Medicare for All is Not Happening… 10 years from now will we have Medicare Advantage for All? Grandmother and granddaughter in the same health plan?
Others have written that the US should achieve universal health insurance coverage, better health outcomes, and lower costs via comprehensive programs such as “Medicare for All”, as proposed by Senator Bernie Sanders. More recently, Amy Finkelstein and Liran Einav suggested a much more limited universal, national “basic” plan [pdf] in their book “We’ve Got You Covered“. Their proposal couples a public plan with a robust market for supplemental programs. Think of a stripped-down Medicare, with covered services linked to cost-effectiveness thresholds, and an even bigger private Medicare supplement market.
As a 40+ year contributor to the mess of the current US healthcare financing system (via my work for numerous insurance companies and Texas’ public hospital systems), I must accept some responsibility for the mess. And either of these paths would be better than the current confusing, inefficient, expensive state of affairs. This “non-system” of Medicare, Medicare Advantage, 50 separate state Medicaid programs, insured employer-sponsored insurance, self-funded employer-sponsored health plans, the individual Marketplace under the ACA, plus military plans, collectively provides coverage for only 90% of the US population. I won’t even try to justify the incredibly fragmented, complex, inefficient ways we finance health care for the uninsured (but newsflash… the uninsured get care that we all pay for).
So, while most everyone agrees we should do something different, there is currently no political path to get to a consensus on what that would be. Instead, under current law, here is where we are heading. While certainly not perfect, I would argue that it is not all bad.
The Trends
- Medicare Advantage (MA) is growing rapidly, now covering over 50% of all seniors, and in states like Texas and Florida, close to 60%. I don’t see that trend slowing down as more people move into Medicare from private insurance that feels a lot like MA (limited networks, managed care referrals, dental and vision benefits), than the traditional Medicare indemnity plan.
- State Medicaid and CHIP plans have been rapidly turned into voucher programs where recipients choose among several private options for their Medicaid coverage. Nationally 75% of all Medicaid recipients select private Medicaid Managed Care Organizations.
- The ACA Individual Marketplace just announced record enrollment, now well over 20 million Americans (almost all working-age adults, receiving some form of federal subsidy).
- The Small Employer market is shrinking. Some are moving to a form of self-funding, called “level funding”, but many others, especially new companies, are creating health reimbursement arrangements that allow their employees to go to the ACA Marketplace to buy whatever plan they wish, but with employer subsidies rather than government ones (more choices for employees, more financial control and less risk for employers).
- While large employers have not yet abandoned their self-funded health plan arrangements, those that cover retirees are rapidly converting their retirees to Medicare Advantage (contributing to the growth in MA). At the same time several large employer coalitions (Purchasers’ Business Group on Health, Houston Business Coalition on Health, etc.) are looking at care management and payment trends in MA, such as the use of advanced primary care and value-based care (VBC) payment models to incorporate in their programs.
How These Trends May Play Out
- Over the next 10 years, MA will overwhelm traditional Medicare. This will push the patient care and payment models utilized in Medicare Advantage rapidly into other sectors (just as now almost all payment models in private and public insurance use older Medicare payment provisions as their base).
- The ACA Individual Marketplace will continue to grow as it largely replaces the small employer market, and large employers with employees scattered across the country find the HRA path better for their employees than their current plans. Just as defined benefit retirement plans have been replaced by 401(k) plans, the same is likely to happen to health benefits.
- The risk adjustment, care delivery, and VBC payment models in MA are already quite similar to the Marketplace and Medicaid, and with all being regulated by CMS, those trends will continue without the need for new legislation.
- The insurers in Medicaid Managed Care are almost identical to the ones in the Marketplace, and MA. As people transition from Medicaid eligibility to Marketplace subsidies, insurers want to retain them, and enrollees get to keep the same physicians and network. Similarly, MA insurers utilize the Marketplace as a feeder system to MA, allowing enrollees to keep the same providers as they age into Medicare.
The Results
Certainly, MA has challenges and is not perfect, but here’s why I don’t think this is all bad:
- Consolidation of MA, Medicaid Managed Care, and the ACA Marketplace insurers actually increases competition across all sectors, with more insurers in these markets than the current employer market.
- Individual choice of competing health plans will drive more competition in premiums and slow insurance cost increases, better than employer-sponsored approaches.
- Less churn of enrollees (workers don’t have to change providers whenever they change jobs or at the whim of their employer) will result in better outcomes and better care coordination over longer time horizons.
- Employees are less passive and make decisions on health care. Employers become financiers, just as the states are doing in Medicaid.
- Provider and enrollee administrative burden should shrink as there is more consistency in regulation. MA problems (which also exist in all other insurance sectors), such as risk adjustment manipulation, network information, and prior authorization processes all improve in one market rather 4 or 5 submarkets.
- This all is happening without massive upheaval to any sector of the healthcare community or consumers. It will be incremental, positive change.
Medicare Advantage for All? We shall see.
Ken Janda