Medicare for all vs. Obamacare

Which one is better?

Nev's Health Law

Neville M. Bilimoria

Neville M. Bilimoria is a partner in the health law practice group at Duane Morris.
NMBilimoria@duanemorris.com

September 2019

As we watch the Democratic presidential debates, more and more attention has been paid to the Medicare for all proposals by Vermont Sen. Bernie Sanders, California Sen. Kamala Harris, New Jersey Sen. Cory Booker and others. I am reminded of the old phrase: “If it’s not broke, don’t fix it.” The question then becomes: Is the U.S. health-care system broken? No matter what the answer is, there is little focus on the now “old,” the Affordable Care Act, also known as Obamacare, and more focus on the “new” idea, Medicare for all.

Is Obamacare working?

The debate on whether to support Medicare for all must begin with whether Obamacare is working. Surprisingly, many experts believe that Obamacare is working and that more time is needed to reap the benefits. In essence, Obamacare focuses on wellness and keeping people healthy while expanding coverage for the under or uninsured.

Doug Elmendorf, dean of the Kennedy School of Government at Harvard and former director of the Congressional Budget Office, said that Obamacare is working and trying to repeal it would be counterproductive.

Obamacare has helped expand health insurance coverage for more Americans and new evidence shows that premiums in 2019 under Obamacare modestly have gone down. However, the big challenge is still reducing health-care costs and Elmendorf isn’t sure that Medicare for all would actually accomplish that by blowing up the current Obamacare system which seems to be working.

According to some, repealing the Affordable Care Act would add $137 billion to the deficit over the next 10 years and would cause 24 million people to become uninsured again. No one in these debates seem to be focusing on the extraordinary cost, not to mention the disruption, which would be involved in any unwinding of Obamacare.

But with all the positives, Medicare for all proponents focus on the continued wastefulness of involving insurance companies as middle men with no true value, the high markups paid for prescription drugs and the overall high cost of insurance premiums, despite premiums declining over the last year. Medicare for all proponents argue Obamacare has not done enough and more can be done to reduce costs.

Medicare for all the answer?

Under Sanders’ proposal, economists differ over whether there would be true savings in health-care expenditures under a Medicare for all program. In fact, economists and think tanks were asked to project the program’s savings and they differed dramatically: Some say Medicare for all under Sanders’ plan would reduce health-care spending by more than $6 trillion by 2026. Others believe it would increase health-care expenditures dramatically as opposed to Obamacare.

Experts also say dismantling Obamacare has a cost in and of itself and that Medicare for all is not a risk the U.S. should take given the high Obamacare dismantling price tag referenced above.

Bottom line, the difference between Obamacare and Medicare for all boils down to some simple basics. Obamacare focuses on expanding coverage with insurance exchanges, which it has done, and improving wellness to keep people healthy and to lower costs.

Medicare for all proposes to reduce costs by increasing taxes to pay for the program’s coverage, but also by reducing payments to health-care providers such as hospitals and physicians.

The Medicare for all program could eliminate the private health insurance system as we know it.

While eliminating private insurance could reduce administrative burdens in health-care providers dealing with multiple and disparate insurance plans by moving to a single-payer system under Medicare for all, the problem is that private health plans pay hospitals about 45% more than hospital costs, while Medicare pays about 12% less than hospital costs, according to the American Hospital Association.

Any way you slice it, Medicare for all means less payments to health-care providers than Obamacare, which would be bad news for hospitals and physicians.

The other major uncertainty with this Medicare for all proposal seems to be how to pay for the program. It’s a continuing issue of debate for Democrats and Republicans alike, but most agree that this single-payer program would be paid for by increased taxes. Americans have to decide: Do they want Medicare for all under a single-payer system that pays your hospital and physicians less, allows you to have lower premiums for health care, but then raises your taxes?

Or do we continue to embrace Obamacare, and perhaps add on provisions to eliminate excessive drug spending, to lower premiums overall and to further lower health-care spending?

The debate continues. Principles must be viewed objectively and not by a political lens.