Health care reform: Which path is the best?
A study by the Commonwealth Fund looks at eight different possible paths forward to increase health care access in the U.S.
The United States can achieve universal or near-universal insurance coverage with modest increases in federal spending, while still maintaining an employer-based insurance system, a new report concludes.
The study by the Commonwealth Fund looks at eight different possible paths forward to increase health care access in the U.S., including four versions that would enhance the existing Affordable Care Act (ACA); two that would allow employees to opt out of the private market and into a public option-type plan; and two single-payer systems that would eliminate private, employer-sponsored health plans. Only the last two would eliminate employer-based coverage completely—and the study’s authors said that costs to employers would go down with any of the reforms.
Related: Biden’s Obamacare 2.0 comes with controversy
The report notes that the current system, despite the insurance coverage gains seen with the implementation of the ACA, still leaves many Americans without coverage, and many others with inadequate coverage or coverage that they struggle to afford. Because of the demand for further reform and the current discussion of “Medicare-for-all” plans, the Commonwealth study sought to look at some of the most likely options.
“As the 2020 campaign heats up, it’s critical that we understand how various health reform proposals will affect health care costs, household budgets, and health insurance coverage,” study’s authors write.
Lower health care costs to employers—but…
With every version of reform, the report projects lower costs to employers. As the options become more expansive, the costs to employers drop—and the most expansive, single-payer plans have no direct costs overall, since employer-based insurance is eliminated. Two of the plans would presumably lower costs as employees are allowed to opt out of private insurance for government plans—something that is generally not allowed under current law.
However, the study notes that overall employee compensation will adjust in other ways, even if direct health care costs go down. “A substantial body of economic research indicates that reductions in employer spending on health care is passed back, over time, to workers in the form of higher wages,” the study said. “Thus, in equilibrium, employers will spend significantly less on health care under some of the reforms we present, but they are unlikely to experience considerable overall savings or improvements in profitability.”
No free lunch
All solutions represents trade-offs of sorts; with increased coverage comes increased federal spending in most cases. However, the report said that total national spending on health care would decrease under some of the most expansive plans.
The report alludes to, but does not go into detail about, how these changes would affect providers—for example, the report assumes fully phased-in changes, while acknowledging that the actual changeover to any of the new systems would take time and cause disruption.
“We assume for this analysis that provider supply will, over time, expand to meet the increased demand for services,” the report said. “Therefore, we have not estimated constraints on the supply of medical services. However, the expansion of supply for particular services may take longer than for others.” The report also assumes higher regulation of provider payments, which in itself would be controversial and likely have an impact on provider supply.
For consumers, the report predicts overall savings in household spending on health care. There could be possibly significant savings in the single-payer model, the study said, but that will be coupled with an increase in taxes.
“Depending on the reform approach and income level, households see considerable savings in health care costs, with the greatest savings under the incremental approaches accruing to lower- and middle-income families,” the study said. “However, households will face higher taxes with any of these reforms, and these taxes are not accounted for here.
Read more: