Lindsey Hendrix: Hi there. Welcome to The Vantage Point. I’m Lindsey Hendrix. In case you haven’t heard, we’re coming up on an election year, so we’ve got a lot of primary debates going on right now. Of course, one of the major topics that has been a subject of much debate over the past several decades is health care in the United States. So today we’re going to talk about one of the proposals that’s coming from a few of the potential candidates for the presidency, and that is the idea of Medicare for All, or a single-payer system for health care in the United States.
To talk to us about that and kind of unthread everything, today we have Dr. Tim Callaghan, who’s an assistant professor in the Department of Health Policy and Management at the Texas A&M School of Public Health. Dr. Callaghan is a political scientist, so he’s coming at this from that viewpoint. And then we also have next to him, Dr. Michael A. Morrisey, who is the head of the Department of Health Policy and Management at the Texas A&M School of Public Health. He brings an economic expertise to this discussion as an economist. So welcome both of you to the show.
Tim Callaghan: Thanks for having us.
Michael Morrisey: Delighted.
Lindsey Hendrix: I think we should start out by talking about what the current health care system looks like and how health insurance works right now.
Michael Morrisey: As a result of the Affordable Care Act and moving forward, about 9 million people don’t have health insurance currently. Two-thirds of folks have coverage privately, largely through employer-sponsored health insurance. Some have purchased it individually. And then the other third get coverage through Medicare and Medicaid. Perhaps surprisingly, there are more folks enrolled in Medicaid than there are in Medicare.
Lindsey Hendrix: So Medicaid is the public health insurance for people who fall under a certain income level, and Medicare is for those who are 65 years of age and older, is that correct?
Michael Morrisey: That’s correct, with a little bit of … There are disabled folks who are in some circumstances covered by Medicare as well. But you’re basically right.
Lindsey Hendrix: So I think one of the problems that we’re trying to address is people who don’t qualify for Medicaid, they don’t qualify for Medicare, maybe their employer does not offer a health insurance policy for them to pay into, they’re struggling to find a fair price for health insurance. Is that why the Affordable Care Act was developed and why other future leaders think they have a better idea of how to do it?
Michael Morrisey: Yeah. The Affordable Care Act was really designed to expand coverage largely for those who didn’t have health insurance and for those who had preexisting conditions that made it expensive for them to buy coverage.
Lindsey Hendrix: This has obviously been an issue for several years, as we’ve said. I mean decades, right? This is going back so far. Who was one of the first politicians to propose the idea of universal health care or health care coverage at all?
Tim Callaghan: I mean it’s not a new idea at all. It’s something that dates back over a century. I mean, presidents were talking about this in the early 1900s and there’s been high levels of support within the American public for some form of universal health coverage for decades. But when it comes to the political reality of trying to implement such a system, that’s when things sort of fall apart. So, before the Affordable Care Act, the most major health reform was the enactment of Medicare and Medicaid in 1965. Other than that, most presidents have had some attempt at health reform, but it’s looked very different from president to president depending on the political circumstances that they faced.
Michael Morrisey: A good example is the Truman Administration right after World War II had a proposal for a national health insurance scheme that basically ended up resulting in the Hill-Burton Act, which some folks will recall was a mechanism to subsidize the construction of hospitals and nursing homes.
Tim Callaghan: And there have been times throughout history where it looked like major health reform might happen. The Nixon Administration is sort of a surprising example where you have an administration that you might not expect to pursue health reform, but was pursuing it in the midst of Watergate. The Democrats felt that they could hold out and not actually implement what the Nixon Administration wanted because they knew Nixon would be gone soon and they thought they could get something better, and they were wrong. So throughout history there have been lots of examples. They’re what-if moments that could have led us to health care reform and to universal health coverage. We just haven’t seen that happen yet.
Michael Morrisey: Interestingly enough, one of the largest efforts at studying health economics was the RAND Health Insurance Experiment in the ’70s which came about in anticipation of the Nixon initiative.
Lindsey Hendrix: What is the RAND Health Insurance Experiment that you mentioned, Dr. Morrissey?
Michael Morrisey: Sure. The RAND Corporation is a contract research house that’s been around certainly since the early ’70s. What they got funded to do in the ’70s was to try to figure out how much less, if any, do people use health services when they have to pay more out of pocket. So what they did was essentially a clinical study where they randomly assigned people into four different, more than four, but essentially four different health insurance plans and then paid for everything. So some people got free care, meaning they had to pay nothing out of pocket. Some had to pay a quarter of the cost. Some had to pay half. And there were some that had to pay 95 percent. Yeah, which sounds pretty terrible except it turns out that there was a stop-loss, so back in those days you’d have to pay no more than $1,000 out of pocket.
