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What Rep. John Conyers’s sweeping single-payer health care bill would actually do

August 28, 2017
In The News

While Republicans were trying and failing to repeal Obamacare, Democrats in Congress were quietly lining up behind a single-payer health plan that, as written, would fundamentally reshape American health care for every single person in the country.

That plan has now gained the backing of 60 percent of House Democrats, the most support a single-payer plan has ever enjoyed in Congress, and Sen. Bernie Sanders (I-VT) is planning a national campaign for a similar proposal in early September.

But by its author’s own admission, the House single-payer plan — Rep. John Conyers’s (D-MI) HR 676 — may not be ready for legislative primetime. For instance, it contains only a skeletal outline of how to raise the trillions of dollars needed to achieve the universal, free coverage it wants to give every American.

But the bill is the sudden rage among the Democratic base and its congressional officials, aligning the party with a piece of legislation whose scope and speed would likely be unrivaled by any recent law in the Western world, according to four health care experts.

“It proposes, in just one stroke, to cut away so many of the pathologies of our health care system. And you can look at that and say, ‘The shocks to society this would produce would be crazy — too crazy to actually pull off,” Harold Pollack, a health expert at the University of Chicago, told me. “On the other hand, the bill forces us to confront how pathological our system is in the first place. And it does so in a breathtakingly ambitious way.”

Conservatives tried and failed this year to dramatically reduce the government’s role in the US health system. Now, liberals are looking more and more likely to try to nationalize that system if they take back Congress.

Some critics argue that Conyers's bill sets up Democrats to repeat the same mistakes of the GOP health care effort, by not having a serious plan ready to go when the political moment arrives. But to understand why the proposal appears so radical, it's first critical to understand the scale of change it envisions.

HR 676 sets the direction for a future health bill, even if it couldn’t be enacted tomorrow

A mere 30 pages, HR 676 leaves huge decisions up to the Department of Human Health and Services. But it puts Democrats in alignment with policy goals that make the changes ushered in by Obamacare appear minuscule.

The most important change would be to virtually eliminate private medical insurance, forcing the 150 million people who get insurance through their employer to switch to a new plan and creating a universal system that would give every American free health care with no premiums or deductibles.

Calling it “Medicare-for-all” actually undersells the ambitions of the Conyers bill. Medicare involves significant cost sharing, wherein the patient covers deductibles and premiums; Conyers’s bill would give everyone Medicare, but in doing so also transform Medicare into something much closer to Medicaid.

“Many people refer to single-payer as ‘Medicare-for-all,’ but it doesn’t actually operate like Medicare,” said Larry Levitt of the Kaiser Foundation. “Medicare is the part of our health care system that is single-payer-like, so it’s how people understand it.”

The bill would also likely result in the largest tax increase in modern American history, one that would almost certainly have to hit everyone. Under it, for-profit hospitals would have to become nonprofit entities or fold.

Beyond that, the bill would create new regulations and new federal bureaucracies in every state that would make Obamacare’s expansions of state power look Reaganesque.

Policy hurdle 1: creating one new government insurer for all 330 million Americans

The American health care system is made up of a hodgepodge of about five different insurance systems — each with its own rules and costs and coverage benefits.

Currently, 153 million Americans — or about 47 percent of the country — receive insurance from their employers. There are also government programs, most importantly, Medicaid and Medicare, that combine to insure close to another 38 percent of Americans. Then there are the last two buckets — the 5 percent of Americans who receive coverage on the Obamacare exchanges and the approximately 9 percent of Americans with no insurance at all.

Conyers’s bill would condense that patchwork into one single system, in which every American is on the exact same insurance plan — a decision that would achieve generous universal coverage, while also steepening the bill’s political hurdles.

Conyers’s bill would allow every American citizen to receive a two-page application in the mail to qualify for a “Medicare-for-all” card. Once everyone is enrolled, the government would pay for virtually all of their care; under HR 676, the new government insurer would pick up the full tab for a basically all key coverage areas, including primary care, inpatient care, prescription drugs, long-term care, mental health, emergency care, outpatient care, vision care, and even chiropractic care.

HHS would determine if undocumented immigrants would be eligible to enroll in the program. Foreigners simply visiting from other countries could qualify for the Medicare-for-all program. (Only those who currently get their care from the Veterans Administration and Indian Health Services would go untouched.) The new insurer would be run by a director picked by the Department of Health and Human Services, though the proposal doesn’t guess at the number of new government administrators required to make it work. (It would almost certainly be a huge number.)

Under the bill as written, very few Americans could avoid joining this plan. The bill makes it illegal for insurers to sell coverage deemed “duplicative” with Conyers’s program; since the bill provides unlimited free coverage for virtually every possible ailment, basically every existing health insurance program would become illegal overnight.

