This is the second part of a two-part article. Part I is here. The full version appears in the Spring 2017 issue of The American Prospect under the title: “The Republican Health-Care Unraveling: Resist Now, Rebound Later.” This is the “rebound” part. Subscribe here to the magazine.
Even as they resist the Republican rollback of the ACA and Medicaid, Democrats should be thinking about new initiatives in health care. No doubt the next steps will depend in part on what Trump and the Republicans end up doing. In the wake of federal legislation, many of the critical decisions in the short run may move to the states. But Democrats cannot limit themselves to defensive efforts to salvage the ACA at either the federal or the state level. They need to think about a more attractive national agenda in health care that reflects the lessons of the ACA and new political realities.
The coming national Democratic debate is going to focus on extending Medicare—to whom, how quickly, and under what rules will be the questions. The strategy for universal coverage in the ACA relied on the extension of Medicaid for the poor, but the limitations of that approach should now be clear. In its 2012 health-care ruling, the Supreme Court effectively made it impossible to use Medicaid as a foundation for universal coverage. As a mixed federal-state program, Medicaid affords states the opportunity to limit coverage, and the ACA experience has shown how far red states will go in doing that. Republicans may also succeed in eliminating Medicaid’s status as an entitlement, which will be hard to restore.
As a national program with deeper public support as an entitlement and no role for the states, Medicare does not suffer from these problems. When Medicare was enacted in 1965, its backers hoped to use it to cover other groups besides seniors, and in 1972 Congress did extend it to the disabled and patients with end-stage renal disease. (The disabled become eligible for Medicare two years after they qualify for federal disability insurance, a delay that leaves many people with high costs in the individual market.) But the expansion of Medicare then stopped, and in the 1980s Democrats in Congress obtained Republican support for incremental expansions of Medicaid to cover low-income pregnant women and young children. This was the path that led to the ACA’s further Medicaid expansion, a strategy that the Supreme Court and Republicans have now brought to an end.
Many people will equate an expansion of Medicare with a “single-payer” plan. But even Medicare-for-all would not be a single-payer system since about one-third of current Medicare beneficiaries use the program to buy coverage in a private Medicare plan. Medicare today is a marketplace—but a marketplace with a dominant public plan and not just a “public option,” which might turn out, if badly designed and established separately from Medicare, to be a relatively small and weak player in the market.
Medicare-for-all faces two enormous obstacles. Moving everyone under age 65 into Medicare would require a huge increase in taxes; employees who now receive health care as a fringe benefit would inevitably look at those taxes as an additional burden, even if reformers try to assure them that their wages would rise once health care was financed by taxes.
Moreover, many seniors insist that Medicare is their program, and they fear—or can be made to fear—that extending the program to others will jeopardize their coverage. They also see Medicare as an earned benefit, and many of them resist extending it to people who they believe haven’t earned it.
But there is a way forward: create a new part of Medicare for the older population below age 65—the older population who have also earned Medicare coverage by paying taxes and who are directly threatened by current Republican legislation. My name for this new program is “Midlife Medicare,” which would be open to people age 50 to 64 not otherwise insured (for example, by an employer). Seniors would be more likely to accept this extension than any other; for one thing, AARP welcomes as members all Americans 50 years of age and older. Earlier versions of this idea have been referred to as a “Medicare buy-in”; I have in mind a program that would be partly financed by taxes and that would automatically provide a basic level of coverage (no mandate needed), which those in midlife could increase by paying income-related premiums (as seniors do now).
Midlife Medicare would have advantages for both its beneficiaries and those age 49 and below remaining in the individual insurance market. The enrollees in Midlife Medicare would benefit from the countervailing power that Medicare exercises. Medicare pays provider rates that are substantially below those paid by private insurers in the non-Medicare market, yet providers accept Medicare patients, who consequently do not face the “narrow networks” in most plans in the individual and small-group markets. Americans who continue to have employer coverage will have the assurance that if they need to retire early, they will have health insurance as good as they would now get at age 65. Midlife Medicare is also a response to the rising death rates and declining health that economists Anne Case and Angus Deaton have demonstrated among non-Hispanic whites in midlife.
Moreover, by pulling the 50- to 64-year-olds out of the individual insurance pool covering people 49 years of age and under, Midlife Medicare would make coverage for the younger population substantially cheaper. The younger enrollees in the individual market would, in effect, no longer be shouldering part of the cost of the more expensive 50- and 60-year-olds. This is a much better way to reduce rates for 20-year-olds than the Republicans’ proposal to let insurers charge 60-year-olds five times as much as young adults.
An additional step to relieve the burden on the individual market would be to eliminate the two-year delay in the eligibility of the disabled for the existing Medicare program. Combining this step with Midlife Medicare and a strong reinsurance program would stabilize and make coverage in the individual insurance market significantly less expensive. With these measures in place, the system could be more or less workable even if Republicans eliminate the individual mandate in favor of a 30 percent premium surcharge on individuals who fail to maintain continuous coverage (as the Ryan bill would do). Although I don’t think that would be a good thing to do, I also don’t think Democrats want to focus their next health agenda on restoring the individual mandate.
Formulating a new health-care agenda requires acknowledging that although the ACA has done much good, it has not worked out as well as its supporters originally hoped. The Supreme Court and the red states have limited how far the strategy could go in achieving health care for all. High deductibles and narrow networks have meant that many people are unhappy with the coverage they are receiving. Trump and the Republicans cynically played on public dissatisfactions, suggesting they would provide something better when, in fact, their alternatives would intensify the problems Americans face. We need to move in a more promising direction that takes into account the difficulties that progressive reform has long faced in health care. Midlife Medicare could be a big next step toward a system that works better for everyone.