So it was like having a high deductible health plan. They looked at what effect the coverage had on the use of services. What they found is when people had to pay more out of pocket, at least not a surprise to economists, they end up having fewer physician visits, fewer hospital visits, using less prescription drugs.
Lindsey Hendrix: Have there been any studies to show what impact that has on the general population health?
Michael Morrisey: Yeah. It turns out that there is remarkably little evidence to suggest that having better health insurance affects your health status. I mean there are groups—for children, those with particular health problems, there is evidence of impact. But if you look broadly across the spectrum, you don’t see much.
Tim Callaghan: I mean the reality is if you get really sick enough you will go to the emergency room and get the care you need. However, there is considerable research that says if you have … The big difference is having health insurance versus not having health insurance. Because if you have health insurance, things get bad enough you’re going to get the coverage you need to get the care you need. That does matter. It’s not like health insurance doesn’t matter at all.
Michael Morrisey: Well, no. It matters a whole lot in terms of your financial wellbeing.
Tim Callaghan: Certainly.
Michael Morrisey: It matters in terms of lots of measures of satisfaction. In terms of health status, it’s much more limited. Perhaps one of the reasons is, as you say, if you get sick enough, you go in to get care. But hospitals are obligated to provide care for people who come in, whether or not they have health insurance coverage, at least to stabilize them.
Lindsey Hendrix: So would it be safe to assume then that if everybody has health insurance coverage, that it’ll overburden the system?
Michael Morrisey: If you have to pay $30 for a physician visit out of pocket, you would expect people to consume up to the point where they think they’re getting $30 worth of a visit. If they have to pay $100 out of pocket, you would expect them to wait a bit and say, “Maybe I’m not really feeling well, but maybe I’ll feel better in the morning.” At $100 I might wait till the morning, at $30 I might not.
Tim Callaghan: Right. But to your question as well, I mean I think there is some belief, there’s an understanding that there are going to be shortages of physicians in some areas, especially primary care, areas like that where if everyone suddenly had health care and could get the coverage that they needed as soon as they needed it and it wasn’t going to cost them anything outside of the taxes that they pay, you might not have enough physicians today to carry that sort of caseload, that demand.
Lindsey Hendrix: Why is health care so expensive in the United States? I mean, we like to think it’s the greatest health care system. We have a high level of care and quality of care. Is that why it’s expensive here? Is this an issue worldwide?
Michael Morrisey: Health care is expensive worldwide. It’s much more expensive here largely because the prices we pay are higher. I mean it isn’t so much the quality, which is excellent and on the top end particularly good. But providers get paid a lot better here than they do elsewhere.
Tim Callaghan: Right. And there’s also rules related to competition. If you have a single-payer system, sometimes you’re able, as that single payer, to negotiate prices that are a bit better. But if you don’t have that system, you might argue in a capitalist system you would expect the insurance to compete with each other and prices to go down, but that’s not necessarily what happens in the U.S., in part because the doctors aren’t necessarily forced to negotiate down their prices as well.
Michael Morrisey: Well, and the world has evolved a lot in the last 20 to 30 years. With the advent of managed care in the ’80s and into the early ’90s, there really was this sort of price competition that Tim mentions. Insurers were able to negotiate substantially lower prices with hospitals and with physicians. But what we saw emerging into the 2000s was substantial consolidation on the part of hospitals and efforts on the part of physicians as well. So the insurers lost much of the bargaining power that they had in the advent of managed care.
Tim Callaghan: Right. So if you were to look at the prices that you would pay to see a specialist in the U.S. versus other countries and also look at the prices of some of those high-end prescription drugs, that’s where you see the big discrepancies and costs really develop. Just for people who might not understand, can you explain what managed care is?
Michael Morrisey: Yeah. Virtually today if you have private health insurance you are in a preferred provider organization or a health maintenance organization, an HMO or a PPO. All that means is there’s a network of physicians and hospitals and pharmacies that you go to and receive care and pay less out of pocket if you go to those. If you step outside the network, you end up paying a lot more out of pocket. The idea of managed care was that in forming these networks, the insurers would be able to negotiate on price and by having a smaller network they were able to channel volume to providers in exchange for price.
Tim Callaghan: Right. That’s how you get the idea of when we’re talking about Medicare Advantage, we’re talking about private insurers being involved in the Medicare program through a form of managed care.
Michael Morrisey: That’s right. That’s right.
Lindsey Hendrix: Right.
