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Medicare for America Can Save Universal Healthcare

While Medicare for All and the Affordable Care Act hang on by a thread, two congresswomen have come up with a solution that can make universal healthcare a viable reality while allowing Americans to maintain the power of choice, which should please both sides of the aisle.

On December 19, Rep. Rosa DeLaruso (D-CT) Jan Schakowsky (D-Ill.) introduced H.R. 7339, a 113 page legislative alternative to Medicare for All with hopes to provide universal healthcare by amending the Social Security Act to broadly expand Medicare to all Americans within realistic parameters, including a place for private insurers. Americans would be able to opt-in to Medicare plans provided by government exchanges, employers, or private insurers instead of a single-payer government-run system. It would literally operate as an expansion of current Medicare benefits.

How it works

The “Social Security Act” would become the “Social Security Act Title XXII Medicare for America”. It would be incrementally implemented beginning once the legislation is passed and fully go into effect in 2022. Current healthcare providers who accept Medicare will also accept the public health option (Medicare for America). Non-existing Medicare healthcare providers who wish to provide services under the Medicare for America plan will be given a pathway to expand services.

As it stands, Medicare for America covers 80 percent of healthcare costs with the insured covering 20 percent. This cost splitting would be expanded to all Americans. Current provisions for pharmaceuticals provided in Medicare part D would be expanded to cover all Americans as well.

All US citizens would be eligible for coverage and provided Medicare cards upon enrollment, which can be automatic or manual. Automatic enrollments include:

  • enrollment at birth
  • current Medicare beneficiaries Including Part A and B
  • citizens age 65 and older
  • uninsured Americans

The general population with insurance can enroll on their own during enrollment periods.

Medicare healthcare providers would be required to switch patients over to Medicare for America. Small Businesses (companies with revenue of $2,000,000 or less) would be able to enroll their employees into Medicare for America plans. Large employers (100 employees or more) would be given a method or gateway to allow employees to opt-in to Medicare for America.

Individuals with qualifying health insurance coverage would be able to opt-out of Medicare for America. Qualifying health coverage includes:

  • employer medical coverage
  • veteran’s benefits
  • Indian Health Service for Native Americans
  • Medicaid
  • TRICARE
  • CHIP

What it covers

Medicare for America would provide comprehensive coverage for services including:

  • emergency services/ER visits/urgent care
  • hospitalization
  • maternity and newborn care
  • behavioral health, mental health, and substance abuse
  • prescription drugs
  • rehabilitation (physical therapy, occupational therapy, speech therapy)
  • long-term care services including hospice, nursing care, respite care and compensation of family caregivers
  • preventative health including oral and vision
  • medical equipment including wheelchairs, walkers, bathroom equipment, insulin and glucometers, breast pumps, wigs, etc.

The plan would also cover family planning services including abortion, contraception, and STD/STI testing.

Competition, additional benefits and ensured coverage

Private insurers wouldn’t be able to duplicate the Medicare for America plan, meaning no room for direct competition. However, private insurers would be allowed to provide Medicare Advantage Plans, which could have increased monthly premiums the insured would be required to pay.

States would be able to provide additional benefits, but private insurer additional benefits would have to meet certain requirements, such as adherence to the Public Health Service Act’s ban on exclusions based on preexisting conditions. Also, States wouldn’t be able to pass laws that prohibit the expansion of Medicare for America plans, meaning Red States wouldn’t be able to use their argument for limited government to limit Medicare expansion.

Premiums and deductibles

Premiums would be determined according to family composition and income. There would be a premium cap at a maximum of 9.69 percent of income, with grandfathered Medicare beneficiaries paying the lesser between old premiums and new premiums. Deductibles wouldn’t exceed $350 for individuals and $500 for families. The annual out of pocket threshold for individuals would be $3,500 for individuals and $5,000 for families.

