Would ‘Medicaid for All’ Cure What Ails Our Health-Care System?

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Brian Schatz. Photo: Drew Angerer/Getty Images

Now that Obamacare has survived its death panel, Senate Democrats are playing offense on health-care. Bernie Sanders is rallying the party’s left-flank around his single-payer plan; Chris Murphy is pushing a turbo-charged public option that would allow every American to buy into Medicare; and senators Tim Kaine and Michael Bennet are promoting a more modest Medicare buy-in plan.

On Wednesday, Hawaii senator Brian Schatz officially introduced one more idea into the mix: A bill that would allow states to expand Medicaid to anyone on the individual market who wishes to buy into it. Like the traditional Medicaid program, the expanded version would be funded by a mix of state and federal dollars. Unlike the old-fashioned version, this plan would compete with private ones on the Obamacare exchanges. States would have the power to set premiums and deductibles on this public-option plan, and consumers would be able to use their Obamacare tax credits to purchase them.

Schatz co-authored the legislation with New Mexico Congressman Ben Ray Luján, and the bill has already attracted 17 Senate co-sponsors — including Senator Sanders. Schatz is, himself, a co-sponsor of the democratic socialist’s “Medicare for All” bill. And while he believes his plan is the best option currently on the table, he wants his party’s marketplace of health-care ideas to be as competitive as possible.

“We should subject all of our ideas to scrutiny,” Schatz said in a recent interview. “One of the most important lessons from the last nine months is that you never know when you’re gonna get the gavel — and that it’s important to be ready to legislate when you do.”

To that end, Schatz allowed New York to scrutinize his plan during a conversation earlier this week. The exchange has been edited for clarity and concision:

So, let’s start with elevator pitch: What does this bill aim to achieve, and how does the legislation aim to achieve it?
What we set about to do, essentially, was define the best path forward to provide coverage for the 30 million Americans who still lack health insurance. And after talking to experts at the state level, and former Clinton and Obama administration officials, we came to the conclusion that Medicaid is a viable path forward because it provides flexibility to the states and because it’s efficient. So the idea’s pretty straightforward: Regardless of income, individuals would be able to participate in Medicaid, which would be available on the exchange.

“State flexbility” will sound good to some ears. But others might worry about how Republican-controlled states will choose to use their wiggle room. Nineteen states still haven’t opted into Obamacare’s Medicaid expansion. Research from Harvard University and the City University of New York suggests that this exercise of state’s rights has resulted in thousands of premature or avoidable deaths. Given the costs of leaving the uninsured at the mercy of Republican state governments, why push a version of the public option that gives red states the power to opt-out?
It is a concern. We thought long and hard about how to configure this, and in the end we made the judgement that providing flexibility to the states was important. Remember, Medicaid is a voluntary program and it took a while for all the states to get on board — including the state of Arizona, which didn’t even participate in core Medicaid until 1982. But we also think that, as the politics of the ACA subsides, and as the popularity of Medicaid continues to rise, we’re confident that states are going to participate.

Do you see the advantages of state flexibility as being primarily political? The idea being: It’s easier to forge consensus around a public option — in a large, diverse country — if states have some power over the details? Or do you see specific policy benefits to giving states some autonomy?
It’s a good question. One of the advantages of the state flexibility on the Medicaid program is that each state can configure the benefits package according to its own needs. There may be a state that wants to emphasize drug prevention and treatment. There may be a state that wants to emphasize caring for the elderly. There may be a state that wants to emphasize the prevention or management of diabetes. Citizens like when their Medicaid programs meet their needs.