Tim Callaghan: And that’s become increasingly popular and it’s something that even the Democratic candidates are talking about in 2020.
Lindsey Hendrix: I mean we do have forms of public and private insurance right now, like we mentioned. Are they both equally able to negotiate those prices? Or how does that work?
Michael Morrisey: Relative to whom?
Lindsey Hendrix: Well, relative to one another. So can Medicare and Medicaid negotiate down prices and, say, Humana or Blue Cross and Blue Shield can also do that?
Michael Morrisey: Well, the comparison to Medicare and Medicaid is not a great one. Let’s back up one step and talk about maybe being able to negotiate relative to private insurers. Certainly on the Medicaid side, the evidence has not been real strong that they’ve been able to negotiate well, in part because Medicaid is a joint federal/state program and there are limits on the nature of the coverage. In some instances, there are requirements as to who has to be included in the provider network. To the extent that my organization has to be included, that kind of gives me some bargaining power over what price I’m willing to accept.
So on the Medicaid side, we haven’t seen a whole lot. On the Medicare side, we see a fair amount of competition for Medicare Advantage, which is the managed care option that seniors have, and about a third of seniors are participating in Medicare Advantage plans. There we have seen some competition, but more generally across Medicare, not so much.
Lindsey Hendrix: Explain more about what Medicare Advantage is.
Michael Morrisey: Under traditional Medicare, basically you choose a physician. You choose a hospital. Almost all of them accept Medicare. You go in, you pay a deductible, and then 20 percent of the physician charge. Or you’re hospitalized and there’s a relatively large deductible, but then you don’t pay anything out of pocket. That’s traditional Medicare. Alternatively, you could sign up for a Medicare Advantage plan. They will have different sorts of deductibles and copays. They’ll be a smaller set of providers. But generally, the view is that you have access to a greater array of services but not as many providers. In many instances, you have to pay nothing extra out of pocket. There is no additional premium.
In other instances, there are, because there’s this bidding arrangement between Medicare Advantage plans and CMS and Medicare over what premiums the plans are going to pay. If their premiums are too high, the extra amount has to be paid by consumers if they choose that plan.
Lindsey Hendrix: I hear a lot about supplemental insurance for Medicare enrollees.
Michael Morrisey: Yeah. That’s the other option. I mean, it turns out that virtually everybody who has Medicare has something else. Maybe they’re low income and they’re also covered by Medicaid. Maybe they’ve chosen to do a Medicare Advantage option. But if they don’t do either of those, they’ve probably bought a Medigap policy, also called supplemental coverage. Basically what that does is it provides coverage for the deductibles and copays that are associated with traditional Medicare.
Lindsey Hendrix: Medicare is not covering everything for these individuals.
Michael Morrisey: That’s true.
Lindsey Hendrix: Yes.
Michael Morrisey: That’s true. Medicare is sort of lousy coverage in the sense that there are big deductibles on the hospital side. There are substantial payments that one has to pay out of pocket. From an insurance theory point of view, that’s not particularly bad, but given the extent to which consumers have chosen to get something in addition suggests that it’s less than they would have liked.
Lindsey Hendrix: Right.
Tim Callaghan: Right. It’s certainly not ideal, although when you talk to the American people about Medicare, it is very, very popular as a program. People really like the fact that they have Medicare. I mean it exists today because prior to 1965 once you got to a certain age, if you didn’t have an employer-sponsored coverage you were in pretty deep trouble from an insurance coverage perspective. So I think perspective is important to keep in mind because, is it ideal? Absolutely not, especially if people are having to supplement. But by the same token, it is pretty popular in the American public and many seniors are very, very glad that they have it.
Michael Morrisey: You’re quite right.
Lindsey Hendrix: What are some of the candidates proposing now? You hear that buzz term, “Medicare for All.” I think that’s how a lot of people are recognizing this coming into the new election year.
Tim Callaghan: Yeah. I think there’s a few different camps among the Democratic candidates. I think on one end you have the most progressive candidates, the Elizabeth Warrens, the Bernie Sanders of the world, who are proposing true Medicare for All, which is to say, everyone in the country will lose the private insurance that they have and instead will be covered by a form of Medicare that everyone in the country will be expected to sign up for and participate in. There’s several different plans out there that various Democrats have suggested. But all of them involve over a certain number of years, you’ll transition from the system that we have now to this new system where everyone is covered by government insurance, basically.
Michael Morrisey: In some sense, you’re even a little bit narrow there. In some of the plans, you don’t have to sign up at all. It exists and all you do is show up for care.
