If you track national health care policy developments, you’ve been busy lately.
Following weeks of growing declarations from Democrats in support of Medicare for All, US House Speaker Nancy Pelosi tamped down exuberance over any plans to replace the Affordable Care Act (ACA). Then the US Justice Department spoke up.
In a March 25 statement to the Court of Appeals for the Fifth Circuit, Justice Department lawyers said US District Court Judge Reed O’Connor’s ruling should be affirmed—that the entire ACA coverage mandate is unconstitutional, and since the provision is inseverable from the ACA, the entire Act is invalid. The ACA remains in place as the District Court ruling is under appeal.
The next day, President Donald Trump announced that Republicans will craft a health care proposal “far better than ObamaCare” if Judge O’Connor’s ruling is sustained. A few days later, President Trump clarified that his party’s action on a health care replacement would not occur until after the 2020 election when he predicted Republicans again have control of both the Senate and House.
For those keeping score, … good luck!
One takeaway from all of this is health care policy is firmly seated at the forefront of debate heading into the 2020 presidential election. Another: momentum in politics and policy can shift rapidly. But it seems pretty clear that, at this early stage in the presidential race, Medicare for All remains in play.
This is the second in a series focused on Medicare for All, what it is and is not. In this piece, we examine the potential cost, financing mechanisms and impact on provider payment.
Early studies of recent Medicare for All proposals vary in their conclusions about cost. A University of Massachusetts at Amherst analysis concluded Vermont Sen. Bernie Sanders’ 2017 Medicare for All Act could actually reduce annual US health care spending from $3.24 trillion to $2.93 trillion in the first year. It would require, however, $1.05 trillion in new revenue in that year to make the plan work. According to the Amherst analysis, the $1.05 trillion does not represent an additional spending burden, but rather it is a replacement of revenue lost due to changes in private revenue sources.
On the other hand, a working paper out of the Mercatus Center at George Mason University found Sen. Sanders’ proposal would increase federal outlays by $32.6 trillion over the first 10 years of the plan starting in 2022. In the first year, according to the analysis, federal costs for the plan would increase $2.535 trillion, and that’s with $384 billion in cuts in provider payments as Medicare reimbursement rates are applied. By 2031, the size of the provider payment cuts would equal $702 billion, for a 10-year total of $5.3 trillion.
Sen. Sanders re-introduced his Medicare for All proposal this year on April 10, calling it the Medicare for All Act of 2019 (the Senate version). In a paper laying out his response to financing the proposal, he referenced the PERI and Mercatus analyses. He explains, however, that the Mercatus Center conducted two analyses, the one described above and another showing that a combination of reduced health care spending plus reductions in administrative costs will yield savings of more than $2 trillion over 10 years.
We have not seen the last of the cost estimates. In January, the Chairman of the House Budget Committee asked the Congressional Budget Office to assess the impact of single-payer proposals, including Medicare for All, on the federal budget, national health spending and access to care.
Depending on the proposal—one analysis identified nine different federal health care proposals in play from Democrats, eight of which begin with “Medicare” in their names—the cost and financial impact will be derived out of the details. All call for an increased federal role in health care financing, but many retain private insurance and premiums.
In the Medicare for All Act of 2019, introduced in February by Washington Representative Pramila Jayapal, many details are left for the Secretary of the Department of Health and Human Services (DHHS) to decide. But certain provisions affecting financing and providers are clear: all cost sharing—copays, coinsurance, deductibles—would be eliminated. (Sen. Sanders’ legislation applies limited cost sharing to long-term care and prescription drugs.) Balance billing would also be eliminated. That doesn’t mean, though, that provider payments will be sufficient to cover the providers’ costs.
The Jayapal proposal requires that individual and group providers be paid on a fee-for-service basis according to a fee schedule developed by the DHHS Secretary. Appropriateness of the fee schedule would be determined using a “standardized documentation and review process of the relative values of physician services,” according to Rep. Jayapal’s summary of the proposal. A new electronic billing system would handle the provider payments.
Hospitals, skilled nursing facilities and federally qualified health centers would be paid according to a regionally negotiated global budget. Limitations would be placed on how the global budget funds could be used—for example, capital projects and technology purchases would need to be funded separately from operations.
If providers don’t participate in the Medicare for All plan, the providers may not bill or contract to serve patients who are eligible for plan benefits, except that they could provide non-covered services and bill accordingly. The non-participating providers could also provide any services to patients who are not eligible for Medicare for All benefits.
Just as there would be no cost sharing in the program, there would be no premium payments for coverage under the Medicare for All Act of 2019. As in other Medicare for All proposals, tax revenue would be used to finance the Medicare for All Act of 2019, with funding going to a new Universal Medicare Trust Fund, consisting of funds now used to finance federal health care programs.
In a big change long advocated by Democrats, DHHS would negotiate the price of prescription drugs, as well as medical supplies and equipment. The proposal identifies the criteria the Secretary would use in the negotiation, including comparative clinical and cost effectiveness information.
The Medicare for All Acts of 2017 and 2019 represent the more far reaching side of the continuing health care reform policy debate. Others—remember, there are already nine or more proposals in play—will bring varying degrees of substantial change.
An example of a less-dramatic change under consideration is the Medicare-X Choice Act of 2019 plan, which was reintroduced on April 2 by US Senators Michael Bennet (D-CO) and Tim Kaine (D-VA). The legislation would keep the exchanges in place under the ACA but gradually phase in a public option. Providers who participate in Medicare or Medicaid would be required to serve Medicare-X patients at Medicare reimbursement rates. DHHS would negotiate prescription drug prices, and consumers selecting Medicare-X coverage would be required to pay subsidized premiums.
For more information on the various Medicare for All and other proposals potentially affecting health care in the United States, please contact a member of the Husch Blackwell Healthcare Law team.