Friday, February 23, 2018

Timothy Jost and Harold Pollack weigh in on Medicare Extra

Yesterday, the Center for American Progress released a sweeping but incremental proposal to vastly expand Medicare and transition the U.S. to a more or less "all-payer" system, in which whatever private insurance remains (in employer plans, and Medicare Advantage-like plans) pays more or less the same rates and offers more or less the same benefits as a revamped Medicare, dubbed Medicare Extra. Medicaid and CHIP would also be folded in. Everyone would be covered.

It's a well designed proposal that's hard for a progressive not to like on the merits. But could Democrats ever pass anything like this? I asked Timothy Jost and Harold Pollack and got surprisingly different answers (I'll say that Pollack surprised me more than Jost). The article, with extensive input from both, is up at

POSTSCRIPT, 2/24: One thing is nagging me a bit as reaction to the article unfolds. Harold Pollack suggests that  "Democrats will be much more ruthless the next time around" -- they're done trying to placate not only Republicans but, to a certain extent, healthcare industry interests; they're virtually forced to go for broke if they get the chance. That strikes a deep chord with progressives; it breaks something loose in a progressive heart. Timothy Jost, on the other hand, throws cold water, ticking off the forces that will be aligned against a strong drive toward universal coverage and cost control. What fun is that? But Jost and Pollack's reactions are not as far apart as they appear. Jost does point out that if Democrats gain power any time soon they'll be under strong pressure from the activists a party depends on to go big. And Pollack, in comments that did not make it into the text (my bad?), said that he thinks there's a good chance Trump will be re-elected -- and also acknowledged that industry would hack some parts off before anything like this would ever get enacted.

Pollack's take on the politics the Medicare Extra plan surprised me. I thought he'd be as dubious about the prospects for success as Jost. The fact that he wasn't gives this article its charge, I think (along with the workable architecture of the Medicare Extra plan itself). But I'm also pretty sure that Pollack would be the first to acknowledge that Jost may well be right -- that our political system will prove incapable of putting through such sweeping and coherent reform.


  1. Thanks for your comments on Medicare Extra. I just read the plan plus Charles Gaba's detailed description, and I come back to the same comment that I have made to Gerald Friedman and to Jon Walker about their single payer plans.

    Which is, how the heck are you going to pay for it?

    The premiums in Medicare Extra are a per cent of income on a sliding scale, not unlike the ACA. A person making $30,000 a year pays $900 a year in premium, a person making $60,000 a year pays $6,000 in premiums, etc.

    I did a simulation assuming that the benefit of the plan was $6,000 a year to the insured, and we enrolled an equal number of persons in each income cell.

    If we enrolled eight persons, the benefit cost would be $48,000.

    The premiums collected would be $26,000.

    The Medicare Extra plan will need some big extra taxes to pay for itself.

    This is not a new dilemma. Without a value added or sales tax, the only place to go for new taxes is to employers or to higher income persons.
    This may not work.

    1. The plan has a section on taxation, self-admittedly not very specific at this stage. But the plan leverages reductions in tax expenditures from the employer tax exclusion, as well as anticipated extra tax revenue from wages rising in proportion to employers spending less on health insurance. My guess is that it would cost considerably more than the ACA, because it would be more successful at insuring everyone, but not radically more.

  2. I did find the section on extra taxes, but it still seemed skimpy.
    The ACA extra taxes on the rich have brought in a total of $34 billion a year. That is nowhere near enough to fill the gaps in Medicare Extra if the Extra plan is going to cover 50 million.

    The ACA did not tax capital gains at death, so this would be new revenue.

    Also, in the Medicare Extra plan there are several requirements that employers do a 'maintenance of effort' if they drop health insurance. I would not count on a lot of revenue from wage gains.

  3. The CAP article does refer to expanding the ACA taxes on persons making over $250,000. However, the existing taxes in this area raise about $34 billion a year. That is nowhere near enough to cover the gap if Medicare Extra will go to 50 or 75 million persons.

    And on the employer side.......the CAP article had several references to "maintenance of effort" contributions required of employers who no longer provide coverage.

    In addition to being wildly unpopular, these maintenance contributions will prevent us seeing higher wages.

    1. Solve the problem. Pharma, hospital supplies, and service for fees.