Matt Bruenig has thought a lot about some of the tough policy choices to get to Medicare-for-all.
I recently spoke with Bruenig, who founded the People’s Policy Project and is one of the young left’s leading wonks, about one of the biggest outstanding questions on the debate: how to finance a single-payer health care system. We also talked about his biggest worry for such a system: Can health care supply meet the demand? And finally, we touched on one of the less discussed challenges of a single-payer system: what the government could do for rural hospitals that feel a pinch under single-payer.
If you want to hear a sharp articulation of the left’s counterpoints to some of the most common arguments made against single payer, Bruenig is a voice worth listening to. Our conversation is below, edited for clarity and length.
In your opinion, what is the worst critique of Medicare-for-all?
The worst critique, the one that irritates me the most, is the argument about people losing their health care because people lose their health care all the time. They lose their health care every time they switch jobs. There’s a wonderful list of qualifying life events, which allows you to see when people can change their health care mid-year, and it is every catastrophe that occurs in a human life. It’s in many ways a dark document because it acknowledges these are all the times people are losing their health care: when their spouse dies, when they lose their job. The worst moments in your life — oh, also your health care is gone.
That happens all the time. Even if you stay in the same job, your employer might switch your health care at the end of the year. In fact, they’re supposed to be shopping around.
I recognize there is a communications issue in making people understand that. But it is objectively a bad argument to say, because people don’t like losing health care, we should maintain a system in which people lose their health care all the time.
I do think that is also founded in a feeling that people are mostly satisfied right now. You see the polling that says 80 percent of people think the health insurance they have is excellent or good.
If they like it, hopefully they still have it in a year because there’s certainly no guarantee of that. That’s the basic issue. You can like your health care, but you don’t get to keep it. You don’t get to decide. Your employer decides in many ways, whether to fire you or change the plan.
If you had that position — I really care about keeping their health care — it seems like you would start talking about a regulatory scheme that we could come up with that would prevent employers from changing health plans. Maybe you could always opt out: “I know you switched to United, but I want to keep Blue Cross Blue Shield.”
No one has any plan like that and of course such a plan would be disastrous because you need some level of ability to switch to put price pressure on these insurers. The nature of a competitive insurance system is one of disruption where if you like your plan, you don’t get to keep it.
So what concern about Medicare-for-all do you take most seriously?
The biggest concern is the capacity issue. There’s only so many doctors, there’s only so many nurses, there’s only so many hospitals. If we’re going to provide care to everyone, then is there going to be a mismatch between the amount of care we need and the amount of care we can supply?
That is not inherently unique to Medicare-for-all, but it is the most potentially problematic outcome. That’s what people seem to focus on, more than anything else, in other countries. “Oh, there’s wait lists,” that sort of thing. That’s a serious political concern.
You can work to try to increase supply. Make it easier to become a doctor. Make it easier for doctors abroad to come to the US. But can you do that quickly enough to handle demand that you might have?
Is it fair to say there is more work to be done on how to make sure we’re prepared for the capacity issues?
Yeah, there’s not that much focus on how do we increase the number of hospitals or increase the number of doctors in the current proposals. That issue could be addressed separately.
But even then, capacity is an issue in all systems. Rationing is an issue in all systems. If you don’t have enough supply, then it doesn’t matter how you allocate it, some people aren’t going to get it.
So it still seems to me that if you have a shortage, and you need to allocate that shortage, being able to do that based on some sense of who needs it the most, creating a queue from the most serious need to the least serious need and allocating scarce resources that way would still be a better way to do it than the current system, which in significant part depends on ability to pay.
One of the new features of the Pramila Jayapal bill is global budgeting — paying hospitals and other medical institutions a lump sum in advance instead of paying for every individual service. You could also scale up the way Medicare already pays providers. Does one or the other seem superior to you?
Canada has global budgeting. As far as I understand, Maryland’s all-payer rate setting has global budgeting. To me, I don’t have any ideological preference. I don’t think one is more just than the other. It’s just a technical question of what is the more efficient way to do this.
Global budgeting will maybe make providers less likely to overutilize health care because there’s less incentive than you would have in a fee-for-service system to just charge and charge and charge and perform unnecessary care. On its face, that seems compelling. But I’m not an expert on that level.
I know you’ve described yourself as a tax guy. So let’s hit the big question: How do we pay for it?
The first thing you want to do obviously is take the money flows we already have and divert them into the Medicare system. That is easier said than done.
I’ve been trying to think about how to do it in a way that’s also not regressive, by imposing substantially more cost on low-earners who currently receive Medicaid. Because that’s a criticism people will make. Any tax you use is going to make low earners pay more than they currently pay because they don’t pay anything.
My idea is to completely overhaul the whole payroll tax system in the US. The United States has three payroll taxes. Social Security, Medicare, and unemployment benefits. The way they work is unemployment insurance applies to people to the first $7,000 of earnings. Social Security applies to the first $125,000. Then Medicare applies to all earnings, plus you have the additional Medicare tax that pops in above $200,000.
It is a regressive structure. The first dollar of earnings is hit with the full unemployment tax, the full Social Security tax, the full Medicare tax. Then those taxes fall off until you’re left with the 2 percent Medicare tax at the high earnings.
So let’s squeeze all of those into flat taxes. Instead of charging, like we do with unemployment benefits, 6 percent on the first $7,000 of earnings, you can knock that down to less than 1 percent on all earnings. You can do that with Social Security as well. Knock that down and apply it to all earnings. Medicare would be unchanged.
