Choice Stories

August 28, 2019

How “Medicare for All” Could Affect Group Insurance

There has been a lot of talk about a push by some of the presidential candidates to move toward a “Medicare for All” health care plan. Many of the Democratic candidates back a version of the proposal put forth by U.S. Sen. Bernie Sanders (I-Vt.). Other are supporting less-sweeping alternatives. Let’s look at how Sen. Sanders’ proposal and others might affect employer-sponsored health insurance and health care in the United States.

As proposed, Sen. Sanders’ plan would create a government-run system to provide health insurance for all Americans. His latest proposal goes beyond a prior bill he introduced to establish a single-payer system and would cover essential health treatments with no premiums or deductibles. It would also include long-term care for people with disabilities and coverage for dental and vision. Sanders has 14 co-sponsors for his bill, including fellow senators and Democratic presidential candidates Cory Booker (MA), Kamala Harris (CA), Kirsten Gillibrand (NY), and Elizabeth Warren (MA), although Sen. Harris has recently announced her own plan as well.

Sen. Sanders’ proposal would eliminate existing public health programs – and private health insurance in the U.S. after a four-year transition period. Insurers could offer supplemental plans to cover items not included under Medicare coverage, such as cosmetic surgery. Some current programs operated under federal authority, like the Veterans Health Administration and Indian Health Services, would be maintained.

While Senator Warren and New York City Mayor Bill de Blasio have voiced full support for a single-payer system, many of the other Democratic candidates have proposed alternative plans for health care. Sen. Amy Klobuchar (D-Minn.) says she favors a “public option” that builds on the Affordable Care Act (ACA), the health measure signed into law in 2010 during President Barack Obama’s first term. Former Vice President Joe Biden also supports broadening the ACA, in contrast to moving toward a Medicare for all system. South Bend Mayor Pete Buttigieg supports a hybrid proposal, “Medicare for All who want it.”

Although not a candidate for president, Rep. Pramila Jayapal (D-Wash.) is advocating a more modest Medicare for All proposal. Her House of Representatives bill, with 112 Democratic co-sponsors, expands access to Medicare and Medicaid without actually ending private health insurance in the way the Sanders bill does. 

The Potential Costs

A 2018 study by RAND Corporation, an American nonprofit global policy think tank, estimated Medicare for All would dramatically increase federal spending on health care – bumping it up from $1.09 trillion annually to $3.5 trillion under a single-payer plan. Insurance and health care industry groups have joined forces to form an umbrella group, the Partnership for America’s Health Care Future, to oppose Medicare for All. The group says that since private insurers typically pay more than Medicare does, a move to reduced provider payments under a single-payer system could negatively affect care and reduce the number of available doctors and specialists.

Loss of Employer Coverage

Employer-sponsored health insurance could go away if Medicare for All or another proposal is adopted in the future. Of course, it all depends on who wins the races for the White House, Senate, and U.S. House of Representatives. Since some candidates favor a mix of public and private insurance, it is a waiting game at this point.

Private insurance potentially could shift to supplemental-only coverage, something that works in several countries with universal health coverage. For example, in the United Kingdom, the number of people buying private medical insurance has risen significantly in the past decade. Canadians can also buy private insurance to pay costs not covered by the country’s public health plan.

Even if a Medicare for All proposal did pass the Congress and was signed into law by a newly elected president, a transition period would likely need to be negotiated, since about 155 million people in America receive their health coverage through their employer. Right now, the majority of those with coverage through their jobs say they are satisfied with their plans. They could be unhappy if they’re required to give it up to move to a government-sponsored health program.

Stay Tuned

Health care is an important issue – for employers and employees. We will continue to follow what’s happening in the health insurance industry and on the political front, and will share updates. You can also talk with your employee benefits agent about proposals to change the way Americans get their health care. If you don’t already have a health insurance agent, you can search for one here.

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