Health coverage has taken centre stage during the campaigns for the next presidential election. We explore four coverage expansion proposals and what they mean for industry stakeholders.
HEALTH coverage and financing are top debate issues in this election cycle. Presidential candidates, health policy experts and think tanks are discussing a range of proposals. It is too early to say what proposals, or which candidates, will move to centre stage. That said, there is reasonable likelihood that new health coverage policies will continue to be part of the ongoing campaigns and discussions in Washington. Health care stakeholders can benefit from getting to know more about the various proposals to prepare their future strategies.
This policy brief offers a high-level overview of the main proposals, reviews some of the key policy questions and discusses possible stakeholder implications.
Why is health coverage an issue? While the Affordable Care Act (ACA) reduced the number of uninsured in the United States, 11 per cent (30 million people) were still uninsured in 2019 (figure 1). That said, the uninsured make up a relatively small share of the total population. Many more people, even if they have coverage, are worried about the costs they might face. A recent Gallup poll found that 45 per cent of Americans are concerned a major health event could lead to personal bankruptcy, including a third of those earning more than US$180,000 a year.1
People with employer-sponsored coverage, in Medicare and in the ACA exchanges, all might face out-of-pocket expenses in the form of premiums, deductibles, copayments and coinsurance. Employers, many of which pay a portion of premiums, have raised concerns about the cost of health care. Premiums and deductibles in the employer market increased significantly between 2009 and 2019—54 per cent and 162 per cent, respectively. Employees personally contribute about a third of premiums (US$6,015 for family coverage in 2019) and employers contribute the rest (US$14,561).2 By contrast, wages have increased only modestly above the rate of inflation during that same 10-year period (figure 2).
Democratic presidential candidates are offering proposals aimed at expanding coverage and reducing consumers’ out-of-pocket health care costs. Some proposals would create new coverage options, while others would fundamentally change how the US health care system is designed and financed by expanding the role of government and reducing the role of private insurers.
Few of the proposals include strategies to tackle ongoing cost issues in the system, such as reduction of waste, overutilisation of services and improper payments, or address social determinants of health or other public health issues. The focus of this discussion is primarily on insurance coverage and affordability.
This brief focusses on how four proposals would change (1) who is covered, (2) what benefits are covered, (3) how health care coverage is funded and regulated, (4) how prescription drugs are paid for and (5) how much consumers will pay (figure 3). We will describe some of the high-level concepts behind these proposals rather than delving into specific candidates’ ideas as the details continue to evolve.
A key question is how the government-run programme envisioned in Medicare for All would be able to take on the job of paying claims, given health plans do this now through contracts with the Medicare programme. (See sidebar, “What role do health plans play in Medicare today?”)
As of 2018, the Medicare programme covered nearly 60 million people—more than one-sixth of the US population—and is growing due to the ageing population. Most enrollees (85 per cent or 51 million) became eligible for Medicare when they reached age 65; the rest qualified either because of disability or because they have end-stage renal disease. About 36 per cent of Medicare beneficiaries purchase private Medicare Advantage plans, which provide Part A and Part B health services and supplemental benefits; the rest are in traditional fee-for-service Medicare.23
While Medicare is a public, government-financed health care programme, privately owned health plans, hospitals, physician groups and pharmacy benefit managers (PBMs) administer most of the benefits and services covered by the programme. Even in the traditional Medicare programme, the US Centres for Medicare & Medicaid Services (CMS) contracts with private health plans to help pay claims to private hospitals, physicians and other providers. Moreover, all Medicare beneficiaries who choose drug coverage receive those benefits from private health plans (some are Medicare Advantage plans and others are run by PBM companies).
Many individuals in the traditional Medicare programme also buy supplemental coverage from private health plans or—if their incomes are low enough—may qualify for supplemental coverage from state Medicaid programmes, many of which contract with private plans.
The Trump Administration's health policy actions and proposals have focussed on three main goals: expanding access to lower-premium coverage, increasing price transparency and promoting delivery system reform.
The administration's regulations, guidance and waivers aim to expand access to health coverage with lower premiums for individuals who purchase coverage in the nongroup market, increase price transparency, continue to move the traditional Medicare programme to new payment models and (with support from Parliament) give more flexibility to Medicare Advantage plans' benefit design.
In November 2019, CMS released two rules, one final and one proposed, calling for greater price transparency by hospitals and health insurers. The Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Centre (ASC) Payment System final rule requires hospitals to make public their standard charges - both gross charges and payment rates that health plans have negotiated with them - by January 2021. The Transparency in Coverage proposed rule would require health plans to publicly disclose both negotiated rates for in-network providers and allowed payment amounts for out-of-network providers. Plans would also be required to post cost-sharing information online and provide their members with an online tool that would allow them to see what their cost-sharing liability is for covered items and services. The intent of both rules is to give consumers a way to compare services based on cost and to drive competition between health care providers and health plans. 27
The administration continues to use the Center for Medicare & Medicaid Innovation (CMMI) together with authority from the Medicare Access and CHIP Reauthorisation Act of 2015 (MACRA) to test new models of payment and care delivery, with the goal of moving towards outcomes-based reimbursement.
Following enactment of the Bipartisan Budget Act of 2018 and an executive order by the White House in 2019, the administration has implemented and proposed regulations to allow Medicare Advantage plans more flexibility to design their benefits to target enrollees who need social services and to encourage the use of virtual care.
