Democratic Presidential Candidate Joe Biden (Photo by Tom Brenner/Getty Images)
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Would America be better with an NHS or Biden’s Medicaid plan?

Biden’s proposals will not lower the cost of American healthcare

Through four late evenings of the virtual Democratic National Convention, carefully produced segments buzzed across screens in rapid succession, each introducing an issue but hardly scratching the surface. The function of the convention, besides formally nominating a presidential candidate, is to approve the “planks” of a party’s “platform”, in other words to endorse a series of manifesto promises.

Most planks of the Democratic party platform were uncontroversial and pitched in anodyne language: “preventing gun violence” (not “advocating gun control”), “immigration reform” (the antidote to “Trump’s hatred and bigotry”), and protecting “voting rights” (against “voter purging, voter fraud, voter suppression, and Russian interference”). On most of these issues one would have struggled to wedge a few fraudulent mail-in ballots between Joe Biden’s preferences and those of the party’s “radical left”.

This ostentatious unity was the result of several months of horse-trading between Biden’s team and supporters of Bernie Sanders, who formed a series of six working groups they called “Unity Task Forces”. The one major sticking point was “universal health care”. Dissenting Democratic delegates, supporters of Sanders, sent a message to Biden at the convention by voting against his health plan because it did not advocate a single-payer system, commonly called “Medicare for All”.

At least a quarter of personal bankruptcies in the USA relate to unpaid medical bills

Bernie Sanders has pushed for years for a “single-payer, national health insurance program to provide everyone in America with comprehensive health care coverage, free at the point of service”. In other words, he wishes to create a US equivalent of the NHS. The NHS delivers healthcare that is free at the point of use, paid for through general taxation revenue and an increasing amount from National Insurance. Every taxpayer in the UK receives a personal tax summary that sets out the amount of tax he or she paid the previous year for a variety of services, including the NHS. Private health insurance is rare in the UK and is considered supplementary to the NHS. Plans exclude GPs and emergency care, and elective services are generally delivered by NHS doctors after hours in private facilities. According to The King’s Fund, only around 10.6% of British workers hold a private health insurance policy, with most premiums paid by employers.

In the USA, other than the Veterans Health Administration (restricted to military veterans), there is only private health insurance and some providers contract with state and federal governments to offer coverage under schemes called Medicare and Medicaid (even active duty military and their families are covered by a private health insurance scheme, Tricare).

Medicare is a federal programme that provides subsidised healthcare insurance to those aged 65 and over. Medicaid is a programme that provides free or subsidized health insurance to the unemployed and those who earn below a certain income threshold. Both programmes direct public funds to private insurance companies that provide healthcare services. Together, the programmes cover around 135 million people.

Under Medicare as it is currently configured healthcare is neither “comprehensive” nor “free at the point of service”. Medicare has multiple parts: A, B, C, and D. Only Medicare part A, which covers hospital insurance, is free to most, but not all, US citizens over the age of 65. The basic qualification is having paid social security (the equivalent of National Insurance) for thirty quarters or more of a working life.

Access to a GP and basic preventive and diagnostic services, which most of us would consider basic healthcare, is covered under Medicare part B. This is not free, but costs between $144.60 and $491.60 per person per month based on income. The vast majority pay the lower amount, which increases only after annual income exceeds $87,000.

This is, one should recall, generally retirement income, and Medicare premiums are deducted automatically from social security retirement benefits (the equivalent of the state pension). For this reason, most recipients are unaware that they are paying a substantial monthly healthcare insurance premium. They are more aware that they still owe an annual “deductible” of $198 before costs are covered.

Neither Medicare part A or part B covers pharmaceutical costs, for which a “Part D” plan must be purchased at a small additional cost. Alternatively, seniors can purchase a plan that groups Medicare parts A, B and D and add things that are not covered, including vision, dental and hearing.

By this time, many readers may be asking, who would want Medicare at all? Yet, when it is compared to the employer-based health insurance system that most Americans navigated prior to reaching seniority, Medicare is both inexpensive and straightforward. Around 20 million people have a Medicare Advantage plan, and 40 million are enrolled in original Medicare. Hence, the cry “Medicare for All!”

Advocates for “Medicare for All” give the impression that the only healthcare available to the unemployed or poor is a visit to the emergency room. This has always been misleading and, following the expansion of Medicaid under the 2010 Affordable Care Act (“Obamacare”), it is deliberately deceptive.

