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Sen. Bernie Sanders plans to introduce his universal health care bill Wednesday; it is likely to serve as a litmus test for Democrats with presidential aspirations. The legislation is bold and simple, which makes it very appealing. A recent survey by the Pew Research Center found that 60 percent of Americans believe the federal government should ensure health coverage for all Americans.

But Sanders’s bill only gets it half right.

The part that’s right is that every American would automatically get health insurance. If that came to pass, the door would be open to lowering costs while eliminating the highly complex regulations needed to police our current system and the inequitable tax treatment that sustains it.

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The part that Sanders gets wrong is that he would turn Medicare into a single-payer system for all, supplanting private insurers.

That approach has lots of problems, not least of which is an enormous price tag. Consider what happened in California earlier this year when the state legislature briefly considered a single-payer bill. An appropriations committee estimated it would cost $400 billion, over twice the state’s annual budget. Such complications make the Sanders bill — and other Medicare for all proposals — virtually impossible to enact.

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People also forget that Medicare is a hidebound system. It took Congress more than 40 years to offer a prescription drug benefit, for example. Physicians are paid using an arcane system developed decades ago and that has now ballooned to more than 140,000 procedure codes, all of which is supervised (and gamed) by physicians themselves. Standard private sector cost-saving measures, like competitive bidding for routine services, are rarely used.

There is a better way — called universal catastrophic coverage — which borrows from both progressive and conservative playbooks. It would combine the federal guarantee of insurance for all with the cost-controlling benefits of insurers competing for that business.

From the consumer viewpoint, universal catastrophic coverage would look like this: All Americans not covered by Medicaid and Medicare would be placed in a single, massive risk pool. The government would assume the risk of insuring everyone, using a high-deductible policy that would guarantee that no one would be without care in the event of a health care crisis.

To keep the plan progressive and affordable for all, deductibles would be tied to income. Services that are very effective would be exempt from the deductible and fully covered. This includes many prevention services — like flu shots — but also medications for chronic disease, certain vaccines, and the like.

This would eliminate a host of problems in the current system: no more worries about preexisting conditions, no more losing insurance when changing jobs, no more mandated buy-in, and no more upward spiraling of premiums for those buying policies because healthy people are staying uninsured and not paying their share.

From the point of view of insurers, the new system would look like Medicare’s prescription drug plan, in which they compete for market share by offering different networks, deductibles, premiums, and supplemental coverage.

A version of universal catastrophic coverage that I devised with my colleague, Kip Hagopian, would cost the government about 15 percent less than the Affordable Care Act while insuring 115 million more people, according to a RAND study. Premiums would be about $3,000 annually, about 40 percent less than the ACA silver plans.

This approach borrows from liberal dreams for health care as a right, and from conservative conviction that market forces are the most efficient way to deliver health care and keep costs under control. That is why both sides can support it.

Being bold means asking for big changes. The current system of employer-based insurance would lose its tax-protected status, which currently costs the federal government $236 billion (about the same as the mortgage interest deduction, charitable deductions, and retirement benefit exclusions combined, according to the Tax Policy Center). Those savings would be used to underwrite the new system.

Vested interests will find many reasons to oppose change. But the bottom line is that we can cover everyone if we are smart about it.

Dana Goldman, Ph.D., is director of the Leonard D. Schaeffer Center for Health Policy & Economics at the University of Southern California. He is also a cofounder of Precision Health Economics, a company that provides consulting services to the life sciences industry, and owns equity in its parent company.

  • “The current system of employer-based insurance would lose its tax-protected status, which currently costs the federal government $236 billion (about the same as the mortgage interest deduction, charitable deductions, and retirement benefit exclusions combined, according to the Tax Policy Center). Those savings would be used to underwrite the new system.”

