A serious health plan or a means to activate the base?
Abstract
This paper evaluates how the progressive health-care proposals, which dominated the contest for the Democratic nomination for President in 2020, continue to impact health policy debates in the Democratic party. These health care plans would lead to near universal coverage, reduce out-of-pocket costs and lower prices. However, many households would have worse insurance outcomes on some metrics than under the current system. Moreover, there is no realistic quick smooth transition path from the current system and proposed plans are fiscally unsustainable given the volatile budget process. Progressive health plans are not realistic and mostly serve to inspire and motivate the left wing of the Democratic party.
Introduction:
The Democratic debate over health care in 2020 revealed a sharp divide between progressives and moderates in the Democratic part.
Progressives sought creation of universal or near universal comprehensive health insurance through either a government monopoly or a dominant government-run health insurance company. Democratic party primary voters and the broader electorate rejected these proposals because of concerns about the quality of public coverage and economic feasibility.
Moderates, sought to reduce the number of uninsured and improve coverage options by building on the ACA and by expanding Medicaid. The moderate approach preserved the dominance of employer-based insurance but also improved the state exchange marketplaces created by the ACA.
The Biden Administration pursued a version of the moderate approach and achieved substantial reductions in the number of people without comprehensive health insurance. However, many of the Biden-era gains will lapse because of sunset provisions in the enactment legislation or because of changes in policies implemented by the Trump Administration or the Republican Congress. Go here.
Health insurance and health care reform will remain an important political issue in 2028 because the number of people without comprehensive health insurance remains high but also because important problems -- rising out-of-pocket health costs, high and rising premiums, discontinuities in coverage during job transitions, lack of access to top hospitals and networks in narrow network health plans, and an increase in the denial and delay of claims by insurance companies – persist and are in some cases worsening.
The progressive wing of the Democratic party remains highly committed to the implementation of a health care reform proposal defined by the creation of a substantial government run health insurance company The 2028 intra-party health care debate will, like the 2020 debate, focus on the progressive-centrist divide on how to fix healthcare.
Two Progressive Plans
The progressives offered two plans—Medicare-for-All and Medicare-for-America.
Medicare-for-All (sponsored by Sanders and Jayapal) proposed an outright government monopoly, replacing all private and public coverage with a single federal plan. Premiums and cost sharing would disappear, benefits would be comprehensive, and provider payments would be set nationally at Medicare-linked levels.
Medicare-for-America (sponsored by DeLauro and Schakowsky) created a government-dominated system in which a new federal plan absorbed most enrollees but allowed qualified employer coverage to continue. Employers could continue offering coverage or pay into the federal plan, and individuals would be automatically enrolled unless they opted into employer coverage. This model, like systems in Europe, allowed for some role for private insurance companies.
Both Medicare-for-All and Medicare-for-America promised highly comprehensive benefits, with no exclusions for pre-existing conditions.
Medicare-for-All eliminated virtually all cost sharing.
Medicare-for-America retained some income-based premiums for households with income over 200 percent of the federal poverty line and modest deductibles.
Both plans envisioned rapid transitions from the existing system.
Medicare-for-All would have abolished all private health insurance in four years.
Medicare-for-America would have ended state exchange marketplaces by 2023 but kept some role for employer-based insurance. There is some irony that Medicare-for-America would have quickly abolished the primary achievement of Obamacare, the creation of subsidized health insurance on state-exchange marketplaces.
Medicare-for-America would have retained some role for employer-based health insurance. Under the plan, starting in 2027, employers would have to choose between a payroll tax funding the Medicare-for-all system and offering workers qualified coverage. One model suggested that roughly one-third of workers would retain employer-based coverage, an outcome roughly consistent with European systems that allow limited private options.
Advantages of Progressive Plans:
The progressive health plans described here do outperform private measures on reducing the number of uninsured and on the average out-of-pocket costs across the entire population. Single-payer plans have also reduced prices and total costs of health care procedures, but part of the price differential stems from lower compensation rates, not efficiencies associated with single-payer plans.
Both plans enable people to maintain the same health insurance through job transitions. Medicare-for-All would eliminate risks associated with loss of health insurance during job transitions completely. Medicare-for-America would put most workers in a public plan with modest premiums and allow entry into a public plan at any point in time.
Both plans also promised lower out-of-pocket costs for households. Medicare-for-All eliminated premiums and nearly all cost sharing, leaving only nominal pharmaceutical charges. Medicare-for-America retained modest income-based premiums for higher-income households and some deductibles but still offered far lower financial exposure than most private plans today.
The growth of deductibles and coinsurance has resulted in higher out-of-pocket health costs for many individuals resulting in many people foregoing necessary healthcare procedures and drug regimens or reducing retirement savings to pay for necessary health care procedures. The establishment of a low-cost single-payer health plan would reduce these problems for a large part of the population.
Medical care prices are substantially higher in the United States than countries with a single-payer system for a variety of reasons. For example, the price of an appendectomy is around $4,000 in Spain and the United Kingdom, while the cost of open heart surgery is $89,000 in the United States compared to around $24,000 to $26,000 in UK and Spain.
Problems and Impediments:
The adoptions of a progressive health care proposal would expand coverage, reduce out-of-pocket costs and reduce prices. However, there are several problems and impediments with the proposals.
· Many households and providers would be worse off in some way.
· There is no quick or smooth transition path.
· Benefits could be cut as part of the annual budget process
· The annual fights over health benefits would increase the volatility of the fiscal process.
· Future conservative congress could eliminate all insurance payments for abortion and reproductive services.
We will examine each of these concerns in turn.