Medicaid is state-supported healthcare insurance offered to the unemployed or low earners. It is the single largest source of healthcare insurance in the USA, covering 67 million people (including more than 29 million children). Through a supplementary system called the “Children’s Health Insurance Program” (CHIP), an additional 7 million children are covered. In total, 36 million children, or half of all under the age of 19 in the USA, are covered by Medicaid and CHIP. 14 million more US residents received Medicaid than are enrolled in Medicare.

The salary limits that determine eligibility for Medicaid and CHIP are tied to the federal poverty level (FPL), which in 2020 is $12,760 for an individual, rising by $4480 for each additional family member. Thresholds for receiving Medicaid vary according to the state where one lives and works.

In the 36 states that expanded Medicare provision under Obamacare, a working adult is eligible to receive Medicaid if he or she earns up to 138% of the FPL, so $17,609. This is not very generous. However, 44% of all workers in the USA are “low-wage workers” earning a median salary of $18,000 a year.

For a working couple with two children, the system is far more generous. In the 36 states that offer CHIP, the average salary one can earn before paying a dollar for healthcare for children is 254% of FPL, or $66,548. These families would be considered well off in the UK, where the average net household income in 2020 is £30,800 (approx. $40,000).

Medicaid and CHIP cover everything one could expect from the NHS and more. There are no long waiting lists for non-emergency care. Medicaid and CHIP require no “deductibles” or “co-pays”, which are core features of Medicare and all other private healthcare schemes.

Nothing of substance has been presented to US voters, only misleading headlines and attacks

Much of the discussion around the cost of US healthcare has centered on these supplementary payments, which can add up quickly if one contracts a serious illness, gives birth, or requires surgery. To cover those costs, one can set up a tax-advantaged health savings account. But most cannot afford to do so. Estimates range widely, but at least a quarter of personal bankruptcies in the USA relate to unpaid medical bills. However, bankruptcy is a legal process that eliminates or restructures debt and in many cases it allow families to keep their homes – which is at least preferable to the potentially fatal outcomes where medical treatments are unavailable, rationed, or have long waiting lists.

For adults under 65 who earn too much to qualify for Medicaid, or who are ineligible for benefits as recent immigrants or non-citizens, states offer graduated tax credits towards the purchase of private health insurance. These can be in the order of 95% of the total cost for the poorest, allowing them to purchase a “silver plan”, a mid-level coverage plan for very little.

Only a small fraction of the US adult working population, many being high-earning self-employed people or small business owners, pays the full price of health insurance out of pocket. The cost is around $6,000 per year for that “silver” plan, plus deductibles and co-pays. Well-paid UK residents may look at their annual tax summaries and realise they paid more than that to the NHS.

Biden’s healthcare plan builds on Obamacare, the passing of which he called “a big fucking deal”. He has proposed expanding Medicaid still further to include the nearly five million US citizens who live in the 14 states that resisted Obamacare, and offering it to families of four who earn more than $100,000 (and singletons who earn more than $50,000) at a fixed price, not more than 8.5% of household income. He has also proposed lowering to 60 the age at which Medicare becomes available and introducing a “public health insurance option like Medicare” for others.

Biden’s proposals will not substantially lower the cost of healthcare in the USA, despite necessary pabulum about “negotiating lower prices from hospitals and other health care providers”. But equally his plan will not drive down the quality and range of services available, which is the likely result of introducing a single-payer system that is free at the point of service.

The US system is sloshing with money. In 2018, 9.8% of UK GDP was spent on healthcare, compared to 16.9% in the USA. US GDP is substantially greater, more than six times larger than that of the UK. The huge amount of extra money that supports healthcare is not all creamed off by fat cats. Biden’s plan is built on that realisation, seeking to target more resources on those who earn less. It is practical and achievable, if imperfect. Sanders’ plan is ideological. It ignores the compromises that are essential to the maintenance of a sustainable single-payer scheme.

Nothing of substance and detail has been presented to US voters. Instead, there are only misleading headlines (“Medicare for All who want it”) and attacks (“Socialized medicine”). Neither of these is on offer.

The expansion of Medicaid under Obamacare provided millions of previously uninsured US citizens (not recent legal immigrants, and certainly not illegal immigrants) with affordable or free health insurance, including access to many specialists, medical services and therapies, treatments and drugs that are not offered by the NHS, or which are unavailable across the UK. Biden will expand this offering, but we shall never hear the cry “Medicaid for All!” because Medicaid is considered a “hand-out” not a right, like Medicare, earned like a state pension.

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