Tim Callaghan: Right. Right. But the tricky thing with that is transitioning from a system where the vast majority of Americans are getting their care from private insurance to overnight essentially—not overnight, but overnight in terms of government policy change—switching to a new system where everyone’s getting their insurance through the government and that all providers will accept that and that all prescription companies will accept that. That’s really where it gets to be a tricky proposition. So that’s one end of the spectrum is the Medicare for All, everyone switching to a system.
Then there’s several candidates who are proposing some version of a “Medicare for All Who Want It,” which has also been called a public option. The public option was something that was originally incorporated into the Affordable Care Act that ultimately had to be separated from the Affordable Care Act in order to get it passed. The public option essentially says that the government is going to be competing as an insurer with all other insurance companies. The idea there is that if the government has its own insurance plan, and that it’s a highly competitive plan, it will force other insurers to compete with that and prices will go down everywhere. And then there’s different debates about whether that public option competes forever with private insurers or eventually if those private insurers are forced to give in and allow the public option to become a much bigger thing.
But candidates like Pete Buttigieg, for example, believe in Medicare for those who want it. That’s sort of the middle position among the Democratic candidates. Now, is that the middle position of Americans? Probably not. But we’re talking about Democratic candidates, so they’re all on one side of the spectrum from a liberal/conservative perspective.
And then the third position is the Biden position. It’s also supported by people like Amy Klobuchar, which is, build on what we already have right now with the Affordable Care Act. So unsurprisingly, Vice President Biden is going to be a big proponent of Obamacare because he was one of the architects of helping to get it passed.
So Joe Biden, what he wants to do is basically build on the Affordable Care Act. It’s been called Obamacare on steroids, basically, or the ACA on steroids. Basically there’s been some talk of a public option, but at a minimum, strengthening the Affordable Care Act so that it survives for the long-term despite the Trump administration’s current efforts to cut down the Affordable Care Act.
So those are the three positions. We have 10 candidates or 11 candidates in the field right now with a serious shot at winning the election. Some would say fewer than that. But those are the three positions that all of them are staking out. The thing to remember is it’s a presidential campaign, so their opinions are changing over time and moving between those three different pots.
Michael Morrisey: Well, and the other thing to appreciate is, even for the most detailed of plans, we don’t have a lot of detail. Terms sort of evolve. Without a lot of detail, it’s really difficult to come to grips with exactly what the various candidates’ proposals are really all about.
Lindsey Hendrix: I would imagine that all of these come with their pros and cons and people who—obviously people are going to oppose or support all of these things to a degree. So what are some of the benefits and pros of these three different approaches and what are some of the cons?
Tim Callaghan: Well, I would say the pro of any of these approaches is that you would have more people covered by health insurance. Some of those people who have fallen through the cracks after the Affordable Care Act or are uncovered for various reasons of state actions and things like that, it would provide more people health coverage, which would be a good thing from the perspective of we want everyone to have access to necessary health care.
Michael Morrisey: The big negative with respect to this is what it’s likely to cost. I mean, there are estimates that suggest over the first 10 years we’re talking $30 trillion.
Lindsey Hendrix: Wow.
Tim Callaghan: Which $30 trillion, you go, “Oh my God. That’s an outrageous figure.” But then the candidates who support that would say, “Well, that is a massive figure, but if you look at all the money that’s being spent on private health insurance and all the money that’s being spent on prescription drugs, then you take all of those pots of money and all the money that employers are spending on insurance, and we were to put all of that towards Medicare for All, if that’s our only system, it’s probably close to breaking even. It’s probably not breaking even, but it’s close to it.
People like Bernie Sanders admit, “If I was elected, if we were to do this, we would probably have to raise taxes.” That’s a big concern for not only Republicans, but the American people as well because people don’t want their taxes raised. So he’s going in saying, “We would have to make some changes. If you’re going to elect me, you need to know this is what I would pursue.” But we also need to think about political realities and a $30 trillion price tag is a pretty effective stick for Republicans to use to oppose the proposal.
Lindsey Hendrix: Are we talking about putting our country further into debt? I mean, we look at the debt, it’s already in the trillions. What’s the number right now?
Tim Callaghan: Oh, I couldn’t tell you. It’s big and continues to grow.
Lindsey Hendrix: An imaginary figure, right? So would this put us further in debt? I mean we’re talking about increasing taxes. This is just a huge—
Michael Morrisey: Well, I will defer to my political colleague in a moment. But my sense very much is there will be proposals and there will be the sort of discussion as to where we come up with the monies to pay for all of this. But fundamentally we won’t and the debt will get larger. Disagree?
