As Congress gets back to business in the new year, health care may once again move center stage. That means you may be hearing more about proposals for expanding coverage, including something called “Medicare for All.”
This week, a reader asks columnist Phil Moeller, the author of Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your Costs and the co-author of the updated edition of The New York Times bestseller How to Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security, what this revolutionary plan could mean to current Medicare users.
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What will Medicare for All mean for today’s private plans?
Question: If Medicare for All becomes law, is it true that Part C Medicare Advantage plans will cease?
Phil Moeller: This is what I call a tip of the iceberg question that requires going beneath the surface of the question to explore some assumptions.
People often use the term Medicare for All to describe what’s called a “single payer” health insurance system. In such a system, it’s assumed that the government would be that single payer and that private health insurance plans would cease.
But what does this really mean?
Currently, what’s called Original Medicare is a single payer system that is used by about 40 million mostly older people in the U.S. (younger persons who are disabled may also enroll in Medicare). Another roughly 20 million people have Medicare Advantage plans, which are run by private insurers.
Original Medicare consists of Part A insurance for hospitals, nursing homes, and hospice care, and Part B, which helps pay covered expenses for doctors, outpatient expenses, and durable medical equipment.
If Medicare for All was managed like original Medicare, the Centers for Medicare & Medicaid Services (CMS) would decide what medical expenses were covered and how much Medicare would pay providers for those services.
People would file claims as they do now, and payment for these claims would be overseen by a national network of private companies hired by Medicare and known as Medicare Administrative Contractors, or MACs for short.
These companies are not insurance companies, but they do have their own policies for how they do their jobs, and there can be substantial variations in not only their performance but in whether they approve claims in the same ways.
I suppose these contractors could be replaced by an army of federal employees under Medicare for All, and that perhaps these employees would provide identical services and coverage decisions around the country. But I just don’t see that happening. For better or worse, the MACs have the expertise and getting rid of them makes little sense.
More importantly, Original Medicare today is what’s known as “fee for service” health care. People with original Medicare can get covered care anywhere in the country from any provider who accepts Medicare. Prior approval is not required and if Medicare covers a treatment or other medical expense, the MACs generally will approve it regardless of whether it helps someone get better or not.
Medicare Advantage plans, by contrast, provide managed care programs where coverage is often tied to health outcomes. This is a big, big difference.
There are many horror stories about people on Medicare Advantage plans being denied care, sometimes with calamitous consequences. But most health experts believe that managed care is the most promising way to improve the health of people on Medicare while also holding down the huge increases in health care costs that threaten the solvency of government and individuals alike.
So, the most beneficial form of Medicare for All would be a managed care system, not the fee-for-service system that Original Medicare now employs. And when it comes to managed care, guess where nearly all the operational expertise now resides? In private insurance companies, not CMS.
Further, I assume Medicare for All would cover drugs. Right now, some 40 million Medicare enrollees have prescription drug plans that are all run by private insurance companies. What happens to them? Ditto for another 10 million people who have private Medigap supplement insurance plans that are regulated at the state level.
For these reasons, I cannot envision a single-payer system, or even a big expansion of Medicare to people younger than 65, without a substantial role for private insurers.