    Except the savings would NEVER be there.
    Either the employee gets the burdened labor cost savings as wages, to make up for the higher taxes, or the employer is now able to fund more workers.
    But the loss of the tax write off for providing insurance will NEVER result in more taxes paid by the employer to the Federal Government
    That is just not how business thinks

    • Historically speaking, the business writeoff for employer-sponsored health insurance was a trade-off with the federal government. This tradeoff occurred right at the end of WWII, as the economy picked up after the Great Depression, Roosevelt gave business the trade-off. Roosevelt had wanted universal health care as part of the New Deal. When more taxes were due at that time, business negotiated the employer-based health care system INSTEAD of taxes. Thus, business thought precisely in these terms (taxes vs. health care) at that time.

    • John, the 1942 Stabilization Act was followed a year later by the IRS giving businesses a tax break for the employer-sponsored health insurance. Congress could exercise its’ options to increase revenue by reducing or eliminating the myriad tax breaks in the existing code. The exclusion of employer-provided health insurance, the mortgage interest deduction, retirement saving incentives, and the charitable deduction are the examples cited by Goldman, but there are others, including accelerated depreciation and deferral of taxes on overseas income. My point was that business DOES think about these taxes. Moreover, if Congress did scale back or eliminate the exclusion for employe-provided health insurance, then they would be on the hook for the $236 billion, and they would surely THINK about it then. We can probably agree that they would think about it, although I imagine you would have them thinking about how to get the tax break elsewhere?

    • Mikael – business would have to give the money to the employee as a raise, so the employee could fund the costs of the medical coverage.
      AND WAGES ARE ALSO A TAX DEDUCTIBLE OPERATING EXPENSE

    • John,

      I was commenting on your claim that “insurers do not think that way,” with reference to paying more taxes if the federal government exercised its’ option to increase revenues by scaling back the tax break for employer-based health insurance. There is no logic into how that tax break came to be, and so your notion that there are steps skipped is not germane to our discussion about the tax break. The article from NPR also makes the point that there was no logic into how the current employer-based health insurance (with tax break) came to be, “But to Thomasson and other economic historians, there’s nothing natural or inevitable about it. Instead, they see it as the profound result of historical accidents.” The tax break was an historical accident, and companies would think—and think hard—about how to get out of paying the taxes due if the tax break for employer-based health insurance was scaled back or repealed by Congress.

      As to your post about insurance companies not making profit, I read the articles you reference in CNN and Forbes. I agree that insurance companies enrolling members through the marketplace have not been profitable, and that Medicaid has been a mixed bag—and for the record, I am a fan of neither the marketplace or Insurance-run Medicaid, nor Medicare Advantage. Medicare Advantage profitability, however, is an entirely different story, with profits up 279% (per your reference). I addressed my problems with Medicare Advantage in a separate post to this article last year. Also, all of the CEO’s of the major insurance companies make multi-million dollar salaries, and these exorbitant salaries, along with the 15% administrative waste seen in the insurance industry, goes away with a Medicare for All plan. The salaries of the four largest insurance company CEOs range from 31 to 59 million dollars, and the 31-million-dollar salary is that of United Health’s Mr. Hemsley (https://issuu.com/news_review/docs/pnhp_042018). The greed of these CEO’s is extraordinary when one considers the tactics used to make their profits: claim denials, inflated prescription drug prices, and plans that lack comprehensive coverage.

      In the end, whether or not insurance thinks this way, or that way, or not at all, about the tax break for employer-based health insurance, we probably agree that the reality is that they would either need to increase wages or otherwise pay the taxes due if the tax break were to be scaled back by Congress. Increased wages would simply then go to paying the skyrocketing health insurance premiums seen by employees. Medicare for All solves these problems; instead of pondering changes in the tax code that might affect their bottom line, business can focus on profit-making, and consumers can move freely between jobs without fear of losing their employer-based health insurance. Moreover, business thinks about this idea, and this thinking process is promulgated in the documentary, Fix It: Healthcare At The Tipping Point.

