Medicare For All – Can it Work?

Ask people covered by Medicare to look at their Medicare Summary (claims) Notices.  It’s not uncommon to see Medicare approving about 15-25% of the provider billed amount.  Then Medicare most commonly pays 80% of the approved amount. So, it’s fair to say Medicare pays about 12 – 20% of many Medicare submitted expenses.  Have you ever asked the question: Why would medical providers charge the amount they do if Medicare is only going to approve 15-25%?

Let’s assume for a moment that the provider needs to charge more than what Medicare allows to keep their practices financially viable.  That brings forth the next question: If the amount the provider is allowed to bill only matches Medicare’s fee schedule (approved amount) for all patients, how is the provider to make up for the difference in this lower revenue?

Group insurance, private insurance companies and ACA plans pay closer to 50% – 70% of the provider billed amount. Have you ever heard of “cost shifting”?  This is where many medical providers need the plans other than Medicare, to meet all of their expenses.  Basically, it’s where the provider shifts group and private insurance incoming benefit revenues to cover the lower costs paid by Medicare.  It is said, it’s the group and private (ACA) insurance plans keeping many medical providers financially sound. 

Another possible issue is that about 33% of people on Medicare have opted to enroll in Medicare Advantage Plans (MAs) rather than Original Medicare.  An MA is where a private insurance company does all of the service work for Medicare Part A & B (and probably D).  This includes setting up networks and fee schedules, payment of benefits, and collection of premiums (if any) in addition to the Medicare Part B premium of $135.50 per month. Note: “high earners” pay an increased premium known as IRMAA.  What happens to MA plans if we have Medicare for all?  Do MAs continue or are those enrollees put back onto Original Medicare?

So, like we learned with ACA, this system is complex and changes may/will have unintended consequences.  An example is the ACA premium increases we are now seeing.  Some questions: What if providers would need to lower all of the fee schedules to match the Medicare approved amount?  What if quality students decide not to go into the medical profession because they could be more financially secure in a different field?  If less people enter the medical profession, might it provide problems finding providers for smaller communities?

If we have Medicare for all, would employers need to pay more in Medicare taxes?  You will see this current amount on your paystub. If Medicare taxes rise: how will the employer find the monies to pay the extra taxes.  Would companies raise prices for consumers?  Would employer raising taxes give overseas competitors a financial advantage and therefore reducing sales of American companies?  Will that cause companies to lay off people?  Would that lower the total employer/employee Medicare payroll tax received by our government?  If we had Medicare for all would employers still be able to offer employer health coverage?

The purpose of this column is not to be political, but to provide some information and ask questions.  We have some history with a smaller, although massive, change when The Affordable Act (ACA) became law on 3/23/2010.   ACA was rolled out 11/1/2013 for coverage to begin 1/1/2014. Premiums have increased.  Per the Department of Health and Human Services premium have double between 2014 and 2017.  The premiums rose on average 25% in the exchanges states in 2018.  Yet, people are able to buy coverage with pre-existing conditions covered immediately, better coverage for mental health conditions, and lower costs for lower income people. I believe ACA provides an example of how complicated this issue is.   Professionals from a number of fields will need to look at all of these issues in great detail.  Remember, we are talking about people living or dying due to medical services being available.  I hope these discussions can be conducted with open minds by all.

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