The upcoming presidential election will focus a laser beam on healthcare financing. Even before the COVID-19 pandemic, there was concern about rising premiums and surprise billing. Healthcare expenditures are estimated to consume 18% of the gross national product in 2020, and these huge expenditures have resulted in less-than-optimal outcomes when compared with those of other countries.1,2 The pandemic has raised additional concerns about our preparedness and the adequacy of our healthcare resources.
The focus on healthcare reform is coalescing around proposals advocating “Medicare for all” put forth by Senator Bernie Sanders (D-Vt.) and those under the broad heading of “Medicare for all with a public option.” Although Senator Sanders isn't the Democratic presidential nominee, it's useful to examine the concepts of the Medicare for all proposal as a basis for comparison with the less sweeping public option proposals and the current state represented by the Affordable Care Act (ACA).
Confusion about terminology is understandable given the variety of proposals put forth at this time. Professional nurses, especially those in leadership or management positions, should have a basic understanding of these proposals and their possible effects to make intelligent decisions, as well as advise colleagues, patients, or family members. The proposed changes not only have the potential to impact our personal finances, but also our organizations.
We outline the major tenets of the current Medicare system under the ACA and the “for all” and “public option” proposals and explore the potential effects of the latter two initiatives if they were to be implemented.
The current state
The ACA was passed in 2010 and is generally known as “Obamacare.” Although there have been efforts to dismantle the law, it constitutes the current status of healthcare financing in the US.3
The goals of the ACA were to increase the number of insured individuals, improve cost efficiency, and expand access to care. The ACA mandated that each state create a “healthcare exchange,” which would offer coverage to people with a minimum set of benefits as required by the Secretary of Health and Human Services. If the states were unable to develop such exchanges, the mandate allowed for the federal government to establish them for the state. These exchanges were like a grocery store for insurance coverage in that private insurance companies could post their policies, premiums, and coverage on the site, given that they used simple language. This format provided average consumers with the opportunity to make an educated choice about their coverage. After implementation of the ACA, with the healthcare exchanges and other mandates, the estimated number of people without insurance who gained healthcare coverage is as high as 20 million.4
The ACA further mandated that each individual purchase health insurance. Subsidies were provided for those purchasing health insurance from the marketplace. Originally, if an individual didn't obtain coverage, he or she would be monetarily penalized as a result, but this is no longer the case.5
The ACA sought to improve cost efficiency through several efforts, such as negative reimbursement where hospitals and providers aren't paid if certain outcomes aren't attained or “never events” occur. An example is hospital-acquired urinary tract infections or central line-associated bloodstream infections.
Expanded access was sought through subsidizing the expansion of Medicaid programs. States were encouraged to expand their Medicaid programs and the federal government assumed a large percentage of the cost of this expansion. The Supreme Court later ruled that individual states could decide whether to expand their Medicaid programs; 14 states haven't expanded their programs yet.6
The principal objection to the ACA has been cost. Most individuals or employers have seen their premiums rise. The Centers for Medicare and Medicaid Services reports that premiums had already doubled in 2017 when compared with those of 2013. In 2018, premiums rose another 28%.7 Although certain provisions, such as the prohibition against refusing insurance to those with preexisting conditions, are extremely popular, the rising costs of health insurance haven't been contained.
Medicare for all
The Medicare for all proposal is also referred to as “universal healthcare” or “single payer healthcare.” The term “universal” refers to its coverage of all citizens and the term “single payer” refers to there being only one payer for healthcare, in this case the federal government.
Medicare for all would create a brand-new, universal health insurance system funded by the government. It would provide comprehensive coverage for every person residing in the US. This coverage would include inpatient and outpatient hospital care, emergency services, primary and preventive services, prescription drugs, mental health and substance abuse treatment, maternity and newborn care, pediatrics, home- and community-based long-term-care services and supports, dental care, audiology, and vision services.8 The coverage would be a totally new system, not an extension of the current Medicare system. All existing private health insurance plans, along with their premiums, deductibles, and copayments, would be eliminated.9
The proposed Medicare for all program would change not only coverage, but also the way health insurance is funded in the US. Currently, Medicare is funded by a payroll tax for employees and employers, as well as premiums for Medicare Part B. Healthcare is also funded by private insurance paid for by employers and consumers. Medicare for all would be completely funded by federal taxes.9 Several options for paying for this program have been proposed, such as an income-based premium paid by employers, a premium paid by households, and savings from health expenditures.