Tim Callaghan: No, I would say that there’s lots of talk about reducing our debt or reducing the burden that other countries have on us because of the debt that they hold that is ours. But I think fundamentally if politicians want a new policy initiative, they’ll find a way to get it passed even if it means increasing the debt. So because of that, I would expect that the debt would increase. Now, with a lot of the health care reform proposals that we’ve seen lately, especially by the Trump Administration, one of the struggles they had in getting their proposals passed, besides people losing their health coverage, was they’d had the CBO score all of their different proposals and the CBO would say, “It’s going to cost this much money.”
The proposals that tend to be most effective in getting passed are budget-neutral, which is to say that whatever money they’re going to cost, they have revenue resources that they found that will offset the cost of the program. The Affordable Care Act, one of the big selling points early on was that it would be budget-neutral.
Michael Morrisey: In fact, it was better than that. It would reduce the deficit from the 2010 estimates from CBO.
Tim Callaghan: Right. So if you as a politician can find a way to say, “Not only will this not increase the debt, it will actually reduce the debt,” suddenly your proposal has some oomph from that perspective. But I do think the reality is that if you’re going to be spending $30 trillion, there’s a chance your debt’s going to go up unless you raise taxes pretty substantially.
Lindsey Hendrix: What is the CBO?
Tim Callaghan: The CBO is the Congressional Budget Office. The CBO is in charge of scoring pretty much all public policies that are going to cost money. Basically their job is to look at a policy and project out how much is it going to cost, what is the benefit it’s going to provide to society, and come to some evaluative judgment that can guide Congress into deciding whether or not to pass a policy about what the true impact of that policy will be.
Michael Morrisey: As an example, the last CBO estimate came out, I think it was four days before the Congress voted on the Affordable Care Act back in 2010. They, as always, put forth 10 years’ worth of estimates on how many people are likely to be covered, the reduction in the number of uninsured, and how much it was likely to cost, and sub-categorizing that across a whole variety of stuff. I mean for big proposals like that and for smaller proposals, they do exactly what Tim suggested. They have standard rules that they have to apply to do all of this and sometimes there’s controversy over whether those standard rules are the right things to do. But they consistently look at those kinds of proposals that members of Congress put forth.
Tim Callaghan: But it’s basically a group of economists making, and policymakers for that matter, making best guesses about what the world will look like in 10 years or so if this policy were to pass. But the important thing to keep in mind is no one is perfect to project in the future, so many CBO scores, even if they’re done correctly, will not accurately reflect what the world will look like five years, 10 years later.
Michael Morrisey: Sure. Or two years.
Tim Callaghan: There you go.
Lindsey Hendrix: What is the pulse with the American people? Do we have polls out there that are rating whether or not people are supporting this idea of universal coverage?
Tim Callaghan: We do. So the Kaiser Family Foundation has done a lot of really good polling on both Medicare for All in general and then all the various different Democratic positions. What’s really interesting on the Medicare for All side is, from a survey design perspective, is how you ask the question dramatically influences what the American public thinks of Medicare for All. So if you just say, “Do you support a universal health coverage system where everyone has coverage?” There’s high, high levels of support for it. But as soon as you start including the details of, “Well, your taxes might go up,” or, “You might not be able to see this doctor,” or, “You might not be able to do this,” support drops dramatically.
Michael Morrisey: Or you don’t have health insurance through your employer.
Tim Callaghan: Exactly. Right. The reality is that a lot of people are risk-averse. Change might end up being a good thing, but they’re okay with the insurance they have now. So people will say, “I go to the doctor a few times a year when I get sick or my kids get sick and my insurance works just fine. Why would I want to switch to a new system?” Opinions seem to reflect that. At the same time they say, “Well, people who don’t have coverage should, so I’m okay with a system as long as I get to keep what I have.” A system where you can’t keep what you have right now, a lot of people are afraid of that and that leads to some of the negative opinions as you start to play with the way you ask the questions.
So that’s something to really pay attention to moving forward is how you ask the questions matters lots. When you see politicians saying it has high levels of support or low levels of support, they’re both right.
Lindsey Hendrix: What would happen to the private insurance companies that exist now if we were to go into this universal health care coverage?
Michael Morrisey: Well, it depends on the details. I guess the most general response would be, for the most part, they go out of business. Texas A&M University, although we provide health insurance to our employees, we no longer offer that coverage. They now get it through Medicare for All, and so the coverage that we’ve offered disappears. I’m a private employer. I’ve got coverage that I offer to my workers through Blue Cross or Aetna. Those, in principle, go away with the extreme versions of the plans. The more moderate versions would say, perhaps, that people get to keep their employer-sponsored coverage.