That choice separates Conyers’s bill from other single-payer proposals. In some Western countries with single-payer health systems, such as France, robust private health insurance exists that is complementary to government-run insurance. But HR 676 would circumscribe private health insurers’ roles to “supplemental insurance” alone. Only insurance covering “cosmetic surgery or other services and items that are not medically necessary” would be allowed to be sold privately, the legislation says.

This policy route would likely make it easier to hold down the costs of overall health spending in the US by getting everyone onto the same plan and, as a result, giving the government more bargaining power, according to Levitt. Forcing every person onto one government insurer would lower the cost of employment for many American businesses, which are often expected to pay for their employees’ insurance; it would also make it easier for employees to switch jobs without fear of losing their insurance.

Policy hurdle 2: forcing hundreds of millions of people onto a new government program overnight

But the bill’s strict elimination of private insurance could spur a political backlash from those who would want to buy insurance separate from the government-provided plan or keep their employer-provided plan.

Compounding that would be the speed with which the bill envisions moving the entire country onto this new single-payer system. Obamacare, which affected a much smaller slice of the health care system, took effect over the course of four years. Conyers’s bill allows for no more than two years to pass before it goes into effect.

In interviews, several House Democrats who have co-signed the bill said they’re not wedded to the idea of transforming the American health care system so quickly — even though that’s what the proposal they support calls for.

The biggest issue the bill would face with the public might well be the disruption HR 676 would cause by telling everyone in America with insurance that they can’t keep their current plans. In a recent column on single-payer, for instance, the Nation’s Joshua Holland said pulling this off would be “like trying to stop a cruise ship on a dime;” the New York Times’s Paul Krugman made a similar argument. They note that about 80 percent of Americans who have insurance are “very” or “somewhat” satisfied by their care.

House Democrats behind the bill say that despite co-signing it, they wouldn’t really want to immediately throw hundreds of millions of people off their insurance. HR 676 co-sponsor Rep. Ruben Gallego (AZ), for instance, told me that he favors slowly dropping the Medicare eligibility rate every few years — first from 65 to 55, then from 55 to 45, and all the way down until everyone qualifies. Rep. Peter Welch (VT), another co-sponsor, said doing so “will take time and we’ll have to be careful about how we do it.” A third, Rep. Raúl Grijalva (AZ), said much of the same thing.

“It’s something you’d have to phase in: You don’t have to do everything at once,” Gallego said in an interview. “There’s no rush to do it overnight.”

The problem here is that this is not what HR 676 does, nor what its drafters envision. Those who had a hand in writing the bill say “loss aversion” — the outrage consumers will feel over being removed from an existing insurance plan — would be blunted by the generosity of the new American single-payer system. They also argue that anything short of a rapid jump to a Medicare-for-all system would make the bill politically vulnerable.

“Krugman’s right: People fear change, there’s inertia bias, and people would freak out about losing private insurance. But the first couple times they went to a doctor and realized they didn’t have to pay anything and got better care, those concerns would be assuaged, and support for the system would be much higher than the status quo,” said Dan Riffle, a legislative aide to Conyers.

He added: “The sooner it's up and running, the sooner people realize the benefits and its popularity will grow, making it harder for Republicans to attack.”

Riffle believes it also wouldn’t be possible to simply exempt the employer markets from the single-payer system, while also preserving the bill’s coverage expansions and generous benefits. That’s because, as we’ll see, forcing everyone onto the same government-run insurer is perhaps the cornerstone of the project’s entire fiscal infrastructure.

Policy hurdle 3: how do you pay for government insurance for everyone in America?

The biggest black hole in Conyers’s proposal is how to pay for it. “The one thing noticeably missing from the financing section is any numbers,” said Kaiser’s Levitt.

One thing the bill says is that it would amass all the required funding in one government-run pool, called the “Medicare for All Trust Fund.” As written, the bill contains about 11 lines to explain the largest new entitlement program in American history:

The Urban Institute’s estimate of Sanders’s similar single-payer proposal from the 2016 campaign put its total cost at $32 trillion. (Sanders’s team rejected this analysis as overblown.) A UMass Amherst economist named Gerald Friedman found in 2013 that Conyers’s bill could be paid for by a 6 percent payroll tax on those earning more than $53,000, a 3 percent payroll tax on everyone below that amount, and a slew of other capital gains and investment taxes.

Single-payer advocates also argue that these upfront tax hikes would pay long-term fiscal dividends, in part because the government — acting as the sole insurer — could unilaterally hold down prices and thus restrain spending.

Left unsaid by Khanna is that while overall health care spending throughout the US economy may go down under single-payer — though that itself is up for debate — government spending would obviously increase dramatically. That would require a new financing system that the Conyers bill, in its current form, doesn’t outline.

“There’s a lot of moving pieces here that would affect how big these taxes would have to be — covering everyone, getting rid of patient cost sharing, adding in a long-term care benefit, as the bill does,” Levitt notes. “It’s hard to know where to even start.”