That then opens up a lot of space in the low to mid-earners to apply a higher Medicare tax without there being a net tax increase. Because their unemployment tax has gone down substantially. Their Social Security tax has gone down substantially. Then you can do a flat Medicare tax and the net effect is it’s all falling on people making more than $100,000 a year.
So distributionally, you think there’s a way to structure this where people in the lower and middle-income brackets are not going to end up paying more?
Yes, I think that solves the major distributional problem that people have. Middle-income people would be fine in a lot of different ones because they are paying premiums and their premiums are so high. It’s the lower-income people who don’t pay premiums — how do you protect them from a tax rise? I think fixing the payroll taxes does that.
From there, then you get maintenance-of-effort payments from Medicaid on the state level. Then there’s still a big chunk left, but that chunk is more conventionally able to be done with income taxes or things like that. It also could be phased in. If you take a big bite out of it, you don’t have to fund the whole thing in Year 1. But eventually the tax level needs to rise to the appropriate level.
Something we haven’t talked about much is what the effects of moving to Medicare-for-all would mean for workers compensation. There’s currently the unlimited tax benefit for employer-sponsored insurance. That would be nullified. It seems to me it’s very much an open question whether that loss in compensation would be made up for through increased wages or other kinds of increases in benefits. What do you think the effect would be?
The idea is if employers no longer have to provide insurance then they’ll pass through the savings to the workers or maybe they won’t, right?
To moot the question, we’re going to require employers to pay contributions into Medicare-for-all that are at least on average equivalent to what they were paying now in private health insurance premiums.
That is in some ways a gift to the Medicare-for-all push because, like you said, the amount employers are spending on health care is indirect, is often not understood by regular people, but that also makes it a very easy place to grab money because I don’t have to tax it from you. I just take it from your employer.
That’s what the employer side payroll tax is meant to do. It’s applied on the employer side before the money is paid out to the workers. The incidence of employer-side payroll tax is supposed to be basically the same thing as the incidence of private insurance premiums.
The existing Medicare-for-all proposals have almost no cost-sharing for patients. Is there any room to negotiate or adjust on copays and deductibles? I ask for two reasons. One, introducing even a limited deductible — $250 or $500 a year — would help to reduce the price tag of an actual piece of legislation. But also there is the idea that we want some kind of price sensitivity on the consumer end because of issues like utilization and what that might mean for capacity.
I’m not interested in the budgetary savings of cost-sharing. Whether you shift the cost onto the individual or the government, the cost is the cost.
The sole question really is utilization. Because that is an actual net economic cost, not just who are we distributing the cost onto. That one I think is difficult. Because from what I gather, cost-sharing does work in the sense that it causes people to go to the doctor less, but there’s not convincing evidence that people go to the doctor less because they assess that this is not a real health concern and that one is a real health concern.
That’s the kind of thing you would want with cost-sharing. If you have to pay $20 to go to the doctor, someone will say I just have a cold, I’m not going to worry. But instead, it seems like people forego both necessary and unnecessary treatment because of the cost-sharing.
So what is accomplished? It runs into an informational problem that is not solved by forcing people to have skin in the game. You can put as much skin in the game as you want on me, but if I don’t have information — and I’m not a doctor, so I don’t — how’s that skin in the game going to make me behave correctly?
Health care is not a place where consumers are able to exercise a reasonable amount of discretion, in other words.
It’s like when I get the light on my car that says something’s wrong. I’m supposed to judge this? I don’t know. I just go take it in.
It cuts both ways. You’re going to have unnecessary deaths if you have cost-sharing. You’re going to have unnecessary spending if you don’t.
I don’t know how you balance that. It seems to me the best approach would be to rely very little on cost-sharing and try to educate people if you can. My wife went to the UK to study and she told me about advertisements the government would put out cautioning you not to go to the doctor’s office if you had this or that ailment. That seems like it could work, if you could tell people: if this is the only thing you’re dealing with, don’t go to the doctor.
That might be more effective. In general, I don’t think people like going to the doctor. It’s more of an informational question than it is: If you make it free, people are going to overutilize it. It’s not like chocolate cake or something.
I’m generally sympathetic to the idea that there’s enough glut in the system that reducing payments to providers is not a harbinger of doom that some people might treat it as. But for rural providers, places with one hospital and a limited set of doctors, and places that already require a pretty substantial amount of federal and state subsidization to keep running, we’re now talking about now squeezing even a little bit more out of the system.
Have these plans adequately prepared for what this kind of overhaul might mean for those providers?
Obviously, you need to have different rates and different budgets for those hospitals. So if you’re doing a global budget system, that makes it a little bit easier I would think. This is what it needs to run, even though it’s more expensive on a per-patient basis than other areas because the population density is so low.
I don’t think the solutions are that complicated. Pay them more.
One thing that’s somewhat related to this question: If people are worried about rural hospitals closing or other hospitals closing, I think it would be worth considering, though none of the bills have this as such, a provision that would allow the federal government to buy closing hospitals.
That then prevents that from happening. Then it’s on the government’s books and if they want to keep it open, they can subsidize it as they need to. That would maybe push back against some of the concerns that all these hospitals are going to close. If they close, we buy them. If they’re closing, they’re bankrupt anyway, they shouldn’t be that expensive. It also might reduce the leverage that hospitals might have to threaten to close. Okay, no problem, we’ll take it over.