Will Medicare for All work?

Private insurance promotes competition and innovation

Question: Will Medicare for All work?
Position‹2 of 2: No, Medicare for All won't work.
Argument‹2 of 2: Private insurance promotes competition and innovation

Without private insurance, healthcare will become stagnant. The lack of revenue and competition will lead to poorer quality of care and services. Private insurance drives down prices and helps keep high-quality care affordable.

The argument

As it is currently being proposed, Medicare for All will not work — and the objection is about the financing structure rather than about the goal of universal coverage. Supplemental private insurance plans do two things in the present system. The first is protective: they keep patients from going bankrupt when public coverage falls short. The second is structural, and it is the one usually overlooked — they continue to provide money to the healthcare industry when the government cannot or will not cover the cost of a procedure. Private plans are not merely an alternative payer for the same care; they are an additional flow of revenue into hospitals and practices. Medicare for All, however, aims to cut the private sector out of health insurance altogether, and removing that second flow has consequences beyond who holds the policy. Hospitals and healthcare providers would have money coming from a single source instead of several, and a single payer sets its own rates with no competing bidder to consider. Multiple sources of payment encourage competition and drive prices down; they also create added revenue in the sector, which is what funds innovation — new equipment, new techniques, new facilities — none of which is paid for out of a budget set to cover current costs alone. The predicted result is lower-quality care, arriving not through any decision to reduce it but through the gradual effect of removing the revenue that improvement depends on. The conclusion is not that universal coverage is unachievable but that this design will fail as drafted. If the plan is to succeed, it needs to account for the economic strains that arise from making the government the sole source of funding for hospitals and doctors' offices.

Premises

[P1]Supplemental private insurance is needed to keep patients from bankruptcy and to fund procedures the government cannot cover. [P2] Medicare for All would cut out the private sector, leaving hospitals dependent on a single source of money instead of competing ones. [P3] Multiple payers drive prices down and create the revenue that encourages innovation, so removing them would lower the quality of care. [C] Therefore, because private insurance promotes competition and innovation, Medicare for All won't work.

Counter-arguments

While the current Medicare for All proposal has its flaws, government-funded healthcare is still the best way of ensuring that everyone has access to affordable healthcare. It is hard to predict how any policy will affect the economy, the best way to make a policy work is to enact the policy and tweak it as problems arise.

Rejecting the premises

[Rejecting P1] The premise conflates supplemental insurance with the primary payer. Single-payer proposals of this kind cover the services in question outright, which removes the bankruptcy exposure supplemental cover is said to be needed for, and several countries with universal public coverage retain supplemental private insurance for extras alongside it — so the two are not alternatives. [Rejecting P2] A single payer is not a single source of money, since the funds are raised through taxation across the whole economy, and the premise gives no reason why revenue from one payer should be smaller than revenue from many. These proposals also do not eliminate private provision: hospitals and physician practices remain independent and continue to compete for patients. [Rejecting P3] The claim that multiple payers drive prices down runs against the usual analysis of this market, in which fragmented purchasing weakens the buyer, raises administrative costs on both sides, and produces the wide price dispersion for identical procedures that characterises the US system; single-payer systems generally negotiate lower prices for that reason. The innovation point is the better one and is stated rather than argued — it would need the case that higher prices fund research, together with an account of how much of that research is already publicly funded.