They can opt in to a Medicare program if they choose to pay a premium to get in. From that perspective, you don’t necessarily expect to see major changes at A&M or with private large employers.
Tim Callaghan: Right. So it sort of depends on which candidate were to win or in the long-term what direction the country goes. If you go with a Sanders-Warren-style Medicare for All, it’s probably what Mike said first, which is these insurers might go out of business. Of course, they have lots of money and lots of lobbyists, so that would be quite a fight. But if they were to lose that fight, they would likely go out of business.
But that’s not the only option. For the Medicare for Those Who Want It world, those politicians acknowledge the fact that private insurance is one of the biggest ways people get health insurance today and they’re not going to try and change that. If you don’t like your private health insurance you could potentially buy into Medicare, but you don’t have to if you don’t want to. In that world, private insurance just continues to chug along, potentially having to compete a little more with the federal government.
And then the third option, which is the Kamala Harris option, is a Medicare for All but within the context of Medicare, there is Medicare Advantage, which is that managed care through private insurance that Mike talked about earlier. So in two of the three main options that are being talked about, we would still see not only a role but a pretty big role for private insurers.
Lindsey Hendrix: So what would that competition look like if we had private insurance competing a little bit on the government-sponsored insurance?
Tim Callaghan: I’ll leave that to the economist.
Michael Morrisey: Well, the short answer is it depends on the price. Well, and you laugh, but that’s exactly the case. If you look at the Affordable Care Act and the rolling out and the people who are enrolled through the exchanges, it turns out that the people who were eligible for a subsidy on premiums participated. Those who had incomes above 400 percent of the federal poverty line, didn’t have health insurance through an employer, they found that the premiums were enormously expensive and they tried to find ways to not have coverage. That’s what I suspect plays out in the third scenario here, is I might be interested in buying into a Medicare for All if I want that kind of option, but what do I have to pay relative to what I might be paying now?
Lindsey Hendrix: Right. Because the thing about your employer sponsoring your health care is that you just pay a copay, not a copay, but you pay into it a little bit. They pay in a little bit, and it’s usually a pretty good deal for you as an employee.
Michael Morrisey: Well, we need a long footnote now because, yes, at one level. But fundamentally your employer, for better or for worse, pays you what you’re worth. There’s a basket of things that they pay you. Part of it is money wages. Part of it is health insurance. Maybe there’s a retirement system. But if they’re only going to pay you what you’re worth, if they’re going to put health insurance in the basket, that means something else comes out, like money wages. So effectively even though maybe you’re only seeing $50 or $100 or $200 a month out of pocket or premium share that you have to pay, that other portion that your employer’s paying is really paid for with wages you didn’t get.
Lindsey Hendrix: Right. And so if we switched over into a different system, maybe salaries can go up, wages can go up a little bit, but then you’re taking the difference there and paying it into health insurance anyway?
Michael Morrisey: That’s the interesting spin on the thing that Tim said earlier about how we show that we’re paying for a big expansion in government coverage, and one of which is people leave their employer-sponsored coverage. That’s true that employers wouldn’t be paying for health insurance then, but if they’re in a reasonably competitive labor market, what they’ve said to you is, “We’re giving you less today than we gave you yesterday and to keep good employees, wages are going to go up.” So part of that savings that is observed in some sense goes away when employers raise compensation to their workers which goes to the, either we tax more or we have a bigger deficit, discussion.
Tim Callaghan: Right. When we talk about taxing more, it’s not just taxing the American people. If these employers are no longer necessarily paying for health insurance, it might be taxing these employers a little bit more than they’re being taxed now as well. Whether or not they’d be okay with that really probably depends on the company and their perspective on providing that health coverage to their employees.
The other thing to really think about, and something that’s been really talked about in this current debate, is people who only use their health insurance a little bit are very happy with their health insurance. The people who have to use their health insurance a lot, when they have a major illness or something like that, have much more divergent opinions about their health care and the type of health insurance they have based on that quality of health insurance. Because if you just get sick every once in a while or you need to take your kids to get their vaccinations or something like that, most major health insurers are going to be good enough in that context. But what happens when you get cancer or something like that? That’s when the type of health insurance that you have and that quality can really diverge. That’s what can lead to major medical bills that you have to pay out of pocket.
Lindsey Hendrix: Right. Who are the people who are not currently covered by health insurance? What age are they? Where do they work? What do they do?