    • Mikael
      hold up here – you have quite a few things very twisted

      Medicare Advantage profitability, however, is an entirely different story, with profits up 279% (per your reference).

      with a growth in market share, and baby boomers being the growth – that is natural – but no one is charging Medicae more, and Medicare negotiates the rate every year, through a bid process

      ultimatly they figured out how to add more benefits to Medicare besides original medicare, add Rx, add dental, vision and hearing, CAP out of pocket that Medicare did not cap,
      and do it all for less cost to the taxpayer

      Is that evil?

      “Also, all of the CEO’s of the major insurance companies make multi-million dollar salaries, and these exorbitant salaries,”

      and they are global billion dollar businesses with tons of differant products and business units – with salaries in line with compaiaable corporations

      along with the 15% administrative waste seen in the insurance industry,

      what waste? you mean the taxes they pay per policy, property taxes, FICA, claims processing because Medicare will not, admin fees to state DoI and federal HHS…
      that 15%?
      got news for you – the Insurers have alrady solved that issue – they are telling the U S to bag the ACA compliant insurance market, and besides suing the government for breach of contract – they are leaving the market

      The salaries of the four largest insurance company CEOs range from 31 to 59 million dollars, and the 31-million-dollar salary is that of United Health’s Mr. Hemsley (https://issuu.com/news_review/docs/pnhp_042018).

      For running a global Insurance, IT, claims processing, manufacturing and distrivutions system
      check yourself – the wages and profit are NOT from health insrance, and most is not even earned off insurance in the U S

      The greed of these CEO’s is extraordinary when one considers the tactics used to make their profits:
      claim denials, is a lie since HIPAA and state DOI laws were in place, and that lie was exposed pre ACA

      inflated prescription drug prices – how is that the insurance company’s issue, when they negotiate the prices down?

      and plans that lack comprehensive coverage -which are mandated to meet state and federal laws and coverage requirements

      “goes away with a Medicare for All plan. ”
      nope – not a chance – but you would have to grasp that Medicare denies more claims than all private insurers, and Medicare only pays claims for 30 million of the 60 million, and then only Medical
      Medicare does not process Rx claims

      In a medicare for all system claims processing STILL EXISTS – so there is no savings – in fact, the system will cost MORE since all Rx claims – for all 330 perple, done exery 7 days on opiods and pain killers
      will be processed by government workers or contractors which must provide government benefits and government retirement and comply to federal government wages

      grab your ankles – because the cost to do this in the U S is HUGE – and I have not even touched on the medical needs differance in the U S v other nations

      sorry – but this type of false claims is not becoming

  • “It would combine the federal guarantee of insurance for all with the cost-controlling benefits of insurers competing for that business,” says the author. I believe that’s what we have now — and we all know ow well that works!

  • Could projected costs not be taking into account possibility that they may revert to lower level in a non profit system? There must be a reason why some developed countries have managed, without going bankrupt. And have the statistics that show healthier population than ours.

  • While I strongly support Dr. Goldman’s proposed aim of finding a workable way to guarantee health care to all Americans, it’s disappointing to see California’s experience with single-payer misrepresented yet again – and by an economist and Californian, no less! What opponents to California’s universal health care bill (SB562 – I might add, this bill was not abandoned so much as summarily shelved by Assembly Speaker Rendon after passing the State Senate) misrepresent is that the $400 billion projection is NOT $400 billion of new spending. Instead, that figure is a) as compared to the $370 billion that California ALREADY spends on health care annually, and b) without incorporating any of the plan’s improvements in efficiency that would drop health care costs. When those are taken into account, the actual projection by a team of UMass economists was $330 billion, or $40 billion less than California’s current annual spending on health care. Let’s consider all potentially workable ideas, including Dr. Goldman’s, on their merits, but let’s not misuse California’s experience as evidence for the facile conclusion that “Medicare for All” is inherently unworkable.

  • The article conveniently left out the most important part about Bernie Sanders’ single payer healthcare idea.
    Vermont’s Democratic Governor tried to institute single payer in Bernie’s home state. Once the Gov found out how much taxes would have to be increased in order to support it, he dropped the idea as it would have bankrupted the State.

