Public or Private?

Unpacking the options for health insurance


February 8, 2020

By Jeff Luck, associate professor of health management and policy in the College of Public Health and Human Sciences; former chair of the Oregon Public Health Advisory Board

Roughly 1 in 10 Americans lacks health insurance — far more than in any other wealthy country. At the same time, the United States spends far more on health care than such countries. Even the majority of Americans with employer-sponsored insurance face increasingly unaffordable premiums, deductibles and out-of-pocket costs.  

How does this paradox arise? On average, Americans use about as much health care as residents of other wealthy countries in Asia and Europe. But a decade after the Affordable Care Act, our patchwork of Medicare, Medicaid, employer-sponsored and individual insurance programs leaves millions uninsured. Spending is high because health-care providers — hospitals, physicians and drug companies — charge far higher prices per service than in other countries.  

Health-policy experts urge the U.S. to implement two major policies that other countries use to ensure health care access and control costs: broad health insurance programs that cover all Americans and standard prices that allow cost growth to be controlled. Other countries use widely varying combinations of government and private insurance programs to achieve both universal coverage and affordable costs.  

Progressive Democrats propose “Medicare-for-All” as a comprehensive solution. It would enroll all Americans in a version of the Medicare program that currently covers persons 65 and older or with a permanent disability. Prices would be set at or close to the Medicare level, which is about one-third less than private insurance plans now pay. 

Medicare-for-All would eliminate employer-sponsored insurance, which disturbs many voters who currently have this coverage. Providers vehemently oppose the price restrictions. 

Moderate Democrats propose a narrower “public option” for uninsured adults to buy into Medicare. Enrollees would pay premiums themselves, with employer contributions, or with subsidies for low income persons. Although this option would not provide universal coverage, lower prices paid to providers would keep costs low and, over time, attract more and more people out of private insurance. A public option or modified Medicare-for-All would also preserve the role of private insurers in Medicare and Medicaid. 

OSU research has evaluated how Oregon uses these approaches to provide health insurance and control cost growth. Almost half of Oregon Medicare beneficiaries are in regulated Medicare Advantage plans administered by private insurers. Medicaid covers almost 1 in 4 Oregonians via Coordinated Care Organizations, which are local consortia of insurers, hospitals, physicians and other providers.  

Although many Republicans continue to advocate repeal of the Affordable Care Act, their replacement plans do not claim to offer universal coverage. They propose to use market forces to control costs but do not address underlying drivers of high provider prices, especially that private insurers have insufficient negotiating leverage with local hospital and physician group monopolies. In addition, private insurers as well as Medicare and Medicaid pay far more than other countries for branded drugs.  

Policy solutions to address the American paradox of a lack of insurance coverage and unaffordable cost growth are simple in concept, but the politics of implementation are complex and contentious. The upcoming presidential primaries, 2020 election and federal court decisions on the Affordable Care Act may set the stage for a choice between broader reform or modifications to our current fragmented insurance “system.”  

CATEGORIES: Healthy People