Tim Callaghan: People over the age of 65 are pretty well covered because they have Medicare. The people who aren’t covered to a large extent, this is an artifact of the Affordable Care Act and the Supreme Court decision in 2012. One large group of people who is not covered are individuals who live in states that have not expanded Medicaid to the 138 percent of the federal poverty level, but nevertheless make too much money to qualify for whatever their state’s Medicaid level is. So in a state like Texas, which chose not to expand Medicaid, there is a population of individuals who make too much money to qualify for Medicaid, but if Medicaid were to be expanded, they would have qualified.
They fall into what’s known as the Medicaid gap. So there’s some portion of the public that’s in there and that gets complicated by availability of the Affordable Care Act exchanges.
Michael Morrisey: And to expand on that a little bit, the Medicaid expansion that many states did and many states didn’t, basically expanded coverage for those age 19 to 64. Those over 65 have Medicare. Those under 19 largely had access already through Medicaid or the Children’s Health Insurance Plan if their incomes were reasonably low.
Tim Callaghan: Right. So CHIP is a mechanism to make sure that children are covered. So basically the children are covered and the elderly are covered. It’s sort of this 18 to 65 population, and then within that the largest pockets of uninsured individuals are for the most part in states that chose not to expand Medicaid. It’s states like Texas and Florida who chose not to expand Medicaid. So Texas is a state that actually has a large number of uninsured relative to other states. So Texas would be a state that would be pretty bigly impacted if we were to move to a system of universal health coverage.
Lindsey Hendrix: Right. As the debates continue, as people are watching the debates unfold and the presidential election unfold, what should they be listening for? What are some of the things they should be skeptical of or listening closely to when these candidates are onstage talking about their health care plans?
Tim Callaghan: Well, I think there’s a few things to pay attention to. The first thing to pay attention to is whether they actually have a plan or whether they’re just saying they support a broad principle. So the difference between saying, “I support Medicare for All,” and saying, “I support Medicare for All, here’s how I would actually implement it, and here’s how it would work,” that’s something you need to pay attention to because you can say you support a general principle, but if you were to be elected president, to go into that office and have no idea what to do day one, that says a lot. So certain candidates have more well-developed plans than others. So pay attention to whether they’re talking in platitudes or actually giving concrete answers about what they would do.
The other thing to pay attention to is, listen to how the candidates are talking about what they would do to overcome Republican opposition. Because assuming a Democrat gets elected, and we don’t know that that’s going to happen, but if a Democrat were to get elected, they’re still going to have to face Republicans in the Senate and in the House who are going to be very opposed to the idea of universal health coverage. So how would they possibly get their plan through if you need essentially 60 votes in the Senate to get major pieces of health care reform through?
The Affordable Care Act almost failed because they had a senator from Massachusetts who died and they only had 59 votes instead of 60. So for a long time, they thought the Affordable Care Act wasn’t actually going to go through. So how do you get your massive plan, whatever your massive plan is, through in the modern, polarized era that we live in? Plans instead of platitudes and then practically, how do you get something like this passed?
Michael Morrisey: Yeah. And to play that off a bit further, the Biden proposal that talks about the ACA on steroids and basically having a public option, the reason I suspect that we don’t have the public option is that that was the part of the bill that came out of the House. It was not part of the Senate bill. When the Democratic senator from Massachusetts, when Senator Kennedy passed away and the Republican was elected, they no longer had 60 votes. Ultimately, what they did was to enact the Senate bill that didn’t have the public option.
Tim Callaghan: Right. The Democrats in the Senate used the rules of the game to their advantage to make it so that they didn’t have to deal with the fact they only had 59 votes instead of 60 when the Massachusetts seat went from Democratic to Republican. So that’s one of the reasons you don’t have the public option today, and if Biden were to be elected, it seems like what he’d really like to do is to implement what President Obama actually had planned when he first started his effort in 2009 instead of what was passed in 2010.
Lindsey Hendrix: And then finally, we’re here at the Health Science Center. We’re educating the future health providers of America. What should the students be concerned about? How is this going to affect them in the future if something like this were to get passed at either spectrum? What should they be listening for specifically in the debates?
Michael Morrisey: Well, I think there are two issues that they need to think about. One is if indeed we do go down a route that leads to substantially more people having coverage, that means a lot more people show up in your office. From a national perspective, we have a greater capacity issue than we currently do. So that’s a concern. The other issue is, again, price, and to what extent does the government program or the private insurers who are competing, what sort of prices do they offer providers to deliver care? One of the things that we’ve seen on the Medicaid side, although not on the Medicare side, is reluctance on the part of some providers to provide services, largely over issues of price.
