False Choice

By James Kwak

The scene: Two well-dressed, fully employed people sitting at a table in the chic café at their workplace.

Martha: Do you like your health plan?

George: I love it.

Martha: How much do you pay for your plan?

George: About $550 per month.*

Martha: Do you have a deductible?

George: I have a $1,000 deductible for my whole family.

Martha: What about co-payments?

George: I have to pay 20% of the cost for hospital stays and outpatient surgery.

Martha: What if you just want to see the doctor?

George: I pay $25 to see my primary care physician, and $40 to see a specialist.

Martha: Can you see anyone you want?

George: I pay more if I see people out of network, but the insurer still pays something.

Martha: I’m thinking about switching to the new plan they’re offering. Have you heard about it?

George: No. What is it?

Martha: Well, it covers everything, including vision and dental. And you can see anyone you want.

George: How much does it cost?

Martha: Nothing. There are no premiums and no deductibles or co-payments. Well, you may have co-payments for prescription drugs, but there’s an annual maximum of $200.

George thinks.

George: I think I’ll keep my health plan. I just like it.

End scene.

All those people saying that that Medicare for All will take away people’s health insurance against their will? And that some people would rather be able to keep their current plans, so we should instead just have a public option? They are George.

Health insurance is an intermediate financial product. It’s a contract you buy that pays you money in certain states of the world. It’s not something that people want in and of itself. They don’t want choice in insurance plans for the sake of having choice. They want health care, and someone else to pay for it.

That’s Medicare for All, at least in the Bernie Sanders bill (also endorsed by Elizabeth Warren, although they differ in the political tactics of how to pass it). It gives you all health care that is “medically necessary or appropriate for the maintenance of health or for the diagnosis, treatment, or rehabilitation of a health condition”—for free.

You can argue that this will be expensive—although Warren has produced a detailed plan for how to pay for it. You can argue that Warren’s financing scheme will be bad for the economy—although it’s hard to ignore the fact that the transfer of wealth from the very rich to everyone else would be an enormous economic stimulus.

But you can’t in good faith argue that Medicare for All is bad because it forces people to give up their existing health insurance. Because at that point you are arguing that people are like George: Given the ability to see any provider for free, they would choose to continue paying thousands of dollars in premiums and cost sharing to get access to a limited network of doctors and hospitals. And even given the low opinion that much of the political class has of ordinary voters, that’s a bit much.

* All figures for George’s current plan are from the Kaiser Family Foundation’s 2019 Employer Health Benefits Survey, and are based on the average costs for a PPO plan (the most common type of plan at the large employers whose employees are most likely to be satisfied with their health insurance). Employee contribution: p. 100. Deductible: p. 112. Co-insurance for hospitals and surgery: p. 128. Co-payments for doctors: p. 131. George is also indirectly paying the employer contribution (more than $14,000 per year) in the form of lower wages, but I assume that, under either Sanders or Warren, employers would end up paying a similar amount, at least in aggregate.


5 thoughts on “False Choice

  1. Thank you. Here’s how I’ve been thinking about framing the paradox of the public option where even the private insurance user gets some benefits from Medicare.

    Yes. If you want to keep your private insurance, you can. You will even get benefits from Medicare-for-All. You will pay the monthly insurance company premiums, office visit co-pays, and annual deductibles. Insurance companies will be required to pay at least 80% of medical charges. Medicare will pay the remaining 20% of reasonable costs. You will only be responsible for the difference.

    You will show your private insurance card and your Medicare card to your service provider. Because having to deal with multiple insurance companies increases billing costs, service providers will be allowed to charge a billing fee to private insurance users. Medicare will not pay that fee.

    Of course, under Medicare-for-All you would get the same service providers but without the out-of-pocket costs. You just pay your taxes and go to the doctor.

  2. «They want health care, and someone else to pay for it.»

    And this is pure right-wing propaganda, designed to make universal health care plans unpopular, because as soon as some middle class voter reads “someone else to pay for it” they reckon they are the someone else who will pay for the health care of the lower classes, and will vote against it.

    The only way to persuade the middle classes that they won’t have to be the “someone else to pay” is to correctly describe Medicare for all as an insurance pool, like car or house insurance, where there is no redistribution from the middle to the lower classes, because payouts depend solely on the risk of becoming sick or having an accident.

    NB that’s only half of the story, but the half that matters.

  3. I am not paying a for-profit intermediary to grant me access to a “doctor” who believed the pharma-line that “…it’s a synthetic opioid that is not addictive…”.

    Or Obama and his sell – “…you get to keep your doctor…”

    Sure, who doesn’t want to hang on to concierge organ transplant services for their liver and lungs….?

    Let’s float this possibility – everyone stop using for-profit health insurance companies and instead explore other “capitalist” principles (market pricing) for getting catastrophic medical attention to survivors of natural disasters and increasing investment in educating the entire population of your nation up to the equivalent of a two year health practice knowledge base – think x-ray techs, surgical nurses, etc.

    Five year children are the best minds to capture. The human’s natural life-long curiosity with the human body is innate. Spend the whole year pointing out what an amazing feat of engineering the human foot is to 5 year old and you got their future security taken care of, also. The industrial revolution was all about applied engineering and always was the human body an inspiration

    We need to start solving our collective human problems without the politics of wealth creation for a new generation of technocrat billionaires sticking a tracking chip in every human that will measure a heart rate od a “victim” as they try to outrun a tsunami for someone in Utah to analyze how that heart rate affects your future premium rate if you manage to outrun the tsunami.

    That’s not “health care” – mano et mano…so how much SHOULD that “health insurance” be worth…?

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