You say the goal of your plan is extend health insurance to the 30 million who still don’t have it. Obviously, there’s no official score of your plan at this time. But in 2013, the Congressional Budget Office released an analysis of a somewhat similar public option. And it found that, while such a measure would bring down premiums for many Americans, it nonetheless would have “minimal effects” on “the number of people who would be uninsured.” Why do you think your public option would have a significant effect on the uninsured rate, given that finding?
Well, I’m not gonna apply a CBO study of someone else’s bill to my bill. The experts that we spoke with believe that this is the best path forward in terms of reducing the number of people without insurance. We do need actuarial analysis; we do need a CBO score going forward. But I’m quite confident that the work that we’ve done with experts that have administered Medicaid programs at the state level; that have worked at the Centers for Medicare & Medicaid Services; that run hospital systems and insurance companies and community health organizations — will drive down premiums and decrease the number of uninsured.

How would it do that? Would the mechanism be: Lower premiums attract uninsured Americans to the marketplaces, while the availability of a public option guarantees that there are no counties without any insurer on its exchanges. Or is there another way that this would advance the goal of universal coverage?
That’s right. And it’s not just the bare counties, because we now have either zero or just a few. But it’s also those counties, and those parts of the country, where you may have an insurer or two but they’re charging exorbitant rates. We feel like competition is good, and that a program that’s been proven to offer a solid benefits package — and manage costs effectively — should be available to everybody, not just the people who aren’t doing so well, economically.

Why not open the program to everyone — including those with employer-provided insurance, as some alternative public option proposals would?
Well, people are generally happy with their employer-provided coverage. That’s not something I’d be necessarily opposed to — and I think we’ve got to iterate all of our ideas and be open to merging some of these proposals over time. But, generally speaking, most constituents are not complaining about their employer-provided coverage, whether they’re a union member, or a government employee, or a private-sector worker. If they’re covered by their employer, they tend to be happy with their program.

Would your Medicaid public option pose a threat to private insurers, who might have a difficulty competing with the government on price, due to their higher administrative costs, need to turn a profit, and higher reimbursement rates?
Well I think competition’s good. I think that if a private plan can’t provide a good value, then they should. Yeah — Medicaid provides good value and people are going to buy it. So, that will provide impetus for the private insurers to step up their game.

One criticism of your bill from the right would be: If Medicaid does outcompete private insurance, then that will depress wages for doctors and reduce the profitability of hospitals, because your program’s reimbursement rates would be lower than those of for-profit insurers. Progressive health-care economists, by contrast, might see that as a feature, not a bug: America has some of the highest-paid doctors in the world, and we pay exorbitant rates for medical equipment and hospital services. Thus, many argue that there’s no way to keep aggregate health-care spending under control — while delivering universal coverage — without asking doctors and hospitals to take a hit. Do you think your bill would put a dent in health-care providers’ bottom lines? If not, should it?
Well, I think that we try to address that in our legislation. There’s issues related to the Medicaid payment bump for primary care, and also for specialty care in the bill. But let’s keep our eyes on the prize here: The objective is to make sure as many people as possible can afford to stay healthy. And while our system has improved significantly, it doesn’t work yet. This is a pretty aggressive idea, and it is based on the premise that having 30 million people uninsured, or who are overpaying in individual market, is not acceptable.

Are Democrats spending too much intellectual energy on health care, relative to other issues? Assuming the Affordable Care Act is still in place next time Democrats take power, should health care be the party’s top priority? Or will it be more urgent to address immigration and climate change — issues that the party made little legislative progress on during the Obama years?
I mean, I think we have to do several things at once. I think we have to have an affirmative economic agenda. I, of course, feel passionately about the climate. But, you know, when you talk to individual voters and families, a lot of these issues merge in their lives. It’s the cost of electricity, it’s the cost of insurance, it’s wage stagnation. Politicians think of these issues in silos. But my judgement is, most people just think that the cost of living is too high. And that’s an economic issue, a family issue, and you can even call it a health-care issue. But the bottom line is: Their own personal arithmetic just doesn’t add up. And that’s what Democrats should be focused on — helping people make their own personal math work, so that they can at least break even. Or, maybe, get ahead.

Would ‘Medicaid for All’ Cure What Ails Our Health System?