“Universal healthcare,” as it was originally called, has been discussed in the US for many years but has been met with considerable opposition from both Democrats and Republicans. When Medicare was first introduced in 1965, many hoped that lawmakers would eventually expand the program to include all Americans.10 This didn't happen, but the program was expanded by President Richard Nixon in 1972 to include people with disabilities and those in end-stage renal failure.
The 1990s saw a break from the push for universal healthcare during the Clinton administration; however, as perceptions of Medicare improved, the phrase “Medicare for all” increased in popularity. In 2003, Rep. John Conyers (D-Mich.) introduced a bill that would create a universal single-payer healthcare system, termed the Expanded and Improved Medicare for All Act.11 However, efforts toward implementing Medicare for all eventually failed.
Senator Sanders, backed by several other Democratic senators, reinvigorated Medicare for all in 2013 and that momentum has carried forward to the current presidential election. The phrase has become an increasingly prevalent part of the national conversation around healthcare.
Were Medicare for all to be enacted, patients would have full choice of any participating hospital or physician. Physicians and hospitals would be expected to participate and, although remaining in private hands, they would receive most of their funding through the federal government. Healthcare providers wouldn't be allowed to practice both inside and outside the Medicare system.12
Pharmaceutical companies would likely see significant cuts to their bottom line because the Medicare for all proposal allows Medicare to negotiate directly with pharmaceutical companies, a practice that's currently prohibited. The proposed legislation also allows consumers to purchase drugs from Canada and other developed countries where the cost is lower.
Providers may also see their income drop, particularly if they have large practices of patients with private insurance, because private insurance generally pays more than government-sponsored insurance. The government would assume responsibility for paying for the healthcare of all US citizens and seek measures to lower healthcare expenditures.
Medicare for all with a public option
There are several public option plans being proposed. What they have in common is that they offer consumers a choice instead of the Medicare for all proposal, which provides universal coverage under one program with no choice.
Consumers under public option plans could elect to stay with their private employer-sponsored plans or opt to join a government-sponsored “public option” plan. Medicare would remain intact or expanded somewhat. The public option plans would be on the marketplace and private insurance plans could remain intact. Thus, these public option plans are a compromise between the current system of primarily private insurance, as well as government-sponsored Medicare, and the sweeping change of Medicare for all.
Some public option proposals offer patients the ability to buy a Medicare or Medicaid plan that would look a lot like the current government-funded plans for older adults, those with disabilities, or individuals living below the poverty line. Others would create a brand-new, government-subsidized health insurance program that patients could choose to buy.13
Many of these plans limit who would be eligible for the public option. Some proposals limit the Medicare public option to adults older than age 50 and/or to marketplace participants. Some public option plans would even allow employers to choose Medicare versus private health insurance for their workers.13 Most public option plans exclude undocumented immigrants and those who currently qualify for Medicaid and Medicare from coverage.14
Cost-sharing and cost-sharing subsidies also vary by proposal. In most of these proposals, patients could use their current government subsidies under the ACA to help them buy either a private or public option.13 Those who aren't subsidized would still be eligible to purchase a public option plan or a private plan, and some proposals allow employer support. Several of the proposals would set the benchmark ACA marketplace plan at the gold level versus a silver plan to lower deductibles and other out-of-pocket costs and expand eligibility for cost-sharing subsidies to those with higher incomes.14
Like the ACA plans currently found on the marketplace, the public option premiums could vary based on risk level, which considers age, geography, family size, and tobacco use. The public option would be free for low-income Americans under all plans, and some would cap premium contributions for people with higher incomes.14
What would happen to healthcare provider income under the public option plans? Different proposals offer various incentives for providers to participate in the public option. Without incentives, those patients electing a public option could face a narrower provider network. Some proposals tie participation in the current Medicare and Medicaid programs to participation in the public option, whereas others don't. Some don't specify how they'll address this matter.13
A national conversation
At this juncture, we assume that a national conversation about healthcare is on the horizon, but there's much we still don't know. We don't know which proposal will emerge as that of the presumptive Democratic presidential nominee Joe Biden and we don't know the Republicans' official platform yet. The national pandemic we're currently experiencing will influence the conversation about healthcare financing, but we don't know what changes will occur to the proposals as a result. We also recognize that, regardless of the outcome of the presidential election, these reform measures will have to be voted on by Congress, which until now hasn't reached agreement regarding healthcare reform. Once legislation is enacted, any changes to the tax structure would need to be implemented, public options plans developed on the marketplace, and the transition to the new system undertaken. Nevertheless, it's useful to understand the basic concepts so we can participate in this national conversation and advocate for our patients and their families.