Medicare for All: Careful What You Wish for

In this Breaking Down Health Care conversation, John Hennessy, MBA, and Michael Kolodziej, MD, dive into the topic of Medicare for All and universal health care: why these terms are not interchangeable, and if they could actually solve the key problems people have with health care in the US.

Read the transcript:

John Hennessy, MBA: Welcome to Breaking Down Health Care, where we'll be discussing evolving topics in health care in the United States. I'm John Hennessey; I'm a principal at Valuate Health Consultancy. And for this series, we'll be in conversation with Mike Kolodziej, an oncologist and currently an advisor to ADVI and Canopy. We're going to be talking about his new Substack, Decoding Healthcare, where we're using our expertise to dive into some nuances of health care in the United States.

And today's topic, at least the start of it, is going to be Medicare for All. And Mike, I mean, we've seen the chants that “This is what we want! Medicare for All!” And on the other side of the room, there's someone saying, "Get the government out of my health care." So, let's talk about what is Medicare for All? What would it be and maybe compare it to just a different view of sort of universal health care.

Michael Kolodziej, MD: Sure. Thanks, John. So, we should probably start with the statement that Medicare for All as currently being discussed has absolutely nothing at all to do with Medicare. As we've previously talked about and as was covered in one of the earliest posts, Medicare isn't free. Medicare has premiums; Medicare has deductibles; Medicare has copayments. Medicare operates through the same kind of structure as a lot of commercial health insurance. Medicare is not free unless you are destitute. Then it's free. Otherwise, it's not free.

And I think a lot of people don't actually understand that until they're my age, 64 1/2. And I'm signing up for Medicare coming up this summer. And I had to learn about what all the rules for Medicare are because it affected me. In fact, I'm going to actually want to pay more for health care under Medicare than I did with my employer-sponsored health insurance. And I think people will hear that and they'll think, "Oh, he's crazy." And all I'll say is, give me a phone call when you're 64 1/2 and we'll see what your experience has been.

The truth of the matter is what people are really interested in having is national health insurance. A single payer. And it's funny, the story goes that Ted Kennedy, who I think a lot of people know was very interested in health care when he was in the Senate, Ted basically said that we need to rebrand this. That doesn't work, you know, national health insurance doesn't work. Everybody loves Medicare; let’s make it Medicare for All. And ever since then, it's been Medicare for All. But what we're talking about, national health insurance, has got nothing to do with Medicare other than it's administered by the government.

Hennessy: You get the sense that when people think about Medicare for All, they're thinking about, you know, good old-fashioned Medicare, or they thinking about when Joe Namath and Jimmy Walker talk about this program that's going to put more money in our pocket because some miracle occurs. I mean, what do people think about when they're thinking about this concept of Medicare?

Dr Kolodziej: Well, you know, John, it's funny—it's like just about everything else we've talked about. There's this sort of romantic notion about what Medicare is for you and how good it's been to you, and it'll let you go and any doctor and they take Medicare. It’s not really the Medicare Advantage stuff that Joe Namath goes on the TV for; although, as we've discussed, Medicare Advantage is now becoming, if not the most popular way to receive your Medicare benefit, it's pretty darn close.

No, I think it's all about people not really understanding what the proposal “Medicare for All” really means. And what it really means, in its purest sense—and when I say the purest sense, what Bernie Sanders talks about—is a single-payer national health insurance: no premium, no deductible, enhanced benefits, including dental and vision. It sounds too good to be true, and the reason it sounds too good to be true is because it is too good to be true. And what I've tried to outline in the Substack are the reasons that I think that flavor of national health insurance will never be adopted in the US.

So, first of all, why are we even talking about this? And the reason we're talking about this is because 10% of Americans give or take 2% are uninsured. They do not have any health insurance of any kind. And the idea is to get that to as close to zero as possible to enhance access. But of that 10%—8%, 10%, whatever—of that, about a third are people who are immigrants, either here in the country legally or illegally.

And except for employer-sponsored health insurance, they are generally not eligible, depending on the state, for government-sponsored health insurance. And there are literally no proposals that really solve that problem. In fact, there are only two countries in the world that have unrestricted health benefits for immigrants documented or undocumented, and those two are Spain and Thailand, not exactly in the same league as the United States of America.

So, you know, I volunteer in a medical clinic associated with the homeless shelter, and ever since we've had this vast influx of undocumented immigrants in the US, we have seen a massive number of patients where we are their health care safety net. That will not be solved by Medicare for All. That just won't.

If you look at the other people who don't have health insurance, 1%-2% could get fixed, could get health care, if we expanded Medicaid. So, you know, the intention initially with the Affordable Care Act was to give Medicaid to everybody. That got shot down by the Supreme Court. But there are ways to do this, right? The federal government could do it. They could just say, "We're going to give Medicaid to people who don't get state-endorsed Medicaid." They could do it. They did it during COVID. They can do it. And that would cut our uninsured by another 1%-2%. A lot of those people live in Florida and Texas.

And then there's a bunch of people who say they simply can't afford it. And the truth is that the exchanges were built to deal with those people, to help those people afford health insurance. And at various times since the Affordable Care Act, the government has provided fairly significant subsidies to underwrite the premiums for those people.

Now, Medicare for All, or whatever, national health insurance, is a dramatic, just cataclysmic change in health care to cover a small percentage of the population. And it just doesn't seem, to me, that that's particularly wise. So, I enumerate in the blog five things that make Medicare for All or national health insurance not attractive.

