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CBO’s Report On Single-Payer Health Care Holds More Questions Than Answers

CBO’s Report On Single-Payer Health Care Holds More Questions Than Answers

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Progressive Democrats have rallied around “Medicare-for-all,” a single-payer health plan popularized by Sen. Bernie Sanders (I-Vt.). Now, some of Washington’s official bean counters are trying to add a new framework around what it might look like. The picture they offer highlights just how complicated that shift might be.
A report released Wednesday by the nonpartisan Congressional Budget Office outlined a veritable laundry list of options and technicalities lawmakers would need to consider if they are serious about such a proposal.
“The conversation about single-payer is getting more in the weeds, more detailed, which is a good thing because it’s such a complicated issue,” said Jodi Liu, an associate policy researcher at the Rand Corp. who studies single-payer proposals.
The takeaway: There’s a lot left to be answered about the concepts of Medicare-for-all specifically and the more broad category of single-payer before policymakers and voters can come close to understanding what it would mean in practice. The term “single-payer” generally refers to a system in which health care is paid for by a single public authority.
“Even single-payer systems around the globe vary from each other in many, many ways,” said John McDonough, a Harvard health policy professor who helped draft the Affordable Care Act. “There’s just so many aspects of it that differ from a Canada to a Sweden to a Taiwan — and those are all intensely consequential.”
The report comes as this once-lefty pipe dream becomes officially mainstream.
Medicare-for-all has been name-checked by Democrats running for president. On Tuesday, Democrats and Republicans alike put the proposal under the microscope at a House Rules Committee hearing. And that won’t be the last time that happens. House Ways and Means Committee Chairman Richard Neal (D-Mass.) said he, too, intends to hold a hearing on the issue this session. Meanwhile, Sanders’ latest Medicare-for-all bill, reintroduced in the Senate in April, and a similar House bill, have 14 and 108 co-sponsors, respectively.
Let’s break down the most crucial issues raised by the CBO report — what single-payer might cover, why “what it would cost” isn’t easy to determine and what it could mean for how Americans get their health care.
Medicare-for-all backers say the program would cover all medically necessary services. But what does that truly mean?
What may seem obvious — the notion of medical necessity — isn’t so easy to distill into policy rules. And different single-payer systems around the world handle the benefits question differently, the CBO noted.
For instance, Canada doesn’t cover prescription drugs, but the United Kingdom and Sweden do. Of those three, only Sweden fully covers long-term support services, according to the report.
There are two questions at the heart of it, said Robert Berenson, a health policy analyst at the Urban Institute, a left-leaning think tank.
What benefits would be covered? Would it include dental care or prescription drugs or vision, as Sanders’ bill would? And, how does one determine the discrete services included within those benefits categories?
Single-payer architects could look at existing standards, such as the so-called essential health benefits that govern Obamacare health plans, to determine what’s covered. They could be more generous by including long-term care, which isn’t currently covered by Medicare or most private insurance plans.
Even the two “Medicare-for-all” bills in Congress have slightly different takes. Though both provide for long-term support and services, they diverge on how to pay for it. Sanders’ bill covers only at-home long-term care and keeps Medicaid intact for services provided in institutions. The House bill by Rep. Pramila Jayapal (D-Wash.) covers both.
And there are questions about new medical treatments, and how to determine whether they provide added value. The CBO report suggested some kind of “cost-effectiveness criterion” could determine what the government is willing to cover. In practice, though, that standard could be difficult to develop and fall victim to political lobbying or trigger contentious debate.
Separately from the CBO report, McDonough noted, controversial medical services could bring up different kinds of political baggage — whether this plan would cover abortion, for instance, likely would change the single-payer debate.
Next: Single-payer health care would probably require new taxes. Just what level of taxes, though, and whom they’d hit hardest remain open questions.
Notably, the single-payer report avoids a question that critics frequently surface: How much would this cost? How would you pay for it?
That’s because there’s no uniform cost estimate for single-payer and no easy formula to apply.
For one thing, the price tag depends on what services are covered — something like long-term care would make the idea much more expensive.
There’s also the question of cost sharing. In some single-payer systems, people must pay a copay, meet a deductible or pay a premium as part of the health plan. That would alleviate some need for new taxes.
“I don’t think you can put numbers on it until someone defines a benefit package and defines cost sharing,” Berenson said.
The current Medicare-for-all bills eschew cost sharing. Other health reform proposals would keep premiums intact to help foot some of the bill.
The CBO report suggests that new taxes would likely play a role in financing a new single-payer plan. But what kind of taxes — a payroll tax, an income tax or a sales tax, for instance — has not yet been stipulated. And each would have different consequences.
The single-payer approach could bring down health expenses, or at least increase value. But how effectively it would do so — and its larger economic impact — would depend on other design choices.
Single-payer backers dismiss the “pay-for” questions because, the reasoning goes, this approach would save lots of money in other ways, ultimately making it a good deal.
Yet again, though, the CBO said, whether that actually happens depends on the system’s design.
By eliminating most private insurers, a single-payer system would likely slash hospitals’ administrative overhead. The government could then pay a rate that better reflects reduced hospital costs, according to the CBO report.
But, ultimately, the single-payer bottom line depends on what the system pays hospitals, doctors and drug companies for different services and products. That answer also would inform other economic assessments — ascertaining, for instance, how single-payer affects a small town where the hospital is the main employer.
Even without clear answers, outlining those questions moves the ball, Liu said.
“This area is moving really fast,” she said. “To me, it seems like this is the beginning of a longer conversation.”
Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation which is not affiliated with Kaiser Permanente.

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