Bernie Sanders just cemented his frontrunner status with a huge victory in Nevada. Here's how his Medicare for All plan would remake the $3.6 trillion US healthcare industry.
Under "Medicare for All," everyone in the US would receive comprehensive health coverage from the government. The idea has sparked many months of fierce debate between moderate and progressive candidates who agree on expanding insurance coverage, but disagree on the mechanism to do it. Sanders is the frontrunner in the Democratic primary race, and polls conducted in Nevada, New Hampshire and Iowa show his signature plan gaining strong support among voters. Though specifics are missing on how Medicare for All would likely work, we can start gauging the effects some of the proposals could have on insurers, drug companies, employers, patients, providers and hospitals. Visit Business Insider's homepage for more stories.
The main idea behind Sen. Bernie Sanders's "Medicare for All" plan is straightforward: Everyone in the US would receive comprehensive health coverage from the government. But the reality of implementing it is far more complex, and it has sparked heated debate among Democratic presidential candidates with dueling ideological visions — since it would represent the biggest reshaping of the $3.6 trillion US healthcare system in over half a century. Democratic candidates all agree on expanding health insurance coverage, but they disagree on how to do it. Those on the progressive left like Sens. Sanders and Elizabeth Warren envision a government-run insurance system where Americans would get coverage including dental, vision, and long-term care, and private insurers are eliminated or sidelined. Sanders is the frontrunner for the Democratic presidential nomination. He just won the Nevada caucus and the New Hampshire primary and scored a near-win in Iowa. Entrance polls conducted by NBC News and the Washington Post showed voters in the first three nominating states to be largely supportive of his signature proposal to reshape US healthcare. Moderate candidates like former Vice President Joe Biden and former South Bend Mayor Pete Buttigieg would preserve the current system. And they would create an optional government insurance plan — commonly known as the public option — and inject more federal subsidies into the state exchanges set up under the Affordable Care Act. Candidates have proposed incremental or sweeping healthcare reform plans, but Sanders' Medicare for All bill has been held up as the standard. The legislation would virtually eliminate private insurance and provide care to everyone without co-pays, deductibles, or out-of-pocket spending. Sanders would attempt to achieve it in four years. The estimated price tag of a government-insurance system on the scale he seeks is around $34 trillion over a decade. Warren unveiled her own plan last year that's projected to cost $20.5 trillion over ten years, and mirrors Sanders in many ways. But she has pledged to pursue a public option first and then pass Medicare for All through Congress in the third year of her presidency. There is a lot of speculation on what would happen to all the key players in the healthcare system if a single-payer plan such as Medicare for All gets passed. Though specifics are still missing on how Medicare for All would be fully implemented, we can start gauging the effects some of the proposals could have, based on analysis from groups including the nonpartisan Kaiser Family Foundation, conservative-leaning Mercatus Center, and Urban Institute among others. Read on to see what Medicare for All would mean for every part of the US healthcare system: insurers, drug companies, employers, patients, providers and hospitals. (This article was published on August 13, 2019 and has been updated.)SEE ALSO: Democrats are clashing over how to fix US health care. Here are the 7 key terms you need to know. People living in the US would probably pay higher taxes, but less for their healthcare.
In the Sanders plan, patients would face virtually no costs to get medical care, as the proposal does away with most charges like co-pays, co-insurance, and deductibles. And it would be financed by a blend of new taxes. The Vermont senator has outlined nine possible ways to cover the plan, including a 4% premium for people earning more than $29,000 a year. So far, he maintains he doesn't need to roll out more details explaining how he'd fully pay for it, making it difficult to fully assess its impact. By comparison, Warren said she would not raise middle class taxes by "one penny" in her proposal. She's relying instead on redirecting healthcare spending from employers, state government and households onto the federal budget. Higher income individuals would likely pay more for healthcare while lower-income individuals would generally pay less, Kaiser Family Foundation Executive Vice President for Health Policy Larry Levitt told CNBC. But he pointed out it depends on which taxes are increased. Sanders has argued that most Americans would be better off because their healthcare savings would offset any tax increase. Big companies would no longer have to provide insurance for their workers. They could see taxes go up, too.
