“Medicare for All” has dominated the Democratic Party debate over health care policy for the last few months. But there is an alternative path to universal coverage that would create a new government-run insurance plan open to everybody while preserving a substantial role for private insurers.
On Tuesday, the Center for American Progress, a think tank that developed one of these “public option” proposals, released a formal projection on how its plan would work in practice.
The short version is that under CAP’s proposal, everybody would have insurance and that, by and large, people would have better insurance than they do today while paying less individually. In other words, Americans would have universal coverage, just as they would under Medicare for All.
The majority of Americans would be in either the new government-run plan or traditional Medicare. Nearly one-third of the population, however, would remain in employer plans.
That’s a pretty big contrast to Medicare for All, which would wipe out existing private plans. And there are other major differences. Relative to Medicare for All, CAP’s plan would cost the federal government a lot less money. In one scenario, the total cost would be less than $3 trillion over 10 years, which means financing could come entirely from new taxes on the wealthy.
But with that lower price tag for the taxpayers would come significant tradeoffs.
Medicare for All would wipe out individual insurance premiums and nearly all out-of-pocket costs. The public option wouldn’t, and in some cases, it would leave individuals owing substantial sums of money when they went to the pharmacy, doctor or hospital.
How you feel about all of this, as always, depends on the kind of tradeoffs you’re willing to make ― financing health care through taxes versus premiums, say, or the virtues of a single government plan versus one that offers many people a real, but potentially confusing, choice.
It also depends on what you think is possible to achieve politically.
A Public Option That Would Get Very Big
The Center for American Progress is a liberal organization with close ties to the Democratic Party establishment. Its proposal, which it formally released in early 2018, is called “Medicare Extra for All.” It looks a lot like the “Medicare for America” legislation from Reps. Rosa DeLauro (D-Conn.) and Jan Schakowsky (D-Ill.), which has garnered explicit endorsement from one 2020 Democratic presidential candidate (former Texas Rep. Beto O’Rourke) and implicit endorsement from another (South Bend, Indiana, Mayor Pete Buttigieg).
The CAP plan also bears a strong general resemblance to “Health Care for America,” a plan that Jacob Hacker, a Yale University political scientist, developed with the Economic Policy Institute back in 2007. That’s another way of saying that the idea has been kicking around for quite a while, although it’s now become more mainstream than it was a decade ago.
Like Medicare for All, the CAP proposal would create a new government-run insurance program that would immediately absorb Medicaid and take in all the people who, under the existing system, buy coverage through HealthCare.gov, through state-run exchanges or directly from insurers.
But unlike Medicare for All, the public option approach would allow employers to keep offering private insurance, giving employees of those firms a choice. The employees could enroll in the company plan or opt into the government-run alternative.
Seniors would also have a choice. They could stick with current Medicare, whether it’s through the traditional government program or the private insurance alternative known as Medicare Advantage. Or they could opt into the new government plan. Either way, they would get dental, vision and a cap on out-of-pocket costs ― all benefits that Medicare does not offer today.
There are some other important wrinkles to the CAP program. It would include full coverage of long-term care, which is a huge (and still growing) need for the aging American population.
It would also leave in place a handful of smaller government health care programs, including the Veterans Health Administration system and the Federal Employees Health Benefits Program, while giving people eligible for those programs the option of joining the new government plan.
How It Differs From Medicare For All
The most important distinction between the CAP approach and Medicare for All is the treatment of employer coverage.
According to the newly released projections, which come from the independent actuarial firm Avalere, the kind of government-run plan that CAP has in mind would pull in about 31 million people from employer coverage ― a substantial number, to be sure, but only a bit more than 20% of workers with private coverage.
Workers might opt into the new public plan because it offered better benefits, had lower premiums, or a combination of the two. In some cases, employers would stop offering insurance and instead contribute a lump sum toward the cost of the public plan, as the proposal would require of them.
The upshot is that about one-third of the U.S. population would still have employer insurance. Whether this is a virtue or a bug depends on your perspective.
Among the arguments in favor of Medicare for All is that even people who have “good” employer insurance are at the mercy of those employers (who can change plans, networks and individual financial contributions) as well as the insurance companies (who have a history of seemingly arbitrary hassle and claim denials). Under the CAP plan, that would still be the case for a large chunk of Americans.
In addition, the leading Medicare for All proposals, including the one from Sen. Bernie Sanders (I-Vt.), would have no individual premiums and no out-of-pocket costs, except for some small copays on certain name-brand prescription drugs. That’s not true of the CAP plan.
But while voters like the idea of Medicare for All, according to polls, they get a lot more skeptical when they hear that it would mean giving up existing coverage. Just this week, a new NPR/Marist survey found that 70% of Americans would support a version of Medicare for All in which enrollment in the government plan was optional, but only 41% would support a version that replaces private insurance entirely.
And though the financial protections under the CAP plan would frequently be less comprehensive than they would be under Medicare for All, the plan would still reduce premiums and out-of-pocket costs relative to what they are now.
The biggest benefits would go to low-income workers switching into the new government plan. Their premiums and out-of-pocket spending would fall by 87%, according to the Avalere projection, because the plan’s prices and benefits would be tied to income. But higher-income workers and even those staying in employer plans would also see savings, Avalere predicts, because the CAP proposal includes a form of price regulation that would apply to all medical bills.
“A key aspect of the plan is using government regulation of health care prices, as is typically done in other higher-income countries,” said Larry Levitt, executive vice president for health policy at the Henry J. Kaiser Family Foundation. “The health care system envisioned in this plan would be more complex than Medicare for All, but still a whole lot simpler than our current non-system.”
Regulating health care prices comes with its own tradeoffs. Drug and device makers say that lower payments would leave them less able to develop new treatments; doctors and hospitals say cuts would lead to financial losses and closures that reduce access to care.
Public option proposals have already attracted the ire of the Partnership for America’s Health Care Future, an industry-funded group. “These would drastically change health care in our country,” one of the group’s officials wrote earlier this year. “They are nothing less than a slippery slope toward one-size-fits-all, government-run health care.”
Whatever the merits of their arguments, these groups have a great deal of political influence.
The Future Of The Health Care Debate
Like all projections, including previous ones about Medicare for All, Avalere’s is extremely rough, subject to myriad assumptions that reasonable people can question. And the results could vary quite a lot with even modest changes to the public option proposal. The CAP report actually includes three different projections from Avalere, each one considering a different scenario for the kind of coverage and assistance that the proposal would offer.
In one scenario, the coverage is a lot more generous, providing people with greater financial protection from medical bills. But the government would have to spend more, too, which would mean raising additional revenue or reducing payments to providers more dramatically.
One reason that CAP commissioned analysis of three options was to demonstrate the plan’s flexibility. “We think of this as an approach that has dials—which can be adjusted over time,” Topher Spiro, vice president for health policy at CAP, told HuffPost.
Of course, the same is true for Medicare for All or, for that matter, any serious idea for health care reform. Each one is really a set of interlocking concepts that lawmakers could modify. And the differences between, say, Sanders’ bill and the CAP plan start to blur if you imagine how Congress might adjust either proposal if it ever took up one of them seriously.
The distinctions between these and other approaches are important ― and, especially in the context of a presidential campaign, it may be worth ignoring political constraints to sketch out what an ideal plan would look like. But Tuesday’s report is a reminder that if universal coverage is really the goal, there isn’t just one way to achieve it.
CORRECTION: The Center for American Progress released a report on its public option proposal on Tuesday, not Wednesday.