Lots of folks were pretty excited yesterday by the news that presumptive Democratic nominee Hillary Clinton dropped the words “public option” and “Medicare buy-in” at a campaign stop in Northern Virginia. Center for American Progress President Neera Tanden retweeted this yesterday:
Here’s what we learned yesterday. Note my highlights in bold as an entry point to problematizing this proposal.
“I'm also in favor of what's called the public option, so that people can buy into Medicare at a certain age,” the Democratic presidential front-runner said during a roundtable with local residents at the Mug'N Muffin coffee shop. “Which will take a lot of pressure off the costs.”
While Clinton long has supported including a public option in the insurance market, her campaign said she was floating the idea of letting Americans not yet of retirement age buy into the Medicare system as one way of accomplishing that. She's also open to creating a separate government-run option on the Obamacare exchanges.
”...so that people can buy into Medicare at a certain age.” Hmm...
Ah, yes, if you’re 55 or 60, Hillary thinks you should get some sweet-sweet-sweet single-payer Medicare, but if you’re 25 or 35 or 45, well, send that check to Aetna every month, fear going broke because of your insane $6,000 deductible, and shut up, I guess.
Here’s the problem: Hillary’s Medicare buy-in proposal is an amazing deal for greedy health insurance companies, but a pretty crappy deal for prime-age working people struggling to cope with stagnating wages and, courtesy of private junk insurance, insane health care costs.
So, from a social welfare perspective, how is this anything close to a sound policy proposal? Spoiler alert: it’s garbage.
Health insurance works best when there is a giant risk pool — so the young and healthy cover the costs of the old and sick, or young and unlucky (i.e. the 25-year old with Cancer). So, what’s in it for taxpayer-financed single-payer Medicare — and society at large — for the older and sicker to go on the government plan while younger and healthier people are forced to continue sending their income to Aetna and Cigna? How is this good social welfare policy? It’s not!
The entire reason Medicare exists is that health insurers refused to cover the costs of sick and dying people (i.e. unprofitable people), so the Federal Government was forced to step in and fix a clear example of market failure. The end result: socialization of the cost of health care provision for the old and dying and privatization of the gains of providing health insurance coverage for the young and relatively healthy. By enacting a Medicare buy-in only available to those close to retirement age — generally, people much sicker than those in their prime-age working years of 25-54 — Hillary’s Medicare buy-in proposal just makes things even sweeter (way more profitable!) for the health insurance companies who have been whining, as of late, about covering sick people.
Now, some of you will argue, “Woah, slow down. We start at 60 and then go to 50, and then 40, and eventually, zero.”Really? I’m not a religious man, but it takes a giant leap of faith to believe this would actually happen, given that Hillary’s Medicare buy-in proposal actually works as a kind of de facto government subsidy of corporate health insurers, relieving them of the sickest patients who are nudged towards Medicare, while preserving their young and healthy customers who continue to have no public option under her policy.
So, if a “Medicare buy-in” were to be enacted this would be awesome news for Aetna shareholders and older people who could choose a quality government-managed single-payer plan over the abusive and expensive private health insurance bureaucracy, but it would be bad news for taxpayers — who would now be taking on the burden of health care finance for a comparatively sicker population while simultaneously denied more tax (read: premiums) from the young and healthy — and the working-age population who would continue to be forced to waste their income on junk insurance with burdensome cost-sharing.
If you really care about putting Medicare on a sustainable fiscal path, why do you just want to expand it to the old and sick? Why not promote a policy — Medicare-for-all — that says, instead of sending premium checks to Aetna or Cigna or Humana, young people not near retirement age — who don’t use much health care anyway — will send the value of those premium checks to Medicare instead?
In many respects, then, this “buy-in” proposal is not unlike George W. Bush’s Medicare Part D, which was a win for seniors who could now pay less for drugs, but a lose for taxpayers and good governance.
Now, one qualification to my argument: if Hillary were to propose a Medicare buy-in for anyone of any age, I’d be totally game — and would consider it a smart, fiscally-conservative pathway to a more socially-just, equitable and effective single-payer universal health care system. But “near retirement” obviously means Medicare only for the sick and old, which is just not smart policy.
So, rather than endorse this proposal, I can simply restate what I’ve said hundreds of times before: only a single-payer, Medicare-for-all policy is capable of reforming America’s barbaric health care system — anything short of “everybody in, nobody out”— including a “Medicare buy-in” kludge that must be making Wall Street salivate — is just more tinkering around the edges of a grotesque health care status quo.