If the Democrats win in 2020, they will push a nationwide public option, not Medicare for All

For months, the Democratic candidates for president have been debating the relative merits of Medicare for All versus “building upon” the Affordable Care Act (ACA). Senators Bernie Sanders has argued that the time has come for adoption of an undiluted single-payer plan, while former Vice President Joe Biden and South Bend Mayor Pete Buttigieg, among others, have pushed for a less sweeping agenda.

Until recently, Sen. Elizabeth Warren sided with Sen. Sanders. That changed with the release of her “transition plan” to Medicare for All. Her embrace of this interim step is an admission that the party’s next big idea in health care will be a public option, not single-payer.

 

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Sen. Warren claims that, if elected, she could champion transition legislation, including the creation of a public option, early in her first term and then follow that up with a push for Medicare for All in year three at the latest.

That’s not realistic. If Sen. Warren were to win the election in 2020, it would take months, and maybe more than a full year, to pass her initial plan (it took fifteen months for President Obama to get the Affordable Care Act through a heavily Democratic Congress). The disruption Warren’s transition plan would cause, and the effort implementation of it by her administration would require, would prevent her from seeking enactment of Medicare for All a mere two years later, and probably would close off that course even if she were re-elected.

A public option would be far easier for Congress to enact than Medicare for All. Unlike Medicare for All, a public option would be voluntary; employers would be allowed to maintain their current offerings to workers. Thus, no one would be forced to give up their private insurance. Further, the federal cost of a public option would be far less than a single-payer plan, which means the tax hikes (or spending cuts) needed to finance it would be less controversial.

Several years ago, the Congressional Budget Office (CBO) estimated that one version of the public option would lower federal costs, if it were offered only to individuals getting their coverage through the ACA exchanges and did not offer more generous benefits than the private plans also offered in that market.

The Warren public option would be more costly than the version examined by CBO. It would be free to all children in the U.S. and to any household with an income below 200 percent of the federal poverty line (FPL). There would be no cost-sharing requirements for these enrollees, and the insurance would cover benefits that go well beyond what is provided by ACA-compliant plans, including vision, dental, and long-term care services. Still, even with these added costs, the federal price tag would be a fraction of the $30 trillion-plus needed to pay for Medicare for All over a decade.

The same political considerations that led Sen. Warren to conclude she needed a plan that stopped short of full single-payer is constraining the ambitions of the other Democratic candidates too. Aside from Sen. Sanders, none of Sen. Warren’s other major competitors is pursuing a purest version of Medicare for All. Sen. Kamala Harris is pushing for a publicly-managed system that relies on private insurance to administer the benefits, while the rest of the top candidates are pushing for more incremental steps.

Even if Sen. Sanders were to become the party’s nominee, and win the election next November, a public option is still more likely to be considered by Congress than Medicare for All. House Speaker Nancy Pelosi is a vocal critic of pursuing a single-payer plan, in large part because she believes it would fracture her caucus and fail to pass. She is, however, a strong supporter of adding a public option to the marketplaces created by the ACA. Many other prominent voices in the party also are against championing Medicare for All at this time, and they are unlikely to go quiet even during a Sanders administration.

While a public option would face less resistance in Congress than a single-payer plan, it would not be free of controversy. In Washington state and Colorado, policymakers have been forced to adjust the parameters of their public option plans to assuage the concerns of private insurers, hospitals, and associations representing physicians. Officials in both states are now planning to rely on private insurers to offer coverage with publicly-influenced payment rates. They are also struggling with how to ensure sufficient numbers of hospitals and physicians will join their public options’ provider networks without imposing heavy financial penalties on those who opt out.

Overcoming these difficulties for a nationwide public option would require a newly-elected Democratic president to expend significant capital to get the plan through Congress, even if the Senate joins the House under Democratic control after the election. Still, the relatively good chance of success in this scenario would make it worth the effort. The same could not be said of Medicare for All, no matter the make-up of Congress. That Sen. Warren has reached this conclusion, a full year before the election, is telling and indicative of where the rest of her party is headed too.

James C. Capretta is a resident fellow at the American Enterprise Institute.