  • This new proposal keeps the private health insurance companies in the thick of things & practically guarantees that they will always make a profit, as well as paying their CEOS highly inflated salaries & bonuses…
    Why not make the govt the only insurer in the game & cut out all these greedy parasites?

  • Dana: In your plan, would physicians be able to negotiate their fees based on market conditions such as quality measures and/or patient satisfaction? Or, as a monopoly, would the government be able to dictate the cost of healthcare much as Chavez would dictate the price of bread or milk?

    • I personally think so-called “quality measures” are too easily gamed and reward excessive attention to documentation and clerical activities rather than patient care. Many with good reason see those requirements as merely a way to decrease aggregate physician payments. And patient satisfaction is likewise a poor determinant of outcomes. The third option, not mentioned, is that docs compete on price. The current RVS Udate Committee run by the AMA is a highly flawed and highly politicized process. But some version of that is a better bet than other alternatives.

    • Compete on price like car dealers? Sounds good, as long as there is SOME method of determining the quality of the purchased good. Who determines that quality? The liability system? Patient reviews? Quality metrics? Without a validated quality reporting system, competing on price will get the population 2 of 6 possible outcomes: low price, low quality, and low or high convenience. Is that our health goal, or is low price, high quality and high convenience our health goal?

  • Health care as a human right is a liberal conviction; that market forces are the most efficient way to deliver health care and keep costs under control is a conservative dream.

  • Present day Bronze plans are essentially a “Universal catastrophic coverage plan”, and it is an abysmal failure. The high-deductibles deter people from seeking care before it progresses to a catastrophic level. I have seen this in a 56 y/o woman who presented in Stage 4 cervical Ca after much procrastination. Anybody after age 40 needs full coverage as that is when maladies occur most often. Shifting some funding priority from military spending to healthcare seems a better approach.

  • As a physician myself my biggest gripe is burgeoning regulatory demands. Meanwhile most of our trade organizations, from the AMA to most specialty societies, focus on preserving income and regulatory compliance. But overall I believe our top priority by far needs to be universal coverage. Decidedly second but nearly as important is cost control. I haven’t seen other proposals for universal care but your criticisms of Medicare are accurate. I’m not the least enamored of commercial insurance yet they are the only major players that compete on price. Preventing vested interests and politicians from manipulating any system will prove challenging.
    And personally I’d like to see changes in financial incentives that favor procedures and more expensive care; and more than lip service promoting primary care and making it a viable alternative for docs with large amounts of educational debt.

    • I disagree with the thesis of the article: “The part that Sanders gets wrong is that he would turn Medicare into a single-payer system for all, supplanting private insurers.” As a non-academic generalist physician, the author does not represent my position, as he is an academic elite from a private university some people refer to as the University of Spoiled Children. His professional positions are in a private health economics company and in a private biosciences field. The thesis is wrong-headed because it comes from this position of private bias, which in the larger scope of the universe of health care is resisting the movement to Medicare For All.

      The Medicare for All Resistance likes to call this program “single-payer” because they know that even though the difference between the two terms is only rhetorical, it plays well to the American public’s fears of big government. However, this communication ploy does not deter those of us who favor Medicare for All for we know that politicians are bought and paid for by pharmaceutical and health insurance lobbyists. This lobby describes Medicare for All as an existential threat, which is true, as the author acknowledges it “supplants private insurers.”

      His rationale for his thesis discusses competitive bidding for routine services and the coding process for diagnosing illness. Oddly enough, not only is the coding process gamed by Medicare Advantage plans to upcode diagnoses to receive greater reimbursements from Medicare, but the opportunity for physicians to bid on supplying the exam that allows for this upcoding is prevalent in the health care marketplace. I know both of these facts to be the case because I used to work for health insurance companies to examine patients and give them their f****** upcoded diagnoses, and I could choose which insurance company to work for on the basis of which one paid the highest hourly rate. In this way, I could sell my soul to the highest bidder. I am much happier to work as a salaried employee in a Medicare for All system.

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