At Work

What to think about, what to ask about when it comes to M4A … seriously‼️

The US health care system needs to be improved, most people agree on that. How and what to improve is the question. There are two main issues, cost and coverage.

When you read about the US international rankings on health care, our relatively low status is not because of the quality of care Americans receive, but rather that so many citizens have difficulty accessing the system when care is needed.

The United States has struggled with health care for decades, many decades, we have tried numerous strategies, mostly focused on cost, but some on coverage and still we are a long way from a solution. At one extreme there are those who seek a government-run system and at the other so-called free market, consumer solutions.

Over the next year we will be focused on Medicare for All, a proposed government run system covering all Americans and providing very comprehensive coverage with no cost-sharing at the point of service and no premiums. As appealing as all that sounds, there are many unanswered questions.

1. Cost – what will such a system cost? We can debate conflicting projections of the total cost and whether there will be savings or not, but total cost means very little. What matters is the net financial impact on individual Americans. See # 4

2. Funding – how will the program be paid for? Since out-of-pocket cost sharing seems to be off the table, that leaves us with either taxes or premium payments or a combination of both similar to current Medicare. However, we are told by some that there will be no premiums.

3. Who will pay? – regardless of the methods used, either citizens or businesses will pay for a M4A type system. 😏Those at the very top, the richest individuals and the biggest corporations, are going to pay more. And middle-class families are going to pay less,” Warren said. “That’s how this is going to work.” Sen Elizabeth Warren, Candidate debate 9-12-19.]😏 That is highly unlikely. For the coverage most workers now have, which is significantly less than proposed, employers pay an average of 8.3% of payroll. It should be noted that employer plans, many of which are self-insured, typically cover people who are healthier than the general population which translates to lower cost. That means even after assumed savings, a M4A system with greatly expanded benefits will cost more. It’s not only the expanded benefits, but the cost of extending coverage to the uninsured and those with limited benefits such a Medicaid.

4. Offsetting premiums – most Americans pay health insurance premiums or payroll deductions. The amount they pay varies greatly. To some unknown extent there will be a tradeoff between taxes, and premiums. There will be winners and losers depending greatly on the employer or other subsidy received and the type of current coverage. One thing is clear, all control over future taxes/premiums shifts to the federal government.

5. What about Medicare? – the promises of M4A extend to current Medicare beneficiaries. That means significantly higher benefits and elimination of out-of-pocket costs, including for prescription drugs … and higher costs that go with the changes. It also means no premiums, a windfall for seniors now paying Medicare and Medigap premiums. So, if 60 million Americans suddenly have virtually all their health care free of cost sharing and premiums, who picks up the tab…or will seniors be required to trade these savings for higher taxes?

6. Managing costssee #9, 7 and # 10 As far as I am concerned this is the overriding issue for any M4A plan. It is the one Americans should be asking about more than any other. Once implemented, once all potential savings are captured, how will M4A manage costs going forward❓By law Medicare does virtually no claims review or management, which contributes significantly to Medicare high levels of fraud. Will M4A be required to follow the same processes? What measures will be necessary to control costs; cut fees, reduce facilities, cost/benefit analysis, exactly what? What are the potential consequences?

7. Administrative savings – a great deal is made of the administrative costs of the US system, generally blamed on insurance and its claim and care management processes, including networks. It’s true, it is a nightmare for health care providers and at times for patients. A single claim system would save money for providers, but not nearly as much as claimed. Compliance with numerous state and federal laws adds greatly to administrative costs and as with Medicare a universal system would still require claim processing which would be more expensive for the general population than it is for the over 65 group. In addition, the low admin costs for current Medicare along with its inability to manage claims prospectively contributes significantly to fraud and waste. It is not accurate to compare Medicare with a universal system or Medicare to commercial insurance. See #6. 🤑“Historically, administrative expenses were much higher in the commercial market because insurers did a lot of underwriting, or using the health status of individuals or groups to determine their premiums. The Affordable Care Act was designed to curb that spending. On top of that, experts explained that unlike Medicare, private insurers take on more responsibility than simply paying claims or occasionally going after fraud. Before a claim is even filed, they check its appropriateness, assess whether it is medically necessary, and whether it can be done in a cheaper way (outpatient versus inpatient care, for example). “Medicare has been trying in fits and starts to look a little more closely at how it pays claims but generally speaking, it is passive in processing claims,” Sabrina Corlette, a research professor at the Center on Health Insurance Reforms at Georgetown University.” 🤑 “The Medicare Trust Fund loses $60–$90 billion every year to fraud, errors, and abuse. Although the exact figure is impossible to measure, the U.S. Government estimates that 3%–10% of annual health care expenditures are lost or stolen from the Medicare Trust Funds.”

8. Winners and losers – the perception that we all pay large amounts for health care on a regular basis is inaccurate. 50% of the population with the lowest spending accounted for only 3% of all total health spending; the average spending for this group was $276. Source: Thus, for half the population the bulk of their costs are not for health care, but premiums and for most of those Americans a big chunk of premiums are paid by their employer. Also, Americans over age 65 account for 16% of the population, but 36% of health care spending. Those over age 55 account for half of all spending. In other words M4A as proposed must create massive redistribution of resources and costs in favor of older Americans and the relatively few younger but high utilizers of health care.

9. Using health care – a great deal is made of “free” health care, no deductibles, no co-pays, no concern for the cost of care or how much care is consumed. While admitting the possibility, some experts downplay the impact of “free” health care on costs. We need to think this through carefully. See #6. We are told many Americans avoid care because of costs as low as a co-pay. Employers have been trying to control costs by giving employees more of a financial stake in spending. Even Congress recognized the problem of no patient cost-sharing and eliminated Medigap plans that covered deductibles and Co-pays. Can we reasonably expect “free” health care not to contribute to more use of health care services?

