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False Choice

Summary:
By James Kwak The scene: Two well-dressed, fully employed people sitting at a table in the chic café at their workplace. Martha: Do you like your health plan? George: I love it. Martha: How much do you pay for your plan? George: About 0 per month.* Martha: Do you have a deductible? George: I have a ,000 deductible for my whole family. Martha: What about co-payments? George: I have to pay 20% of the cost for hospital stays and outpatient surgery. Martha: What if you just want to see the doctor? George: I pay to see my primary care physician, and to see a specialist. Martha: Can you see anyone you want? George: I pay more if I see people out of network, but the insurer still pays something. Martha: I’m thinking about switching to the new plan they’re offering. Have you

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By James Kwak

The scene: Two well-dressed, fully employed people sitting at a table in the chic café at their workplace.

Martha: Do you like your health plan?

George: I love it.

Martha: How much do you pay for your plan?

George: About $550 per month.*

Martha: Do you have a deductible?

George: I have a $1,000 deductible for my whole family.

Martha: What about co-payments?

George: I have to pay 20% of the cost for hospital stays and outpatient surgery.

Martha: What if you just want to see the doctor?

George: I pay $25 to see my primary care physician, and $40 to see a specialist.

Martha: Can you see anyone you want?

George: I pay more if I see people out of network, but the insurer still pays something.

Martha: I’m thinking about switching to the new plan they’re offering. Have you heard about it?

George: No. What is it?

Martha: Well, it covers everything, including vision and dental. And you can see anyone you want.

George: How much does it cost?

Martha: Nothing. There are no premiums and no deductibles or co-payments. Well, you may have co-payments for prescription drugs, but there’s an annual maximum of $200.

George thinks.

George: I think I’ll keep my health plan. I just like it.

End scene.

All those people saying that that Medicare for All will take away people’s health insurance against their will? And that some people would rather be able to keep their current plans, so we should instead just have a public option? They are George.

Health insurance is an intermediate financial product. It’s a contract you buy that pays you money in certain states of the world. It’s not something that people want in and of itself. They don’t want choice in insurance plans for the sake of having choice. They want health care, and someone else to pay for it.

That’s Medicare for All, at least in the Bernie Sanders bill (also endorsed by Elizabeth Warren, although they differ in the political tactics of how to pass it). It gives you all health care that is “medically necessary or appropriate for the maintenance of health or for the diagnosis, treatment, or rehabilitation of a health condition”—for free.

You can argue that this will be expensive—although Warren has produced a detailed plan for how to pay for it. You can argue that Warren’s financing scheme will be bad for the economy—although it’s hard to ignore the fact that the transfer of wealth from the very rich to everyone else would be an enormous economic stimulus.

But you can’t in good faith argue that Medicare for All is bad because it forces people to give up their existing health insurance. Because at that point you are arguing that people are like George: Given the ability to see any provider for free, they would choose to continue paying thousands of dollars in premiums and cost sharing to get access to a limited network of doctors and hospitals. And even given the low opinion that much of the political class has of ordinary voters, that’s a bit much.

* All figures for George’s current plan are from the Kaiser Family Foundation’s 2019 Employer Health Benefits Survey, and are based on the average costs for a PPO plan (the most common type of plan at the large employers whose employees are most likely to be satisfied with their health insurance). Employee contribution: p. 100. Deductible: p. 112. Co-insurance for hospitals and surgery: p. 128. Co-payments for doctors: p. 131. George is also indirectly paying the employer contribution (more than $14,000 per year) in the form of lower wages, but I assume that, under either Sanders or Warren, employers would end up paying a similar amount, at least in aggregate.

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