How it will be paid for

The Medicare for America public health plan would be funded by a Medicare Trust Fund, which would be funded via

  • taxation: non-appropriated funds in the general fund Treasury
  • treasury funds for Medicare under Title XVIII and Medicaid under Title XIX beginning in 2026
  • additional appropriations allowed to be obtained annually
  • Medicaid Maintenance of Effort payments made to the Trust Fund
  • funds for the Federal Hospital Insurance Trust Fund and Federal Supplementary Medical Insurance Trust Fund transferred to the Medicare Trust Fund after necessary payments for claims for items and services have been made
  • a surtax of 5 percent applied to annual gross incomes over $500,000
  • Medicare Payroll Tax increase from 0.9 percent to 4 percent
  • net investment income tax increase from 3.8 percent to 6.9 percent
  • tax increases on small cigars, cigarettes, and other tobacco products by 100 percent with increase on pipe tobacco by 1666.10 percent
  • tax increase on alcohol by approximately 19 percent
  • termination of flex spending and health savings accounts

The legislation also includes adding a tax on sugared or sugar sweetened drinks that will be imposed on the producer, manufacturer, or importer. The tax would be .01 cents per 4.2 grams of “caloric sweetener,” namely monosaccharides (glucose and fructose), disaccharides (such as lactose, sucrose, and maltose), and high fructose corn syrup.

Taxable beverages include drinks from fruit juice concentrate and pressed fruits, infant formula, oral nutrition therapy for people who can’t metabolize dietary nutrients, oral electrolytes for children, etc. Exemptions would be applied to drinks with primary ingredients of soy, milk, rice, or other plant based milk substitutes. The tax would only be imposed on the first introduction of caloric sweetener to the final product. Revenues would be used to fund research to prevent and treat obesity, diabetes, dental caries and other diet related ailments.

Employer provided plans

Large employers would be required to dedicate 8% of their payroll budget to the Medicare Trust Fund. All employer provided plans would cover up to 80 percent of healthcare costs for full-time employees with a minimum of 70 percent. For part-time employees (those who work less than 30 hours per week), employer contributions would be made commensurate with the part-time employment ratio (number of hours worked/ 30-hour, part-time work week). Employees could opt-out of employer provided plans and choose the public health option, making the employer exempt from contributing that share of payroll to the Medicare Trust Fund.

Drug and medical device price protections

An additional proviso in the Medicare for America Act puts strict limitations on the ability of pharmaceutical and medical device companies to charge extreme prices. The clause requires in-depth reporting by pharmaceutical and medical device companies on business operations, pricing, and rationale for price increases. Ramifications for non-compliance include reduction of patents, penalty of up to 10 percent of gross sales on excessively priced prescription drugs or medical devices as well as a tax on profits from excessively priced drugs or devices. Additionally, direct-to-consumer advertising of drugs will be reviewed by the Secretary of the Department of Health and Human Services (DHHS) to determine if said advertisements would benefit public health.

These provisions are timely, as Sen. Tammy Baldwin (D-Wis.) recently sent a letter to Pfizer about the company deciding to raise the prices of 41 drugs in January, only months after it agreed to temporarily scale back on price increases per pressure from Trump. She requested a complete list of drugs that will go up, an explanation for why as well as information on the cost of ingredients, marketing and advertising spending, and total revenue and net profit generated by the medicines. The letter was dated December 11 and the Medicare for America legislation was introduced December 19. You can read Sen. Baldwin’s letter here.

The Urban Lobby’s Position

The Medicare for America public health option is a much more realistic step in ensuring healthcare is accessible for all Americans. The Affordable Care Act’s (ACA) individual mandate was nonsensical, as a penalty for not purchasing exorbitantly priced insurance plans was out of touch and has even been recently deemed unconstitutional. While The Urban Lobby doesn’t want to see the ACA overturned, healthcare reform that makes sense is needed. Medicare for America provides myriad options for Americans to get health insurance on their terms while mitigating costs and ensuring all Americans have access to healthcare. This legislation is preferred to the socialist Medicare for All plan, which is a single-payer government-run healthcare plan that leaves no room for freedom of choice and presents an unsustainable price tag for taxpayers.

Caveats with Medicare for Americans include an inability to gauge the cost of the program. According to POLITICO, Rep. DeLauro is “still looking at it [the cost].” While the bill clearly outlines where the funding will come from, an estimated price tag will help policymakers and analysts better determine if Medicare for America is, in fact, feasible. Also, it is laudable that Rep. DeLauro is echoing Sen. Baldwin’s concern for holding pharmaceutical and medical device industries accountable; however, there is still opportunity to add provisions for holding healthcare facilities accountable and ensuring quality care as outlined in the second part of the ACA, which includes patient protection. Overall, we are optimistic about this legislation and look forward to developments.

Read additional summaries from the office of Rep. DeLauro here. Get Congress.gov updates on H.R. 7339 (Medicare for America Act) here.

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