Tim Callaghan: Right. And I think the other thing they need to be thinking about is that if some form of universal health coverage were to be enacted, the way that they deliver care might not necessarily change but their day-to-day operations might change considerably because, for better or worse, part of the day of any sort of physician or medical provider is handling the world of the insurance that the patients have. To the extent that you no longer have those insurers to deal with and you’re dealing with a single insurer, the system gets simplified in one respect, but it gets complicated in many other respects.
So you go from dealing with lots of different companies and instead you’re dealing with a massive bureaucracy. So the day-to-day things that you do in addition to patient care might change. That’s something to know, that the health care system you see today could look very different in five years if, say, someone like Bernie Sanders were to be elected.
Lindsey Hendrix: Is there any research going on at the School of Public Health on this issue specifically, or are students working on health policy issues and things like that?
Tim Callaghan: Well, we are both members of the Department of Health Policy and Management, so of course we in the Department of Health Policy are doing lots of research on health policy right now. But focused on the 2020 election, I think we’re all in a wait-and-see mode right now because it’s so early. There were 22 candidates as recently as two months ago. So we’re waiting for it to pare down a little bit. But I’m sure there will be some discussion closer to the election, and then if someone new were to be elected, then there would be lots of discussion about how those plans could be implemented or how plans that are implemented impact the health of Americans.
Michael Morrisey: Sure. Much of the work that’s going on in the department, much of it by doctoral students, have been really looking at what effects the ACA has had. I mean it’s only in the last couple of years that there’s been enough data to begin to rigorously look at what effects that law had.
Lindsey Hendrix: Right.
Tim Callaghan: Right. We’ve had students do really interesting research looking at the impact of the Affordable Care Act in individuals with diabetes, on opioids, and lots of different topics.
Michael Morrisey: Dental care.
Tim Callaghan: Dental care, yeah. So there’s lots of students who are working on that sort of thing right now. But Mike’s right. The fundamental issue is you need good data to do this sort of research and because they implemented the Affordable Care Act in stages, some of the big pieces of the Affordable Care Act weren’t implemented until 2014 or even later than that. So if you want to look at that, you need several years of data which only have just recently become available.
Lindsey Hendrix: Are any of these studies published yet? Are they at that point?
Tim Callaghan: Some are on the way to being published. I know the one on diabetes I mentioned is in the final stages of review at a top diabetes journal. So that’s pretty close. But these are our students, so they’re still trying to finish their dissertations and things like that, so I think we might be about a year away for some of them.
Michael Morrisey: Sure. Sure.
Lindsey Hendrix: Okay. It’s interesting that we don’t really have—this whole idea is so new and so fresh. I mean it is and it isn’t. But it’s only been implemented in the past few years, so I’ll be interested to see some of those studies come out. I’m sure everybody listening would be interested to see how ACA has—the implications of that and what any kind of future policies will have. So are there any final thoughts that you would like to leave us with before we sign off?
Tim Callaghan: Well, I mean I think my final thought would be patience. It’s early in this debate process, for one. And that as the field gets winnowed down, the options are, the table could get winnowed down because there are the three sets right now but there’s no guarantee that candidates who support those three different positions will all make the final set of debates or make it towards the end.
The other thing to remember is, when we’re talking about all these different health plan options, I think all of the Democrats would say that they prefer any of the options that any of the Democrats are talking to the status quo or anything that the Trump administration is proposing.
And then the third thing I would say is, even if a Democrat is elected, that doesn’t necessarily mean that anything will happen on health. National events could dictate that we focus on foreign affairs or the economy or something like that and health could go to the background. Or you could just run into that partisan polarization that seems to be so common in Washington today.
Lindsey Hendrix: Right.
Michael Morrisey: I guess the only point I would make is actually the point that Tim Callaghan has made many times, that reform happens incrementally. So it’s usually not the case that you see wholesale reform changing all kinds of things in dramatic ways all at once. You see nibbles here and there. To the extent that we actually do see changes, that’s probably much more likely.
Tim Callaghan: I would agree with that.
Michael Morrisey: Yeah. Because you said it.
Tim Callaghan: There you go. It’s a great idea.
Lindsey Hendrix: Well, thank you both so much for talking about this topic. I know this is a huge concern for many, many Americans and it should be a concern for those who haven’t thought about it. We look forward to seeing the debates unfold, the presidential election unfold, and hopefully we’ll get some of those studies published that we can take a look at. So thank you both for being here today.
Tim Callaghan: Thanks for having us.
Lindsey Hendrix: And thank you for tuning in to The Vantage Point. We’ll talk to you next time.