According to a recent Wall Street Journal article support among Democrats has slipped for Medicare for All. While this may be so it’s rather meaningless if what is entailed by Medicare for All is not fully understood by the people being polled. Moreover, some who tout Medicare for All, and some who vehemently oppose it, fail to have a basic understanding of what it means and what repercussions it will have.
Medicare for All would expand Medicare to all U.S. citizens and legal permanent residents and abolish the current system of employer-provided coverage, which would de facto establish a single payer system in the U.S.
Pointing to single payer systems Medicare for All proponents’ common refrain has become “let’s do what the rest of the [industrialized] world does” to provide universal access and contain costs. But, such blanket statements brush over the fact that many healthcare systems that provide access to all citizens and manage to temper cost growth are not single payer.
And the problems of misconception are not confined to the left. On the right, there is also the widespread belief that “European healthcare systems” are all single payer. Moreover, the right often falsely equates single payer health insurance systems with socialism.
Across the European continent, the Dutch, Swiss, Germans, French, and others, have established hybrid, multi-payer healthcare systems. Each has unique characteristics. But, what they share in common is government playing a key regulatory role as rule-maker and main funder. At the same time, the private sector – hospitals, health insurers, physician clinics – is a fully engaged participant, at times on an equal footing with the public sector.
Switzerland and the Netherlands have entirely privatized the health insurance function, which is carried out by multiple not-for-profit and for-profit payers subject to strict government regulations. One regulation is establishment of a pseudo-governmental body that oversees a national formulary on behalf of all insurers for the essential pharmacy benefits package. For what is deemed non-essential care insurers institute their own formulary standards.
France and Germany are examples of hybrid systems with predominantly public funding, but also private healthcare financing, combined with a public-private mix in the provision of healthcare services. Health priorities are set at the national level. And, most drug pricing and reimbursement decisions are left to national entities whose mandate is to provide evidence-based assessments of newly approved drugs and make recommendations accordingly.
All four countries require residents to purchase health coverage, from private payers in Switzerland and the Netherlands, not-for-profit “sickness funds” in Germany, and government insurance in France, which can be topped up with optional supplemental private insurance. The insurance mandates serve to efficiently pool good and bad risks, mitigating the potential for adverse selection.
In the U.S. lessons can be drawn from each system. For example, in certain ways the German multipayer model builds naturally on the American health insurance system. Workers and employers share the cost of insurance through progressive payroll taxes, while the government finances coverage for children, the unemployed, and disabled. Most salaried employees are automatically enrolled into one of approximately 110 not-for-profit “sickness funds.” Financing of the sickness funds is community-rated, and paid for with joint employer-employee contributions. Here, the employer pays half of the contribution, and the employee the other half. Sickness funds must provide an essential health benefit package, and may not reject beneficiaries or discriminate on the basis of pre-existing or existing conditions. Social welfare recipients are also enrolled in sickness funds. Higher income residents, students, and civil servants can opt for private health insurance.
The French model of national health insurance co-exists with private health insurers offering supplemental policies for those – 90% of the French population – who want additional coverage. Also, patients in France are not faced with gatekeepers, that is, they may choose to go directly to a specialist without getting a referral from their primary care doctor.
As those healthcare reformers who favor heavier government involvement ponder possible expansion of Medicaid and Medicare they may look to France for lessons, particularly regarding optional buy-in purchases of supplemental private insurance. Alternatively, healthcare reformers who are more inclined to seek solutions in the private sector may find the Swiss and Dutch systems instructive. The Dutch system in particular demonstrates that having a public option of any kind may be superfluous. It offers beneficiaries – young and old alike, employed and unemployed, poor and wealthy – a choice of private insurer. All insurers have fully integrated pharmacy and medical benefits.
Alternatively, reformers may consider changes to existing structures, such as the Affordable Care Act. A practical example would be to simplify insurance and allow insurers to sell policies across state lines. This is especially relevant on the individual market, where those without employer plans or government plans like Medicaid buy their own coverage.
So, besides Medicare for All many options are available to health reformers. Rather than taking its cue from our northern neighbors, or the British National Health Services, it makes more sense for the healthcare reform movement to consider what is being done on the European continent.
Of all reform options, single payer is the least consistent with American values and the structural diversity of the current U.S. healthcare system. Ultimately, incremental changes can retain the pluralism, autonomy in regard to choice, and some of the distinct advantages of the U.S. healthcare system.
It’s not fashionable to be centrist these days, or even pragmatic. Yet, in order to get things done one must compromise. Ideology isn’t going to win the day when it comes to healthcare. Practical steps will. For some practical steps there are lessons to be learned from overseas healthcare systems that are more closely aligned with the U.S. than the single payer model.