Our resident Medicare
expert weighs in on this proposal for a single payer system
by Phil Moeller |January 2, 2019
As Congress gets back
to business in the new year, health care may once again move center stage. That
means you may be hearing more about proposals for expanding coverage, including
something called “Medicare for All.”
This week, a reader
asks columnist Phil Moeller, the author of Get What’s Yours for Medicare:
Maximize Your Coverage, Minimize Your Costs and the
co-author of the updated edition of The New York Times bestseller How to Get What’s Yours: The Revised
Secrets to Maxing Out Your Social Security, what this
revolutionary plan could mean to current Medicare users.
Got a question of
your own about Medicare or Social Security? Send it to askphil@considerable.com.
What will Medicare
for All mean for today’s private plans?
Question: If Medicare for All
becomes law, is it true that Part C Medicare Advantage plans will cease?
Phil Moeller: This is what I call a
tip of the iceberg question that requires going beneath the surface of the
question to explore some assumptions.
People often use the
term Medicare for All to describe what’s called a “single payer” health
insurance system. In such a system, it’s assumed that the government would be
that single payer and that private health insurance plans would cease.
But what does this
really mean?
Currently, what’s
called Original Medicare is a single payer system that is used by about 40
million mostly older people in the U.S. (younger persons who are disabled may
also enroll in Medicare). Another roughly 20 million people have Medicare
Advantage plans, which are run by private insurers.
Original
Medicare consists of Part A insurance for hospitals, nursing homes,
and hospice care, and Part B, which helps pay covered expenses for doctors,
outpatient expenses, and durable medical equipment.
If Medicare for All
was managed like original Medicare, the Centers for Medicare & Medicaid
Services (CMS) would decide what medical expenses were covered and how much
Medicare would pay providers for those services.
People would file
claims as they do now, and payment for these claims would be overseen by a
national network of private companies hired by Medicare and known as Medicare
Administrative Contractors, or MACs for short.
These companies are
not insurance companies, but they do have their own policies for how they do
their jobs, and there can be substantial variations in not only their
performance but in whether they approve claims in the same ways.
I suppose these
contractors could be replaced by an army of federal employees under Medicare
for All, and that perhaps these employees would provide identical services and
coverage decisions around the country. But I just don’t see that happening. For
better or worse, the MACs have the expertise and getting rid of them makes
little sense.
Most health experts believe that
managed care is the most promising way to improve the health of people on
Medicare.
More importantly,
Original Medicare today is what’s known as “fee for service” health care.
People with original Medicare can get covered care anywhere in the country from
any provider who accepts Medicare. Prior approval is not required and if
Medicare covers a treatment or other medical expense, the MACs generally will
approve it regardless of whether it helps someone get better or not.
Medicare Advantage
plans, by contrast, provide managed care programs where coverage is often tied
to health outcomes. This is a big, big difference.
There are many horror
stories about people on Medicare Advantage plans being denied care, sometimes
with calamitous consequences. But most health experts believe that managed care
is the most promising way to improve the health of people on Medicare while
also holding down the huge increases in health care costs that threaten the
solvency of government and individuals alike.
So, the most
beneficial form of Medicare for All would be a managed care system, not the
fee-for-service system that Original Medicare now employs. And when it comes to
managed care, guess where nearly all the operational expertise now resides? In
private insurance companies, not CMS.
Further, I assume
Medicare for All would cover drugs. Right now, some 40 million Medicare
enrollees have prescription drug plans that are all run by private insurance
companies. What happens to them? Ditto for another 10 million people who have
private Medigap supplement insurance plans that are regulated at the state
level.
For these reasons, I
cannot envision a single-payer system, or even a big expansion of Medicare to
people younger than 65, without a substantial role for private insurers.
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