What does Medicare For All mean for those with private insurance and health care companies?

Let’s get right into it. If the Senate plan introduced by Bernie Sanders and 14 other Democrats were  to be enacted on March 1 2021, then:

  • on Jan 1, 2025 (4th calendar year) benefits would be available to all residents of the US
  • those under 19 can, if they wish enroll on Jan 1, 2022

So what happens to those with private insurance?

You switch over to M4A.

It’s simple: No deductibles, no surprise bills for out-of-network services, and no copays. And if you change jobs, no changing insurance plans or worrying about losing the coverage that you and your family depend on. — Bernie Sanders on Twitter

And M4A covers a LOT, more than most private plans:

  • Hospital services, including inpatient and outpatient hospital care, including 24-hour-a-day emergency services and inpatient prescription drugs
  • Ambulatory patient services 
  • Primary and preventive services, including chronic disease management
  • Prescription drugs, medical devices, biological products, including outpatient prescription drugs, medical devices, and biological products
  • Mental health and substance abuse treatment services, including inpatient care
  • Laboratory and diagnostic services
  • Comprehensive reproductive, maternity, and newborn care
  • Pediatrics, including early and periodic screening, diagnostic, and treatment services
  • Oral health, audiology, and vision services
  • Short-term rehabilitative and habilitative services and devices
  • Emergency services and transportation
  • Necessary transportation to receive health care services for individuals with disabilities and low income individuals
  • Home and community-based long-term services and supports

You’ll notice prescription drugs, other medical devices are covered. As is dental and vision. The last item covers long-term services/supports that advocates for the disabled wanted included.

There is no cost-sharing, except for $200 for non-generic prescription drugs under certain limited circumstances. That means no deductibles, no co-pays.

It’s also absolutely crucial to reiterate that this insurance cannot be taken away from people. People lose insurance all the time today, because they lose their job, or their employer switches plans to a worse one, or they find themselves priced out of the private insurance market in their state. All of that ends, when this goes into effect.

We have to stress that the current system is very uncertain, even for people who work full-time and have insurance:

the truth is that people who love their employer-based insurance do not get to hold onto it in our current system. Instead, they lose that insurance constantly, all the time, over and over again. It is a complete nightmare. […]

A study from the University of Michigan tracked insurance churn directly by surveying Michiganders in 2014 about their health insurance situation and then following up with survey participants twelve months later. The amount of insurance churn they picked up was even higher than I would have imagined.

Among those who had employer-sponsored insurance in 2014, only 72 percent were continuously enrolled in that insurance for the next twelve months. This means that 28 percent of people on an employer plan were not on that same plan one year later. You like your employer health plan? You better cross your fingers because one in four people on employer plans will come off their plan in the next twelve months. — www.jacobinmag.com/…

When someone casts doubt on M4A because people might be kicked off their employer’s plan, remind them: Over the four year phase in plan, every working American will be kicked off their health-care plan, by their employer.

Given such a high rate of churn among employer plans, any hand-wringing about loss of private health-insurance misses the point.

What happens to health insurance companies?

If M4A is enacted in 2021, people can stay on their private insurance until Jan 1, 2025. After that, they have to move to M4A. The law makes it illegal for insurers or employers to offer coverage for the same services that M4A covers. You can buy coverage for additional services, but private health insurance for any services covered by M4A will not be available if you are covered by M4A.  

This means health insurance companies will shrink to offering traveler’s health insurance, and add on coverage for procedures not covered by M4A. Health-care providers cannot add on charges for covered services to create a “premium care” service. Since M4A is very comprehensive when it comes to medically necessary procedures, this will be a small market. None of this should be a surprise. These features have been part of the Medicare For All bills that Conyers proposed in the house for years. The intent with one plan covering everyone is manifold. It means health insurance companies won’t be trying to game the system and shrink M4A through lobbying. Any half-measure will quickly be undone or manipulated by Republicans in cahoots with their donors. 

M4A means the radical transformation of the health insurance industry within 3-4 years. This will impact many people who work in the industry and we have to consider their prospects as well. Thankfully, the bill does that, but first we have to be clear about how many workers are impacted. 

Private health insurance companies directly employs an estimated 500,000 people*. There are other related professions who may be impacted, staff who manage such billing for providers, or independent agents. In many cases they will find other work within their existing companies. Some insurance companies (few) offer multiple lines of business and people may transition to those other departments. Many people might choose to transition to M4A servicing, which will require some of the same workload/skills.

Overall, my guesstimate is that 400k-800k people might be looking at employment disruption. The bill sets aside up to 1% of the M4A budget to assist employees who face dislocation, for up to five years. That is the good and humane thing to do.

We should keep this dislocation in perspective. Health insurance is smaller than 1% of the economy and workforce. We have 130 million people in full-time jobs in the US, we’re talking about less than 1% of them finding new work, over a 4 year period. The problem is even less acute when you consider that employee turnover within the health insurance industry is 10-15% today. That means between 2021 and 2025, roughly 40-60% of health insurance employees will switch jobs in any case. So we have to keep this in perspective, it is a manageable issue.

* NOTE: There is no really good number for employment in the health insurance sector. BLS does not break down its occupation categories for insurance based on type of insurance. They estimate 2.7 million people work in the insurance occupations. That’s across all insurance lines (P&C, life, health, auto, reinsurance, etc). The actual number employed in private health insurance is far lower since health insurance premiums are a fraction of total insurance revenue in the US. Statista has an estimate of 500k employed in health insurance. This seems roughly right because Aetna had 50k employees and about a 10% market share of the health insurance market. There are likely 

— @subirgrewal

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