More than half of Americans get their health insurance through employers, according to the Kaiser Family Foundation. In the Sanders plan, employer-sponsored insurance would be eliminated. Sanders has argued that Medicare for All is a cheaper alternative compared to what's already in place and that employers would spend less time and cut administrative costs providing decent health benefits to their workers. Employers might face new taxes, though. Among the options Sanders has proposed to pay for his Medicare for All plan is a 7.5% income-based premium that's paid by employers, but exempting the first $2 million in payroll. Under the Warren plan, employers would face a charge equal to 98% of their current health spending. According to the Tax Policy Center's Howard Gleckman, the fee could be "a flat tax" on all workers. That means a company would spend the same amount for healthcare on a low-wage employee and an executive, possibly leading to lost wages that disproportionately affects those with smaller paychecks. Sanders previously criticized this element of the Massachussetts senator's proposal. Doctors might get paid less money.
One concern for doctors is how Medicare for All would affect their pay. If private insurance is eliminated, physicians could make less than they do currently. Private insurers typically pay more for physician services than Medicare, the federal health insurance program for the elderly, according to the Congressional Budget Office. If Medicare for All was implemented, doctors would get paid government rates for all their patients. "Such a reduction in provider payment rates would probably reduce the amount of care supplied and could also reduce the quality of care," the CBO report said. That'd be a hit to pay for doctors treating mostly privately insured patients now, but it could boost compensation for those with many patients covered by the Medicaid program for low income people, particularly in rural communities. Still, there are concerns that cutting payments to doctors could lead to shortages and longer wait times for medical care under Medicare for All. "That means there is going to be a substantial increase in demand for healthcare at the same time that you're potentially cutting payments to providers," Katherine Baicker, a healthcare policy expert at the University of Chicago, previously told Business Insider. The American Medical Association— the largest physician group in the US — opposes Medicare for All, though there are signs that doctors within their ranks may be shifting their views, according to Vox. The group pulled out of an industry group fighting the proposal. In January, the American College of Physicians, the second-largest doctors' group, endorsed both Medicare for All and the public option as a pathway to universal health coverage in a big win for their supporters. Hospitals are worried their funding will get cut.
It's likely that many hospitals could see the amount they get paid to take care of patients fall under Medicare for All. The American Hospital Association and the Federation of American Hospitals, which lobby on behalf of the industry, released a report stating that an option allowing more people to buy insurance coverage via Medicare would cut funding for hospitals by about $800 billion over a decade. The groups oppose Medicare for All. Hospitals say that government programs like Medicare and Medicaid typically pay them less than the cost of delivering healthcare. Hospitals often charge higher rates to private health insurers. An analysis from the libertarian think-tank Mercatus Center estimated that payments to providers such as hospitals would decline roughly 40% under a Medicare for All plan. On the other hand, hospitals that serve low-income or rural populations could benefit under Medicare for All, as Bob Herman at Axios has reported. Under the Warren proposal, pay for hospitals would rise 10%, the New York Times reported, leading to uneven wins and losses among them depending on their location and the size of their financial cushion. Pharmaceutical companies could face limits on how much they can charge for their drugs.
Pharmaceutical companies largely oppose a single-payer system in the US, as they'd likely face stricter limits on how much they can charge for their drugs, similar to the systems in other wealthy countries. Sanders' Medicare for All bill would give the government more power to negotiate with drug companies and secure lower prices. The Vermont senator has visited Canada over the years to highlight that country's cheaper drug prices, which stem from the country's system of government regulation. Under the Warren plan, the government would reduce spending on generic medications by 30% and spending on brand-name medications would drop by 70%. Republicans have also criticized the fact that Americans face higher drug prices, and the Trump administration has proposed allowing Americans to import cheaper drugs from Canada, Business Insider previously reported. There'd be little role left for private health insurers.
Private insurers would likely have little role to play under the Sanders proposal. The government would be the sole insurance provider and virtually eliminate the private insurance industry — as employers and private insurers would be barred from providing coverage that overlaps with the government system, according to the Kaiser Family Foundation. Sanders has said that supplemental insurance would be allowed for things like cosmetic surgery, though it's not clear that there'd be much of a market, as Margot Sanger-Katz has reported in the New York Times. Other candidates are more guarded in their approach to reform, leaving a bigger role for private health insurers instead of essentially getting rid of them under Medicare for All. Former Vice President Joe Biden's plan would preserve a role for private insurance, for example.
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Buzzy health startup Oscar is making a big bet on a crucial change to how you get your healthcare. The CEO shared how he thinks that will happen.