Some of the key questions under debate regarding the various coverage proposals include:
Under many of the proposed plans, consumers could keep their coverage. The Public Option plan, for example, would add a new coverage option, as would a Medicare Buy-In. However, under Medicare for All, every US citizen (except for a few groups) would move to the new plan; coverage through other programmes such as employer-based coverage and Medicaid would end.
None of the proposals entirely eliminate commercial health insurance companies. But, Medicare for All would bar employers and health plans from offering coverage that duplicates any of the benefits available under the programme. Supporters of Medicare for All say that the need for private health plans would effectively be removed because the programme would provide more comprehensive benefits than required under current law and regulation.
Plans such as the Medicare Buy-In proposal could create more income for private Medicare Advantage plans by allowing more individuals (ages 50–64) to purchase coverage. It is not clear what the insurance risk pool for this new population might look like. The Public Option would exist to compete directly with health plans that sell coverage on the individual market today but would not remove them entirely from the system.
All of the proposals aim to reduce what most individuals pay for health care in premiums and out-of-pocket costs. Most proposals would increase the amount the government spends on health care. Financing provisions—most of which have not yet been fully specified—could increase how much individuals or employers pay to support the health care system through taxes or other financing mechanisms.
How much more the government would need to raise (or find savings in current federal spending) to pay for the proposals depends on: 28
Observers have noted that the more sweeping proposals could affect the economy through changes to tax policy that would finance the proposals. Other observers question whether the money employers pay today in benefits could turn into higher wages if employers no longer paid for health coverage. Another related question is how contributions that employers would make under some of the plans might impact employees’ wages and the larger economy.
The Congressional Budget Office, the official scorekeeper on legislation for Congress, has not estimated costs for any of the proposals. However, two recent studies have come up with estimates for Medicare for All:
Some proposals call for lowering payment rates to hospitals, physicians, drug companies and other health care stakeholders. One key question is whether Parliament would agree to enact legislation that would lower payment rates to the extent contemplated in the current policy proposals.
The public appears generally confused about these health care proposals. For example, nearly half of those surveyed (47 per cent) believe Medicare for All and the Public Option are either very or somewhat similar. 31
Opinions also change depending on which facts are presented.
Views also differ by political party (just as they continue to differ on the ACA). For example, most Democrats (77 per cent) and the majority of Independents favour Medicare for All (53 per cent). Most Democrats and Independents also favour a Public Option (87 per cent and 72 per cent, respectively). Meanwhile, most (69 per cent) Republicans strongly oppose a national Medicare for All plan and nearly four in 10 (39 per cent) strongly oppose a government-administered Public Option. 35
All of the proposals have the potential to affect all the federal and state agencies that pay for or regulate health care coverage and insurance (figure 4). Most of the major laws that impact coverage would also need to be addressed. For example, the Social Security Amendments of 1965 amended the Social Security Act (SSA) and created the Medicare and Medicaid programmes. The Public Health Service (PHS) Act and the Employee Retirement Income Security Act (ERISA) impact individual and employer-sponsored coverage. The US tax code under the Internal Revenue Service (IRS) contains numerous provisions to encourage employer-sponsored coverage, impose penalties for not offering coverage and raise income to pay for many programmes. The ACA made significant revisions to each of these laws.
All of the proposals face challenges to becoming law, even if Democrats gain control of the White House, the US Senate and the House of Representatives. The legislative history of the ACA illustrates that it can be challenging to forge consensus around health care, which requires a delicate balance of policy goals with budget and political constraints.
But even if some version of these proposals were to become law, it would likely not solve all the issues ailing America’s health care system. Remaining challenges could include:
At Deloitte, we believe that by 2040 health care stakeholders will evolve to focus on health and well-being and much less on health care. This vision of the Future of Health anticipates a complete transformation of the delivery system. Innovation—spanning the use of data and platforms to drive insights and efficiencies, consumer engagement and scientific discovery—is critical to that vision.
Health care is a major part of the political and public debate. Now that we are less than a year away from the 2020 elections, we should think through the implications of the Democratic candidates’ proposals, the administration’s policies and possible priorities in a second term and how to prepare for various election outcome scenarios.
Expanding coverage, reducing health care costs and improving outcomes for patients will likely remain at the forefront of the US policy agenda and will require agility for many health care stakeholders. The US health care system is a balance of public programmes and private sponsorship. That balance will likely continue to be challenged and debated as federal funding, private contributions and tax incentives exist for coverage, financing and delivery of innovative health care approaches. Health care is dynamic by nature—diseases emerge, discoveries are made and new paths to wellness are emulated. All of this should be considered for health care stakeholders to best meet their business priorities, respond to the constantly evolving health care environment and pursue their commitment to consumers.
Innovation starts with insight and seeing challenges in a new way. Amid unprecedented uncertainty and change across the health care industry, stakeholders are looking for new ways to transform the journey of care. Our US Health Care practice helps clients transform uncertainty into possibility and rapid change into lasting progress. Comprehensive audit, advisory, consulting and tax capabilities can deliver value at every step, from insight to strategy to action. Our people know how to anticipate, collaborate, innovate and create opportunity from even the unforeseen obstacle.