Study: Expanding ACA could hike coverage while costing less than single payer


As the presidential candidates spar over health reform proposals, a new analysis of eight different Democratic reform models found they would cover from 11 million to 35 million more Americans while costing the federal government from $590 billion to $34 trillion over 10 years.

Urban Institute researchers examined models ranging from a modest enhancement of Affordable Care Act coverage to a government single-payer system covering all U.S. residents, including additional benefits such as dental and long-term care and requiring no patient cost-sharing.

They concluded the U.S. could slash the number of Americans lacking comprehensive health insurance from 34.6 million to 6.6 million through an aggressive incremental reform model that falls short of a full government takeover of health insurance.

That model would offer more generous public subsidies, restore the individual mandate, provide subsidized coverage for low-income people in states that haven’t expanded Medicaid, create a public health plan option which employed people could join, and enroll uninsured people automatically.

It would boost federal spending by $1.5 trillion over 10 years, while modestly decreasing overall national health spending.

The researchers also analyzed two different single-payer designs—a “lite” version covering ACA benefits with income-related cost sharing, and an enhanced version with extra benefits, no cost-sharing and covering undocumented immigrants.

The lite model would leave 10.8 million people uninsured while costing the government $17.6 trillion over 10 years and reducing total national spending by 6%. The enhanced model would leave no one uninsured but would cost the government $34 trillion and jack up total national spending by about 20%.

A significant part of the coverage difference is that the enhanced single-payer model would cover undocumented immigrants, which is politically controversial even among Democrats.

The findings could help Democratic presidential candidates such as Joe Biden, Pete Buttigieg and Sen. Amy Klobuchar of Minnesota, who favor cheaper alternatives to single payer for expanding coverage, including a public health plan option.

Critics, including Biden, say it would be politically difficult or impossible to raise taxes enough to cover the huge government costs of a single-payer plan. On the other hand, experts note that the increased taxes would be offset by households and employers no longer having to pay private insurance premiums.

No other country has as generous or expensive a national health insurance system as the enhanced model described by the researchers, which is similar to the single-payer bill backed by Democratic presidential candidates Sen. Bernie Sanders (I-Vt.) and Sen. Elizabeth Warren of Massachusetts.

The cost of the various models would depend greatly on rates paid to hospitals and other healthcare providers. The Urban Institute researchers assumed hospital payments under all the public plan options would be set at 115% of Medicare rates.

“If that isn’t the way it works out, then costs would be somewhat higher than estimated here,” said John Holahan, one of the researchers.

That’s considered likely. State lawmakers in Washington and Colorado had hoped to set hospital rates at Medicare levels in the public health plan program they are designing in order to lower premiums. But pressure from hospitals forced the states to significantly increase those rates—to 160% of Medicare in Washington and to 175% to 225% in Colorado.

Hospital and physician leaders, along with Republican critics of public health plan proposals, argue that shrinking provider rates to Medicare levels would hurt access and quality. The Congressional Budget Office said in May that a single-payer system could swamp providers, while also noting large potential administrative savings.

But Dr. David Blumenthal, president of the Commonwealth Fund, which financed the Urban Institute study, said the healthcare systems in other advanced countries produce health outcomes as good or better than the U.S. while paying providers much lower prices.

“The reason U.S. healthcare costs twice as much is because our prices are so high compared to the rest of the world,” he said.

The researchers emphasized that policymakers and voters have to consider many tough trade-offs in deciding how to structure healthcare reform. Some of those choices pit families’ healthcare cost savings against less federal spending and lower taxes, and lower national health spending against less government price regulation.

A recent Commonwealth Fund survey found that while 27% of Americans favor a Medicare-for-all system, 40% say they need more information about the details of these proposals to form an opinion.

“People are confused about what the proposals might mean for them and the trade-offs,” said Sara Collins, vice president of healthcare coverage and access for the Commonwealth Fund.

She suggested that Congress might want to let states take the lead in experimenting with public health plans to see how they work before pushing ahead with single-payer legislation.

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