Oscar Health CEO Mario Schlosser thinks a big shift is coming in how Americans get their...Oscar Health CEO Mario Schlosser thinks a big shift is coming in how Americans get their health insurance. Schlosser thinks that over time, fewer people will get their health insurance through their jobs. "I do think this will over time lead to a gradual then sudden disappearance of the employer market," Schlosser said during a presentation Monday at the J.P. Morgan Healthcare Conference in San Francisco. Oscar currently sells insurance on the individual exchanges set up by the Affordable Care Act, to small businesses, and to seniors via Medicare Advantage plans. The company on Monday announced a partnership with Cigna to expand small-business insurance sales. Click here for more BI Prime stories. Oscar Health CEO Mario Schlosser is keeping an eye out for a fundamental change in how Americans get healthcare. For many Americans, their employers are the ones picking up the tab for their healthcare. More than half of the non-elderly population is covered by an employer-sponsored healthcare plan. Schlosser said he thinks that's not always going to be the case. "I do think this will over time lead to a gradual then sudden disappearance of the employer market," Schlosser said during a presentation Monday at the J.P. Morgan Healthcare Conference in San Francisco. He pointed to the introduction of the Individual Coverage Health Reimbursement Arrangement that allows employers to provide workers with pre-tax dollars they can use to go out and buy health plans on the individual exchanges or Medicare, rather than paying for group health plans. Never miss out on healthcare news. Subscribe to Dispensed, our weekly newsletter on pharma, biotech, and healthcare. Unraveling employer-provided health insurance Ideally, that could increase the number of people buying health insurance on the ACA's markets, making plans more affordable, he said. But it'll take some initial employers to pave the way and convince other companies that it's a feasible way to provide health coverage, he said. "There's just so little logic for employers to be in the insurance markets that they've been in for the last 80 years," Schlosser told Business Insider in an interview on the sidelines of the conference. "That logic's going to eventually unravel." Changing the way Americans get their healthcare isn't an easy task, even as employers are spending more on health insurance premiums than ever. Companies are reluctant to make big changes to the insurance that they give their workers. "I think there's a system in place that employs millions of people, that for millions of people works really well. That's the employer-funded healthcare system." Progyny CEO David Schlanger, whose company works with self-insured employers to provide fertility benefits, told Business Insider. Oscar expanded significantly for 2020 Oscar sells insurance on the individual exchanges set up by the Affordable Care Act, to small businesses, and to seniors throgh Medicare Advantage plans. The company had 235,371 members as of September 30, slightly more than the company had in 2018. In 2020, the company expects to have 400,000 members and make $2 billion in gross premium revenue, Schlosser told investors on Monday. That's in part because of the new markets it's entered in in 2020, offering private Medicare Advantage plans to seniors in New York and Houston. The company's also selling Obamacare plans in 12 new markets for this year, including in four new states. Read more: $3.2 billion health-insurance startup Oscar Health just revealed plans to offer a new kind of coverage in 2 cities Oscar has raised more than $1 billion from investors enticed by its promise of a new tech-driven approach to health insurance. In August 2018 it raised $375 million from Google's parent company, Alphabet. Oscar's health plan collaboration with Cigna During the presentation, Schlosser said that Oscar and health insurer Cigna would be joining forces to offer health plans to small businesses. The companies plan to identify four markets to enter by the end of 2020. "This will let us go faster to more markets," Schlosser said. He cited issues Oscar's had in the past in the small-employer market, such as challenges building networks of doctors and hospitals. For instance, if an employer based in New York had a few employees who lived in Connecticut, where Oscar doesn't have a network, it couldn't offer the plan to those employeess. Eventually, the plan is to use the relationship with Cigna to offer small business coverage nationally, Schlosser said "I think we can become one of the dominant small group players," he said. The Cigna partnership helps demonstrate that Oscar's tech is modular enough that the company might be able to sell parts of it to different users, Schlosser said. "We're still building all this stuff for ourselves," Schlosser said. "The first client is still Oscar." For Cigna, working with Oscar helps the insurance giant sell to small companies with fewer than 50 employees. Cigna hadn't previously targeted those companies, an executive said. "What this does is bring a fully insured choice to that 1 to 50 small group marketplace," Julie McCarter, vice president of product solutions at Cigna, told Business Insider. Read more: Verily just presented for the first time at JPMorgan's big health conference. 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Health administration costs were more than four-fold higher per capita in the U.S. than in Canada...Health administration costs were more than four-fold higher per capita in the U.S. than in Canada ($2,479 vs. $551 per person), which has a single-payer system.
Joe Biden and Bernie Sanders clashed over "Medicare for all" on the debate stage, with Biden...Joe Biden and Bernie Sanders clashed over "Medicare for all" on the debate stage, with Biden saying it is unrealistic and Sanders accusing the former vice president of championing the status quo.