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Medicare-for-all: eliminating private insurance is a big task

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Democratic presidential contenders are having to grapple with a crucial health policy question: Should Americans keep getting health care coverage at work?

Sen. Kamala Harris (D-CA) faced a question about this last week from CNN’s Jake Tapper and gave a pretty clear response: “Let’s eliminate all of that. Let’s move on.” Sen. Cory Booker (D-NJ) faced a similar query but gave a less clear response, where he noted that “even countries that have vast access to publicly offered health care still have private health care, so no.” Whether that “no” referred to private insurance or private providers hasn’t been clarified.

It’s becoming clear that this is a question that any 2020 hopefuls will have to deal with. Right now, I see the field of candidates torn between increasing enthusiasm for saying good riddance to private coverage — and apprehension about how you make that transition.

About half of Americans — a total of 156 million people — get health insurance through their jobs. A lot of this traces back to some World War II-era tax code provisions that allow companies to provide health benefits tax-free, making it an appealing way for employers to compensate employees.

There are lots of reasons Democrats are increasingly supporting legislation that would eliminate employer-sponsored coverage entirely. Both Harris and Booker, for example, are co-sponsors on Sen. Bernie Sanders (I-VT) single-payer bill, which would move all Americans to government-run coverage. The health care system would certainly be simpler, and a government plan would have a lot more leverage to negotiate lower health prices when it was the only insurer in town.

But the thing that seems to cause worry is how to actually get there. Moving to a world where there isn’t private insurance means moving those 156 million Americans onto a different plan. What exactly would that look like? It’s really hard to game out, but there are a few historical examples that I find helpful to look back on.

One is the launch of Medicare itself, which happened in 1966 and required enrolling about 19 million seniors into government-run health care in just about a year. Back then, the government hired 5,000 temporary workers to basically fan out across the country and let seniors know that this health plan was coming. And, by and large, that effort seemed to work. Seniors got their cards, got signed up, and got covered. (I wrote a longer piece about this for the Washington Post a few years back, that you can read here.)

A big caveat here is that those seniors were often retired and uninsured. They didn’t have health insurance to begin with. More recently, the Obama administration had to transfer tens of thousands of Americans onto plans that complied with new Obamacare regulations.

At first, this seemed like an easy task: After all, these people were going to be transitioning into more robust individual market plans that would be required to cover things like prescription drugs (at the time, some plans didn’t). But it turned out to be a huge controversy when people realized that those new, more robust plans often came with higher premiums. Under significant political pressure, the Obama administration actually rolled back this transition — allowing plans that didn’t comply with the law’s benefit coverage requirements to stay on the market an additional year.

At the end of the day, I think what matters the most is what exactly Americans are being asked to transition into. When Americans transitioned into Affordable Care Act plans, they often found those plans had high premiums and deductibles — and were frustrated with those costs. When Americans transitioned into Medicare, they ended up with really robust coverage that had very low premiums and deductibles.

Transitioning half of all Americans from one type of health insurance to another is no-doubt a huge undertaking. But whether or not it’s successful, I think, rests on what kind of coverage is on the other end. If it’s a government plan where Americans feel like they can afford to go to the doctor, then I’d expect any frustration with the transition to eventually dissipate. If it’s a government plan where co-payments and deductibles are high — especially if they’re higher than employer-sponsored coverage — then frustrations would almost certainly only grow over time.

One last note: I do think it’s worth keeping in mind that even countries we think of as single-payer still have some level of employer-provided health insurance. Take Canada, for example, the country that Sanders has modeled his own health plan on.

The country does indeed have government-run health coverage for all citizens that covers visits to hospitals and doctors. But it does not cover dental care, vision, or prescription drugs. Instead, the vast majority of Canadians have supplemental coverage — and most of them get that insurance at work. Even in Canada, the Commonwealth Fund estimates that two-thirds of citizens carry some version of private coverage.

I often see the health policy discussion framed as a dichotomy: either we eliminate private health insurance, or we don’t. In truth, many of our peer countries have made much more nuanced decisions in this space.

They’ve decided to have private health insurance for certain benefits and not others. This might only make things harder for presidential candidates because it turns there aren’t just two options for how to deal with this question. There are lots of different ways you can handle private insurance in a universal coverage system, each with their own policy tradeoffs.

This story appears in VoxCare, a newsletter from Vox on the latest twists and turns in America’s health care debate. Sign up to get VoxCare in your inbox along with more health care stats and news.

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