Why A “Public Option” Isn’t Enough

The point of replacing private health insurance with single payer…

At one point, the meaning of “Medicare For All” was quite clear. Under Medicare For All, every American, instead of having to navigate the tangled and inefficient marketplace of for-profit health insurance corporations, would simply be enrolled in Medicare. Instead of people paying premiums and copays to an insurance company, they would pay taxes, and those taxes would be used to pay providers. As Dr. Abdul El-Sayed wrote in this magazine, Medicare For All is “single-payer healthcare that would provide cradle-to-grave government-supported healthcare for all Americans.” 

But as Democrats have realized how well the phrase “Medicare For All” polls with voters, its meaning has been deliberately muddied. Most of the Democratic presidential candidates now support something they call “Medicare For All,” but it’s often not clear what they mean by it. Some, when they clarify specifics, make it clear that what they actually want is a “public option,” i.e. a new kind of government insurance plan that you can buy within the structure of the existing healthcare marketplace. Pete Buttigieg says that he believes in “Medicare For All Who Want It.” Presumably, what this would mean in practice is that when you go to healthcare.gov to select your insurance plan, one option would be a thing called “Medicare For All,” and you could buy it, through premiums, if you chose it. This is, as Dr. El-Sayed points out, a “rebranding” of the concept, an attempt to present Bernie Sanders’ single payer proposal and Barack Obama’s old abandoned “public option” idea as roughly the same. 

But how do proponents of (actual) Medicare For All respond to the basic arguments made by those proposing “Medicare For All Who Want It”? What Pete Buttigieg and other moderates say is this: Why force people into a government program? Most people are satisfied with their healthcare (though note the huge difference between the 70 percent of Medicare enrollees who say they are satisfied with the cost, and the 51 percent of people with private insurance who are satisfied with cost). Why abolish private insurance? Why not just have insurance companies compete against a government plan in an open marketplace where people can choose? That way, everyone who wants Medicare gets it, while people who are satisfied with their current insurance can keep it. Everyone wins. The implication here is that anyone who supports a full single-payer plan, in which everyone would just be insured under a government program, must be rigidly ideological, wanting to shutter the private insurance industry for no good reason. Why would we do that instead of just providing a new option?

To understand why full “single payer” health insurance is the left’s goal, rather than just “another insurance plan on the marketplace,” it helps first to understand the left’s vision for how healthcare should work. In an ideal world, your healthcare would not be something you have to think about very much. If you got sick, you would choose a doctor’s office and make an appointment. You would go to that appointment and see the doctor. Then you would leave. You would not have to apply for insurance, not have to pay bills. And this would be the case no matter who you were or how much money you made. In Britain, this is what you do already. As U.K. Current Affairs contributor Aisling McCrea has explained, the NHS makes healthcare easy. “Insurance” isn’t a part of it at all: Your relationship is between you and your doctor, not you and your doctor and your doctor’s hospital’s billing department and your insurance company. Leftists dream of making healthcare as easy as possible to receive and universally accessible to all regardless of how much money they have. 

Private health insurance is an unnecessary part of the healthcare system. Insurance companies are middlemen, and insurance just exists to make sure that providers get paid. It was our government’s own choice to encourage the proliferation of private insurance, through laws like the Health Maintenance Organization Act of 1973. It was the federal government that subsidized private insurance companies and encouraged employers to use them. Other countries didn’t build this kind of healthcare system, for two reasons:

  1. It doesn’t cover everyone.
  2. It creates a bloated, inefficient insurance bureaucracy.

Our government has always been playing catch-up trying to get more people covered. It’s created employer subsidies, Medicaid, CHIP, and the Obamacare exchanges in a desperate bid to get this system to do its job, and despite decades of piecemeal healthcare reforms 13.7 percent of Americans remain without health insurance and millions more have inadequate coverage. Offering to let Americans “buy-in” to Medicare keeps Americans paying premiums, and as long as Americans must personally pay premiums to receive healthcare there are going to be some people who can’t or won’t pay those premiums and go without. It turns Medicare-For-All into a publicly run HMO. Maintaining an employer-sponsored health insurance system means remaining in a situation where large numbers of people go through a period of being uninsured each year, because when you lose your job you lose your insurance. (Currently 1 in 4 Americans go through an uninsured period each year.) Single payer advocates ask the question: “Why have a nightmarish tangle of public and private options, varying by state, with people moving on and off all the time? Why not just pay for healthcare with taxes, cover everyone, and make it free at the point of use?” 

Not only will a public option fail to cover everyone, it will do nothing to restrain the growth of healthcare costs. Single payer systems control costs by giving the health service a monopoly on access to patients, preventing providers from exploiting desperate patients for profit. If instead there are a large number of insurance companies, providers can play those insurance companies off each other. Right now, we have a two-tier system, in which the best doctors and hospitals refuse to provide coverage unless your insurer offers them exorbitantly high rents. To support that cost while still making a profit, your insurer has to subject you to higher premiums, higher co-pays, and higher deductibles. Poor Americans with poor-quality insurance are stuck with providers who don’t provide high enough quality care to make these demands. The best providers keep charging ever higher rents, and the gap between the care they offer and the care the poor receive just keeps growing. Poor Americans are now seeing a decline in life expectancy, in part because they cannot afford to buy insurance that would give them access to the best doctors and hospitals. Costs balloon for rich Americans while the quality of care stagnates for the poor.

The bloat doesn’t just come from providers. Because insurance works on a profit incentive, the insurance companies must extract rents as well. So the patient is paying to ensure not only that their doctor or hospital is highly-compensated, but that the insurance company generates profit too. Each insurance company has its own managers—its own CEO, its own human resources department, and so on. We have to pay all of these people, and because there are so many private insurance companies, there are so many middle managers to pay. (Barack Obama once bizarrely critiqued single payer by saying it would eliminate millions of jobs in the insurance bureaucracy, implying that we should keep admittedly pointless jobs and gouge patients as a make-work program.) 

These duplicate bureaucracies are expensive to maintain and do nothing to improve the quality of care. The providers make them compete to offer higher compensation, and you pay for it. Getting rid of these middle men makes the system far more efficient. We now spend 17 percent of GDP on healthcare. Britain spends 10 percent, and British people can expect to live two years longer. (Though in order to achieve a full cost-effective British system, we’d have to socialize medicine rather than just socializing insurance.) People do not associate government with efficiency, but when it comes to moving money from one place to another—which, after all, is all an insurance company does—it can be quite good, and it makes far more sense to have government handle healthcare payments than to leave it to companies with a direct financial incentive to deny treatment. 

Private insurance is inconvenient, inefficient, and continues to leave large numbers of Americans with inadequate insurance or no insurance at all. The Affordable Care Act shored up this system by funnelling more public money into subsidies for private insurance. Now these Democratic candidates are proposing to make a new insurance company, call it “Medicare,” and charge you premiums to use it. That doesn’t get rid of the problem of wasteful duplicative bureaucracies, and will guarantee that some people remain uninsured.  It was the federal government’s decision to build this bizarre, burdensome system. Nothing about private health care is natural or inevitable. It doesn’t have to be like this. 

And yet: Democratic presidential contenders seem reluctant to call this system what it is, and stand behind a comprehensive replacement. It’s not just Buttigieg. Candidates like Elizabeth Warren and Kamala Harris claim there are “many paths” to Medicare-For-All. In addition to Bernie Sanders’ bill, they’ve quietly signed onto some of the “buy-in” bills circulating through congress. Elizabeth Warren says she has a plan for everything, but there’s no Medicare-For-All plan on her website. (A plan for everything except healthcare, as Tim Higginbotham put it in Jacobin.) When asked at a town hall about it, she said:

When we talk about Medicare for All, there are a lot of different pathways…Some folks are talking about “Let’s start lowering the age. Maybe bring it down to 60, 55, 50″…Some people say “Do it the other way. Let’s bring it up, from, uh, everybody under 30 gets covered by Medicare.” Others say “Let employers be able to buy into the Medicare plans.” Others say “Let’s let employees buy into the Medicare plans.” For me, what’s key is we get everybody at the table on this…I’ve also co-sponsored other bills including expanding Medicaid as another approach that we use.

It’s a waffling answer that tells us little about Warren’s vision for healthcare—beyond her willingness to count the public option “buy-in” bills as “pathways” to Medicare-For-All. Yet Warren also came out at the Democratic debate for getting rid of private insurance. With no actual plan, it’s hard to know quite what she’s advocating. The Harris campaign does something similar. Harris has co-sponsored multiple buy-in bills, including Jeff Merkely’s and even Michael Bennett’s. Asked about Harris’ stance on Medicare-For-All, Harris’ press secretary said:

Medicare-for-all is the plan that she believes will solve the problem and get all Americans covered. Period…She has co-sponsored other pieces of legislation that she sees as a path to getting us there, but this is the plan she is running on.

A single payer system requires a lot of political commitment, because it means going up against the insurance companies and the ritzy providers and telling them they can’t screw us over anymore. They can’t deny us coverage, extract heavy rents, and keep us on the phone forever. If a Democratic candidate doesn’t see a meaningful difference between a public option and single payer, if that candidate sees these things as two different “paths” to the same place, that candidate cannot be trusted to put an end to this madness. They are offering just one more piecemeal reform to prop up a failing system—not a true overhaul.

Single payer healthcare is a tried and tested system, and it isn’t radical. Trying to cobble together “universal” coverage from a patchwork of giant for-profit bureaucracies and government insurance products is senseless. “Eliminating private insurance” rather than “adding choice” may sound unnecessarily sweeping. But private insurance just gets in the way of efficiently paying healthcare providers and covering everybody. Medicare-For-All makes sense, and we shouldn’t let it be watered down.

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