Another big question left unaddressed is the rates at which the new single-payer system would reimburse providers for their services. One option would be to keep rates relatively low — by, for instance, keeping them at about what the federal government already pays out for Medicare. This would certainly make the bill’s price tag cheaper and put it on the path to achieving long-term savings. But doing so would also amplify the opposition of doctors and hospitals, who could stand to lose billions if the government started paying them far less than private insurers previously paid for providing the save services.

The other option would be to try to appease doctors’ groups by paying closer to the higher existing rates paid by private insurers. Doing so would help ensure that hospitals and doctors don’t see massive revenue shortfalls under single-payer — but it would have the obvious drawback of increasing the bill’s price tag, and thus triggering a bigger payroll tax hike that many Americans would have a role in paying.

“Politically speaking here, you’re damned if you do and you’re damned if you don’t. This bill doesn’t resolve that question in any way,” Levitt said.

Policy hurdle 4: creating a massive new federal infrastructure to run everyone’s insurance

The new federal responsibility to insure all Americans would require a new federal infrastructure to manage it. HR 676 gestures at what one major part of that infrastructure would look like: New “Medicare for All regional offices” in each state, tasked with essentially figuring out how to run that state’s health care system.

These agencies would oversee virtually all the health care spending operations within a state, Pollack said. They would figure out how many hospitals the state needs and where it needs them, and be tasked with approving construction for new ones. They would set rates for how much each hospital receives for providing a certain service, and determine which kinds of care deserve to be covered.

“It’s genuine central planning at the state level of health care resources,” Pollack said. “If the government is assuming the responsibility for financing the entire health care system, you’re assuming responsibility to make some very difficult decisions.”

Obamacare implemented something somewhat similar to this, though of a far smaller scope. Its Independent Payment Advisory Board — infamously demagogued by Republicans as “death panels” — is responsible for figuring out how to achieve savings in Medicare without impacting quality of care.

HR 676 calls for these offices to “achieve budgetary targets” through its provider reimbursements. It doesn’t reconcile that goal with the federal government’s open-ended promise to pay for virtually every form of care. The bill calls for states’ governors to have a role in these state offices, which may make them more sensitive to ensuring constituents receive generous benefits. Or it may give red-state governors the opportunity to weaken the law right from the get-go.

Policy hurdle 5: making for-profit providers illegal, retraining those who lose their jobs

The government Medicare-for-all program would only reimburse providers that are nonprofit. Within the for-profit providers that do survive, any that are “investor-owned” would be outlawed, according to the bill. This change would force about 20 percent of hospitals in the US to become nonprofits or go under.

Some research suggests for-profit providers offer lower-quality services than nonprofit entities. A majority of home health agencies are now for-profit and, on average, “scored lower than nonprofits on clinically important outcome[s]” while also having higher costs for patients, according to a 2014 study published in Health Affairs.

The bill says these for-profit providers should be “compensated for reasonable financial losses incurred as a result of the conversion” from for-profit to nonprofit status.

To offset these changes, the bill would also create a massive new retraining program for insurance workers who lose their job in the shift. Similarly, Title III, Section D of HR 676 says all clerical workers at insurance companies who lose their job under single-payer would be paid their old salaries for up to two years, and then qualify for retraining in the new system. But what would they be retrained to do? How much money would it take to retrain? How many displaced workers would there be?

Nobody really has an answer yet.

Many Americans want universal coverage. How radical will the solution be to get there?

Faced with skepticism of their proposal, single-payer advocates like to note that much of the developed world has already achieved a government-run system similar to the one Conyers envisions.

And that’s true. But what is also true about America is that our private, employer-based health insurance markets are already enormous — and are so entrenched that they may be difficult to uproot.

England, for instance, adopted the National Health Service after World War II, when “much of the existing health care system had been destroyed” and hospitals had literally been reduced to rubble, said Timothy Jost, a health care expert at Washington and Lee University. In Germany, the public insurance system was “gradually built into a system that covers everybody over a long period of time” starting in the early 1900s. Canada switched to single-payer when its private markets were much less developed than America’s are today, said Jost.

“In every country this has been done, the private health insurance system is much less advanced than it is here,” he added.

But despite the monumental obstacles, a majority of House Democrats are getting behind Conyers’s proposal — not a plan to simply create a public option, or a more incremental approach like Yale political scientist Jacob Hacker's Health Care for America Plan.

"If there's a will, there's a way. If the Democratic Party decided it wanted to do this, we can address all of these challenges," Riffle said.

As they’ve watched Republicans try to pass a bill that would result in tens of millions fewer Americans having insurance, Democrats have become increasingly convinced they should be similarly ambitious for progressive goals. The fact that so many Democrats are willing to sign on to it just demonstrate how much the party’s ambitions have grown.

“Republicans’ failed repeal-and-replace effort has solidified the consensus around universal coverage and provided an exemplar process for radical policy change,” Pollack said. “A lot of Democrats are saying: ‘If they can try doing this with something so unpopular that would hurt tens of millions of people, why can’t we do something on that order that would be popular and help tens of millions of people?’”