Is health care a right or a privilege? That question dominates our thinking about U.S. health policy and often shapes critical political choices. Unfortunately, it also prevents an honest discussion about the trade-offs in health coverage. If you believe health care is a right, how do we pay for universal health care? If you view health care as a privilege, what happens to the millions of uninsured Americans?
Take the Medicare for All bill (S. 1804) introduced by Sen. Bernie Sanders. Its primary benefit is universal health coverage without any direct cost to individuals. This would be an incredible achievement, especially for the nearly 30 million uninsured individuals in the U.S., whose lack of coverage leads to approximately 45,000 deaths a year.
Even for Americans with health insurance, the system needs reform. The past five years have seen premiums double and deductibles increase 40 percent. Many health insurance plans have narrow insurance networks that cover only a limited number of providers and hospitals. These often add more costs in emergencies, especially when the closest hospital is outside the network. According to the Federal Reserve’s 2017 economic well-being report, nearly half of Americans have less than $400 in savings, making the high cost of health care even more problematic.
To fully assess Medicare for all, it is essential to consider how it affects all stakeholders in the health care system — the uninsured, the insured, health care providers, insurance companies, and taxpayers. Progress for one may be losing ground for another.
Medicare for all would achieve universal coverage, a great outcome when viewed through the eyes of the uninsured. But consider its impact on others. It would likely result in longer wait times for the currently insured because of new demand from the uninsured. While health systems would likely eventually hire more providers, they cannot immediately adjust to new demands. In addition, the supply of physicians may be constrained as premed students may adjust career plans in response to anticipated cuts in reimbursement and rising student loan debt.
Medicare for all would also affect individuals who work in the health care industry, which employs a lot of people. In fact, more people work in health care than in either the manufacturing or retail industries. During the recent recession and economic recovery, the health care sector added jobs every month. And although expanded coverage provided by Medicare for all might lead to more jobs in patient care, the likely elimination of private health insurance could result in the loss of half a million jobs. A temporary work assistance program is included in Sanders’ Medicare for All bill (see page 45) to support displaced workers, but many would struggle to find new employment.
Medicare for all would also affect the broader economy, particularly large health care organizations that account for approximately 18 percent of our gross domestic product. Three of the Fortune 10 — UnitedHealth Group, McKesson, and CVS Health — are health care companies and four of the others — Walmart, Berkshire Hathaway, Apple, and Amazon — have current or proposed health care initiatives. Though the stocks of large health insurance companies grew twice as much as the S&P 500 since the Affordable Care Act was passed, this growth was largely due to private and public approaches to expanding coverage. A public-only version of reform might not be so friendly to growth.
While CVS Health and McKesson would likely do well with increased demand for health care, UnitedHealth Group would need to significantly adjust its strategy so as to not suffer dramatically upon the elimination of private health insurance. Under Medicare for all, much of the added cost of providing health coverage would be financed through an increase in the payroll tax from 15 percent to 45 percent, which itself could increase unemployment. The Health Care Select Sector SPDR (XLV), an index that seeks to represent the health care sector within the S&P 500 Index, fell 2 percent after a federal judge in Texas ruled that the Affordable Care Act was unconstitutional. The drop highlights shareholders’ outlook on dismantling the current system.
If enacted, everyone would feel the consequences of Medicare for all — some would be positively, others negatively.
Morally, it is a grave failure that lack of insurance coverage and high prices restrict so many Americans’ access to health care. Medicare for all brings equity to the system through universal coverage and the elimination of medical bankruptcy. Yet the process of unwinding our current system would be painful — higher taxes, longer wait times for health care, and job losses.
Health care reform is more complicated than questions of right or privilege. As we think through our options — whether it’s Sanders’ bill, the seven alternatives that fall under the Medicare for all banner while proposing different approaches to coverage or prices, or smaller adjustments to our current system — we must ask tough questions about the trade-offs we are willing to accept and the impact such a revolutionary change would have on everyone in the health care system — patients, providers, and payers.
Andrew Schuette is an audiologist at Washington University School of Medicine who will join Barnes-Jewish Hospital as an administrative fellow after graduating from Washington University’s Olin Business School this spring. Peter Boumgarden, Ph.D., is professor of practice of strategy and organization at Washington University’s Olin Business School.