Worse Health Insurance Outcomes for Some Households:
In economics, a Pareto improvement is a change in resource allocations which makes at least one person better off and no one worse off. The progressive health plans are NOT Pareto improving.
Some outcomes could worsen on average by the shift from private to public insurance
Often the proposed reforms make some households worse off.
The shift from the current private health care system to a single-payer system could substantially increase wait times to see a specialists or for a procedure for many patients.
The best evidence on this point comes from a large literature on wait times for procedures and specialists in European countries, which have adopted a single-payer plan. For example, A study based on 2020-2023 data revealed that 62 percent of Canadians and 55 percent of UK adults waited more than one month for a specialist compared to 31 percent of adults in the United States.
Access to specialists and procedures is not currently uniform in the United States.
Many generous employer-based plans provide better access than some state exchange health insurance plans.
Access tends be lower for Medicaid than for Medicare and lower for Medicare than many forms of private insurance.
Access tends to be low in rural areas and in some poor communities.
Access differs across states, based on Medicaid and state exchange insurance rules.
The shift from the current situation would increase access to specialists for some people, primarily people on Medicaid or low-cost state exchange health insurance. However, access may be unaffected for people in rural areas unless there was a growth in number of rural hospitals and the number of specialists serving rural areas.
Access for people with generous employer-based health insurance, a substantial portion of the population and the electorate, would almost certainly fall. Based on the cross-country literature this decline in access could be substantial.
In a single-payer system, the political authority determines whether a procedure is covered. There are few if any denials of benefits or prior authorization disputes. The central government health regulator has a clear list of procedures, which are allowed and not allowed so there is seldom a need to argue over a claim.
In the private insurance system in the United States, each insurance company is free to determine whether a procedure is medically necessary given the circumstances of the patient. Prior authorization for procedures is often required. Payment can be withheld if the insurance firm deems the procedure was not medically necessary.
Frustration over private authorization and claim denial hassles is building in the United States and this increase frustration could lead to government regulation.
The literature does not provide clear evidence on whether private insurance or single-payer systems provide better results when it comes to the issue of claim denials and prior authorizations.
Compensation rates for health care providers in countries with a single-payer system are substantially lower than compensation rates for health care providers. Analysis conducted with CHAT GPT revealed that a German primary care physician earns about 56 % of what their U.S. counterpart does in nominal terms and a German surgical nurse earns about 62 % of the annual salary of a U.S. surgical nurse.
A shift from the private health care to a progressive health care system in the United States would have a detrimental impact on most households employed in the health care sector, if accompanied by compensation changes of this magnitude.
Many households, especially those with generous employer-based health plans would have worse health insurance outcomes under the progressive plans.
The odds of enacting a transformative healthcare proposal, where a substantial proportion of the population would be worse off, appear low. However, the prospect of universal, affordable, comprehensive health insurance where all people are treated the same remains the overriding objective or the progressive wing of the Democratic Party.
Transition Issues:
Most countries with a major national health care system started the system a fairly long time ago when health care was a much smaller share of the national economy.
France, the UK, and Canada had health care spending around 4-6 percent of GDP when they created their national health plans. The share of German GDP in the health sector when it originated a national health service in the 1880s was around 1 to 1.5 percent of GDP. These nations did not demolish a large sector of their economy to create a new health care system.
Health care spending in the United States is around 17.6 percent of GDP. A progressive health care plan that created a single or dominant insurance payer would disrupt a large sector of the economy.
The Medicare-for-All approach would eliminate existing large private health insurance companies like United Health. This could be challenged on constitutional grounds, as discussed here.
Compensation rates would have to quickly drop leaving households with health care providers little time to adapt to substantially lower income.
The progressives have not proposed a way to implement a quick smooth transition to the creation of a health care system with a single or dominant public insurance firm.
Economic and Fiscal Sustainability:
The creation of a public health insurance plan, fully or mostly funded by taxpayers, would exacerbate an already volatile fiscal process. All of the parameters of the new federal health plan, -- premiums, out-of-pocket cost sharing, medical necessity decisions, procedures for adjudicating claims – could be revisited every annual budget discussion and considered every time there was debate on a government closure or the debt limit.
Most recently, the Trump Administration dismantled many of the reforms impacting state exchange health insurance markets and Medicaid implemented during the Biden Administration. Go here.
The creation of a single or dominant health insurance payer could result in Congress changing health care benefits and outcomes for every household in the nation during every budget debate.
The placement of all health parameters impacting health insurance coverage under the control of Congress and the President would exacerbate future fiscal disputes.
Reproductive Rights:
Progressive health care proposals raise a sensitive question about insurance funding for abortions and reproductive services. The proposed legislation includes wording that would repeal the Hyde Amendment and the prohibition against federal funding for abortion.
Note, however, the Hyde amendment still exists. No congress has been able to repeal it. The recent tax bill included a provision that eliminated Medicaid funding for abortion. The votes for guaranteeing insurance funds for abortion don’t exist in Congress and even if it was enacted as written in the proposed legislation any future Congress could eliminate this right. Progressive efforts to provide insurance funds for abortion under a public health insurance plan would put all insurance funds for abortion at risk when Congress shifted right.
Conclusions
Despite these limitations and impediments, the progressive wing of the Democratic party remains committed to Medicare for All. The Medicare-for-all bill sponsored by Senator Bernie Sanders, Pramila Jayapal and Debbie Dingell was reintroduced in the Senate on April, 29 2025.
This approach would result in some people becoming worse off.
The approach is disruptive to the economy during a transition and the fiscal process over the long term.
It serves more to inspire and motivate the progressive wing of the Democratic party and is not a serious attempt to improve health insurance outcomes and health care in the United States.