The price tag. So, employer-sponsored health insurance will go away. The presumption is that the employers will pay a certain amount to the federal government to underwrite some of this health care cost. But in fact, that won't come close. And even with the most optimistic projections, every American who pays taxes is going to pay more taxes. There's just no question about it. Now, if you're not optimistic about the government's ability to execute on this, the tax bill will be tremendous. Now, I don't know about you, John, but I for one, I do not like paying taxes. I hate it. And most Americans hate it. And the idea that they're going to get a really big tax bill, they're going to give up their employer-sponsored health insurance in exchange for a really big tax bill. Oh, man, tell me how that works politically. It doesn't.

The second thing is this. In order for the math to work, hospitals and doctors need to be paid on the Medicare fee schedule. Now, as you know, as we've discussed, part of the way the system works now is that private health insurance underwrites the underpayment that Medicare provides. Medicare pays about 85 cents on the dollar, the dollar of health care cost expenditure. It underpays for health care and the difference is made up by commercial health insurance. There will be no commercial health insurance. So, every provider in America takes a big haircut. Will they do that willingly? I don't think so. I don't think so.

Number three. We are assuming the government will develop this very sophisticated medical policy and claims payment system so that every bill for health care gets paid by the federal government. And you might say, well, that's what Medicare does. That is absolutely not what Medicare does. That is not how Medicare works. The way Medicare works is they designate Medicare administrative contractors [MACs]. These are private health insurance companies in various regions of the country. They process all the bills. Medicare has never paid a bill ever, ever, ever. Medicare itself does not pay bills. The MACs pay bills.

So, claims payment systems are complicated things. And to say that there's going to be hiccups is a certainty.

Number [four], if they can't save money like they think they're going to save by not paying doctors in hospitals, then they will ration care. There is no choice. Even the most ardent defenders of health care in Canada or in Britain will tell you that you need to wait. There are things that you cannot get. Elective knee replacement, hip replacement, is a two-year wait. Now, if you can't get a doctor appointment next week, you're mad. So, how are Americans going to tolerate the “rationing”? And it is rationing, right? Because health care will become a scarcer resource.

And the last thing is, for this to work, again for the math to work, Medicare has to successfully negotiate drug prices. They have to get the pharmaceutical companies to bend to their will. Now, we have seen the incredible upheaval that the Affordable Care Act has generated with the idea of Medicare negotiating drug prices, right? And that's for only a very small number of drugs, a small number of drugs that have already been on the market for several years.

How do you think the pharmaceutical companies are going to respond? Well, one thing they'll do is they will surely cut back on research and development. There's just no question about it. Whether they do that in the interest of preserving profit, I'm not going to get into that argument, but the truth is that national health insurance in the United States, which would involve a massive shift from the status quo to a future state. I think is not practical, and I think most of those folks in Congress who have signed on to Bernie's bill haven't really thought about it very much. They haven't thought about it, and they haven't gotten as much pushback because people have thought no way in hell is this ever happening.

So, I’m not a fan of Medicare for All. I don't actually trust the government, and I'm a Democrat, but I don't trust the government to do this right. I don't think they've done so great with public education, and I don't think they're going to do so great with this. So that's just my opinion.

But I understand that we need a solution for access. We have to solve our access challenge. And I think we actually have the tools to do it.

Hennessy: It's interesting, as you mentioned that, because we've had a lot of conversation, certainly recently, about the administrative cost of commercial health care being 20% of spending. But we don't see people lined up to move to a nationalized program to spend that money differently. There's still advantages to a system like that. And I think the other thing you've talked a little bit about is rationing, which seems very obvious when it’s a nationalized program, but so many folks have found their care rationed by deductibles, coinsurances, copayments.

They're sort of like a frog in water that's getting warmer. You know, at what point do we realize that what we call rationing is actually happening today for a whole lot of people in this country?

Dr Kolodziej: Yeah, no, I'm not arguing that we should just leave things as they are, not at all. And let's talk about what I've suggested in the blog for dealing with health insurance companies.

The health insurance companies got way too much freedom right now. They just get away with murder. And I think, first of all, we should put an end to vertical integration. I think that's a terrible disservice to most people who receive health care in America. Vertical integration is just greed on the part of the health insurance companies. My opinion is, we should regulate health insurance companies like we regulate utilities or regulate the banking industry, and there should be significant consumer safeguards.

And among that would be a reasonable look at utilization management, out-of-pocket payment that members need to contribute for their health care, including deductibles. Listen, the health insurance industry is tremendously successful financially. They can give a little, it's okay, they don't like that idea, but they should. In much the same way that the pharmaceutical industry should give a little, right? Hospitals should give a little. We should eliminate this not-for-profit nonsense, it's crazy. And we should probably look at uniform fee schedules for various services so that some hospitals don't completely rip off the beneficiary of a particular health plan, because they can. And that's literally what they're doing. They're doing it because they can. Pharmaceutical companies should agree to some sort of health technology assessment. If it's really good, put your money where your mouth is. Let's try to solve that problem.

So, I think Medicare for All has the potential to really make most Americans crazy. Crazy about how their health care is being administered, and the government will not enjoy accepting that responsibility.

Hennessy: Thank you for watching this installment of Breaking Down Health Care. We hope you enjoyed the conversation and learned something you didn't know about the health care system in the United States. If you have questions or topics you'd like Mike and I to discuss, you can use the Contact Us feature on the website. So please tune in for future conversations. We look forward to seeing you.