Pete Buttigieg (“Mayor Pete”) has recently brought to public attention a policy that many people (including me) find very appealing: “Medicare for all who want it.” I think everyone should have the right to participate in a public health care plan, and I don’t want anyone to lose their existing health insurance if they’re happy with it. So what Mayor Pete says sounds really good to me—if it is not just hollow rhetoric.
But is this option really possible? I’ve come to think it is more appearance than reality — an empty promise— for many of us. I’m neither a health care economist nor a political partisan, so the point of this article is neither to promote any particular policy, nor to denigrate Mr. Buttigieg, for whom I feel great affection and respect. I am, however, a teacher, and I have some experience in identifying important questions. So, my goal here is to pose and explain an honest question in the hope and expectation that either Mr. Buttigieg or some other informed advocate of the policy can answer my concerns.
Here’s the proposal as Mayor Pete’s website describes it:
“For starters, everyone should have the option of getting coverage through a public insurance alternative. This way, if a private insurance plan from your employer or the marketplace isn’t affordable, you can get a plan that is. It’s what Pete calls Medicare for All Who Want It. Unlike many other proposals, you can choose whether to join a public alternative, so if you like your private insurance you can keep it. If corporate insurers are unable or unwilling to lower costs or offer plans that are dramatically better than what’s available today, competition from this public insurance alternative will naturally lead to Medicare for All.” (From "); background-size: 1px 1px; background-position: 0px calc(1em + 1px); background-repeat: repeat no-repeat;">Mayor Pete’s white paper. Boldface mine.)
So, in the interests of clear policy-making, here’s my question:
Can it really be possible for everyone to choose whichever policy they prefer—Medicare or their current insurance?
If “everyone” really means “everyone,” then count me in, but I’m pretty sure it cannot. In fact, I’m pretty sure “everyone” excludes virtually all families who currently depend on employer-based insurance—approximately half the populace. The Kaiser Family Foundation reports that 49% of the total U.S. population are insured through employer-provided policies. So how about all those people? Will they really be able to get the public option if they want it?
A specific test case
My wife and I were both teachers. We were among this 49%. So, let’s imagine that we’re still teaching under the contracts we had before we retired.
Both at my university and her school district, labor negotiations over a period of decades have resulted in about $12,000 per year being transferred from salary to health insurance benefits (the “employer’s contribution”). In other words, our insurance is costing the two of us $24,000 per year in reduced salary (which substantially reduces future retirement income). In addition to that, our “employee share” of the insurance premium is deducted from our paychecks. Then there are copays, etc. Total health care costs for the two of us (and we’re pretty healthy) are about $30,000 per year.
That’s one reason I like what Mayor Pete’s white paper promises: “If a private insurance plan from your employer or the marketplace isn’t affordable, you can get a plan that is.” In fact, I have wanted it for years and long ago approached both my wife’s employer and mine to ask if one of us could opt out of the expensive “benefit” and pay a much cheaper fee to obtain coverage under the other’s policy. “Sure,” they said, “but we won’t move that benefit money back into your salary. You can refuse the benefit, but doing so will cost you $12,000 here plus whatever you pay to join your spouse’s plan. You can opt out of the benefit, but you can’t opt out of the cost of the benefit.”
That experience has shaped my perception of how “Medicare for all who want it” would (or wouldn’t) work. Here’s how it currently looks to me.
From the employer’s point of view, allowing every employee to choose is unworkable.
In fairness to our employers, they are not merely being greedy. Negotiating with insurance companies is difficult. The employer has to make its employee-pool as large as possible: Smaller is more expensive. Every employee who opts out diminishes the pool and increases the cost per remaining employee — creating a vicious cycle.
The people responsible for purchasing a policy for the employer spend a huge amount of time investigating and negotiating even now, when they know that full-time employee participation will be 100%. That task would be fairly impossible if they had to constantly renegotiate with the insurance companies as employees “who want to” individually withdrew from the plan and took their money with them to enroll in Medicare for All.
From the employee’s point of view, taking the option is financially insane.
The issue the employee faces is the monetary value of his/her insurance benefit. It is, as I said, about $12,000 a year for me. I think that Mayor Pete’s “option” for “everybody” would actually come down to this for virtually all of the people with employer-based insurance: You may leave in the company coffers the insurance premium ($12,000 a year or whatever) that you earned and accepted in lieu of salary and then reach into your pocket for another several thousand dollars to spend on a Medicare policy. What kind of “option” is that? Who can afford to do such a thing?
There can be no “option” for most people with an employer-based plan.
So, this is what it looks like to me: The financial realities around which employer-based insurance is structured necessarily deny employees the right to opt out.
We might as well promise the crew of a submarine that they can opt out of a mission and swim to the surface anytime they want. First, the rest of the crew needs them to preserve the functionality of the vessel for everyone else. Second, no individual (no matter how much s/he may want to exit the vessel) can leave on his/her own. The individual’s lungs don’t hold enough resources of oxygen to allow them to swim a few hundred feet to the surface. The very structure of the situation makes the promise “Anyone who wants can opt out and go to the surface” impossible.
The submarine analogy is absurd, of course, but so is the possibility that employees who don’t like the insurance their employer selects for them can ever really have an option to leave and join Medicare — no matter who promises they can.
By my current understanding,
Elizabeth Warren and Bernie Sanders both understand and acknowledge the financial prison that employer-based insurance has created (for employers in many cases as well as employees). They understand that there never can be real choice for people within an employer-based insurance model — or within any insurance model, including Medicare. Being insured means joining with others to share the expenses, and the allocation of those expenses must necessarily be based in the long run on the reality of the numbers — “the total cost,” as Senator Warren has always said. Their plans have the merits of removing the cost of insurance companies and maximizing the pool of participants to increase negotiating power with providers.
That’s how I currently assess the situation, but
I’ll be glad to change my mind if Mayor Pete
or any other supporter of “Medicare for all who want it” can explain two things to someone like me who wants to choose the public option: (a) How can the employer possibly afford to grant me (and perhaps 60% or 70% of my colleagues) the choice to dis-enroll from the district’s insurance policy and enroll in Medicare while simultaneously retaining their existing insurance plan for any employees who want to to keep it; and (b) what laws or regulations will ensure that the health insurance portion of my “total compensation” (the $12,000 per year I have mentioned) will be returned to me to make the public “option” a real option.
In the absence of convincing explanations to the contrary, I will remain convinced that “everyone” cannot include employees like me because the option is unworkable for the employer and financially insane for the employee.
Thanks in advance to commenters for any help and clarification they can offer.
(Crossposted from Medium.)
