October 17, 2019

What 8 different Democratic health plans would actually cost

Daily Briefing

    Federal spending would increase by between $590 billion and $34 trillion over a decade if the United States implemented proposals to expand the Affordable Care Act's (ACA's) subsidies, create a public option health plan, or establish a single-payer health care system, according to report released Wednesday by the Urban Institute and the Commonwealth Fund.  

    Where the 2020 Democratic candidates stand on health care

    Report details

    For the report, researchers examined eight health care reform models, some of which have been proposed by candidates seeking the 2020 Democratic nomination for president and Democratic lawmakers:

    • The first proposal would expand the ACA's subsidies to more U.S. residents and provide $10 billion annually for a federal reinsurance program;
    • The second proposal would expand the ACA's subsidies, implement a federal reinsurance program, restore the ACA's individual mandate, and roll back the Trump administration's expansion of short-term health plans;
    • The third proposal would do everything included in the second proposal, but expand the ACA's subsidies even further to address the so-called "subsidy cliff" in states that have not expanded Medicaid;
    • The fourth proposal would do everything included in the third proposal and also create a public option health plan and cap provider payments;
    • The fifth proposal would do everything included in the fourth proposal, but also would implement automatic and retroactive enrollment requirements for the public option—which the report states would achieve universal coverage in the United States—and allow U.S. residents who have access to employer-sponsored health plans to access ACA subsidies;
    • The sixth proposal includes everything in the fifth proposal, but would increase ACA subsidy amounts;
    • The seventh proposal would establish a single-payer health system with income-related cost-sharing requirements, but no premiums, that covers the ACA's essential health benefits, but does not include coverage for undocumented immigrants; and
    • The eighth proposal would establish a single-payer health system without cost-sharing requirements or premiums that covers enhanced benefits—including dental, hearing, and vision care, and provides coverage for undocumented immigrants.

    The researchers projected household spending, federal spending, national spending, and the number of uninsured U.S. residents under each proposal. The researchers based their projections on a number of assumptions, including the assumption that provider payment rates under the public option would be set at 115% of Medicare rates. The researchers assumed hospital payments would be set at 140% of Medicare rates under the single-payer health system proposals. The researchers then compared their estimates to spending levels and the number of uninsured U.S. residents under current law.

    The researchers did not examine which taxes would need to be raised to cover the proposals' costs or who would have to shoulder the tax increases. However, they wrote, "households will face increased taxes to finance any of these reforms."

    Findings

    Overall, the researchers found federal spending levels, household spending levels, total national spending, and U.S. uninsured rates in 2020 would vary under each proposal:

    For instance, the researchers found the United States could reduce the number of uninsured U.S. residents by 25.6%, from 32.2 million under current law to 6.6 million under a health reform model that would expand the ACA's subsidies and create a public option health plan. That model is similar to proposals from former Vice President Joe Biden and South Bend, Indiana, Mayor Pete Buttigieg (D), who are seeking the 2020 Democratic presidential nomination. Undocumented immigrants, who would not be eligible for the public option, would make up the remaining uninsured population, according to the report.

    That model would not eliminate health insurance premiums and deductibles and, as a result, total national health care spending—which includes both government and household spending—would decrease by $22.6 billion, or 0.6%, in 2020 when compared with current law, the researchers found. However, they estimated that federal spending under the model would rise by $122.1 billion in 2020, and by $1.5 trillion over a decade.

    In comparison, the researchers found a single-payer health system with cost-sharing requirements that does not include coverage for undocumented immigrants would decrease the number of uninsured U.S. residents from 32.2 million to 10.8 million, with undocumented immigrants making up the remaining uninsured population. According to the researchers, national health spending under such a model would decrease by $209.5 billion, or 6%, in 2020 as a result of lower provider payments. However, the researchers found the model would increase federal spending by $1.5 trillion in 2020, and by $17.6 trillion over a decade, when compared with current law.

    Further, the researchers found a single-payer health system without cost-sharing or premiums that offers enhanced benefits and coverage for undocumented immigrants, which is similar to Sen. Bernie Sanders' (I-Vt.) so-called "Medicare-for-All" proposal, would reduce the uninsured rate from 32.2 million to zero. However, the model would increase total national health spending by about $720 billion in 2020 as a result of increased health care usage and zero out-of-pocket costs, which would save U.S. residents an estimated $886 billion over a decade. According to the researchers, federal spending would increase by $2.8 trillion in 2020, and by $34 trillion over a decade, when compared with current law.

    Discussion

    The researchers noted policymakers and voters will have to consider all of the tradeoffs associated with the proposals. For instance, the single-payer health system without cost sharing or premiums would lower U.S. residents' out-of-pocket health care costs, but it would dramatically increase federal spending, meaning the government would need to collect higher tax revenues to fund the plan.

    Sara Collins, vice president of health care coverage and access at the Commonwealth Fund, said, "People are confused about what the proposals might mean for them and the trade-offs." She recommended that Congress allow states to experiment with public health insurance options before federal lawmakers advance legislation to implement a single-payer health system.

    David Blumenthal, president of the Commonwealth Fund, said, "The reason U.S. health care costs twice as much is because our prices are so high compared to the rest of the world." He noted that health systems in other countries pay providers lower rates, but have comparable or better health outcomes than the United States (Meyer, Modern Healthcare, 10/16; Owens, "Vitals," Axios, 10/16; Sullivan, The Hill, 10/16; Urban Institute report, 10/16).

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