffs and how honestly they are surfaced.

In a new Mercatus Center study on the costs of “Medicare for All” , Charles Blahous estimates that Medicare for All would have to “ … immediately and dramatically cut provider payment rates by roughly 40 percent.” I cannot comment on the data here right now, but that would be a tradeoff that should be honestly surfaced.

The debate will continue, as it should.

Read Modern Healthcare: New Medicare for All draft bill sets a global budget model

Read Mercatus Center: Medicare for All: $32 Trillion in New Costs or $2 Trillion in Savings?

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