10. What we pay – the price of drugs is a popular target as are the fees charged for some services, tests, etc. M4A proponents vow to cut drug prices and there is the assumption that other health care services will be paid at Medicare rates which are considerably below private sector fees. This may sound appealing, however, we need to consider possible consequences on things like the flow of new drugs, hospital solvency or perhaps physician shortages down the road. You can’t squeeze a balloon without causing expansion on another side or a complete break. See #6

11 replies »

  1. A couple of additional questions for M4A advocates that occurred to me ….

    1.) If M4A is in place, does that mean I no longer have to pay the “Personal Injury Liability” premiums on my Home? Will those be “outlawed” by virtue of M4A?
    2.) How about the “Personal Injury Liability” premiums on my vehicles?
    3.) How about the “Personal Injury Liability” premiums on my business?

    Will all those insurance premiums be outlawed? They should be, if M4A is covering everything and making health care “free”! I mean, how many different times and ways do I have to pay for the same thing???


  2. People need to study history. There are two models, one current and one which existed when I was a kid. The first one is the VA hospitals and clinics for our veterans. This is the exact model for M4A. By all accounts there is rationing of services, long waits, and poor quality of care with a burden of administration overload. How many doctors would just quit medicine if forced to work under this system?

    The second model when I was a kid was county and state public hospitals for the poor and certain diseases such a polio patients, tuberculosis, psychiatric patients, and nursing homes for the poor. I know of only one remaining state psychiatric hospital in my area.

    Were these closed because the private sector could control costs better? Provide better care? Were some of the diseases cured? I don’t know the true facts but I do know that the counties around me sold off these hospitals and even torn some of them down because of years of neglect. They could not afford to maintain the buildings let alone properly staff and operate them.

    So here are the two models. Both were very costly and neither were / are run well. Why do people continue to think that M4A will not bankrupt the country and that it will be better care?


  3. An excellent article, Mr. Quinn, but please do not accept sponsorship from that pathological liar and sexual predator, Bill O’Reilly – have you no shame?


  4. Mr. Quinn:

    I just finished reading an article at “Yahoo Finance” that indicates paying for Elizabeth Warren’s M4A would require the equivalent of a 42% Sales Tax (Federal Level), to “cover” the additional $3.0 Trillion in Federal outlays for M4A. I can’t vouch for the numbers stated there, but they are at least somewhat to scale. The current cost of U.S. healthcare is estimated to be in excess of 18% of our $22 Trillion GDP – or about $4 Trillion per year.

    While the 10 questions you ask here are perfectly valid, I would argue they are only valid within the context of increasing GOVERNMENT role in health care. The Warrens, and Sanders’ and others’ penchant for framing U.S. health care solely in that context IS the problem – and it can only be addressed by thinking “out of the [Government] box”, as it were.

    If you’re up for it, I’ve done a good deal of work on this subject, and I’ve got a few (justifiable) suggestions. Let me know if you are interested.


    • I’d be happy to see your views, but I urge you to review the healthcare section of this blog going back a few years. Just so you know, I designed and managed employer plans for 50 years and back in the 1980s started and was on the Boards of four HMOs. I would like to see new ideas that both assure universal coverage AND manage costs.


      • Will do. It’s actually your expertise in this area that’s of most interest to me. I don’t have that, but I very much welcome feedback from those like you who do. My own background is in systems and systems engineering, so I tend to frame problems/phenomena from that perspective.

        I’ll confess my bias: I question whether Government should be involved in financing health care at all*. That’s decidedly contrary to the current (and past) context of Government being first, last and solely involved in financing health care in the U.S. I’m arguing that context is wrong, and should be abandoned.

        But my bias is based on the facts that health care is personal, and as such both too complex and too complicated for Government – both characteristics that Government does not do well with. Government bureaucracies only do well for highly formulaic and structured problems.

        To begin … (to “think out of the box”) …

        A Premise:
        Health Care in the U.S. is not now, never has been, and never will be FREE. Nor should it be. It also might never even be “cheap”, by any number of subjective or even objective standards. Furthermore, BY DEFINITION, all of the Health Care in the U.S. will be paid for by Income Generators, and hence Taxpayers. It’s inescapable – Taxpayers (Income Generators) pay for everything in this country. (And I’m including business entities as well as individuals.)

        Two Imperatives:
        1. Anyone in the U.S. who requires medical treatment/services, to include pharmaceuticals, should receive it. Period.
        2. Those who provide those medical treatments/services, including pharmaceuticals, should be well compensated for having provided those services. And by “well compensated”, I mean not just “cost offsets”, but additional to provide incentive to continue and enhance health services capabilities.
        (When I buy a can of soup at my local grocery store, I explicitly know that there is a “profit” built into the price that incentivizes the store to both, 1. replace the can of soup so it will be available for me to buy again next week, and 2. maybe a bit more to incentivize the store to offer other types/brands of soup for me to choose from and buy next week.)

        If you’re okay with with the Premise and both Imperatives, here’s the “punchline” – my Recommendation …

        *The only efficient and effective role for Government in health care finance is to NOT TAX any Income, from any source, that is diverted directly to actual health care delivery – Imperatives 1. and 2.

        From a practical standpoint, that means modifying the Individual Tax code to allow ANY Income – from any source – that is spent on health care to be a 100% “Tax Deduction” (“Adjustment to Gross Income”), irrespective of who the health care treatment recipient is. E.g., it shouldn’t matter that MY income is being used to provide some or all of the medical treatment to my next-door-neighbor’s kid, because my neighbor can’t afford it. If I pay for it, or any part of it, I get the 100% Tax Deduction from MY income.

        Maybe think about that … and let the questioning and challenges begin. And I can defend.


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