I was wrong, Medicare for All does not ban private insurance

12/05/2019 12:50:00 PM

A major theme in the first Democratic primary debate was whether the candidates support abolishing private insurance. Sanders, Harris, Warren, and De Blasio each raised their hands when the question was asked: "Many people watching at home have health insurance through their employer. Who here would abolish their private health insurance in favor of a government-run plan?"

Abolishing private insurance is a little different than banning private insurance though. A plan that gives everyone a public insurance plan could "abolish" private insurance by causing people to opt not to buy it, without it being illegal to do so. However, Warren, Sanders, Harris and many other members of the Senate are cosponsors of a Medicare for All bill that says

it shall be unlawful for a private health insurer to sell health insurance coverage that duplicates the benefits provided under this Act.

Harris tried to walk back her answer by saying she misheard the question and doesn't actually support banning private insurance, which left many commentators wondering whether her statements were consistent with the bill she cosponsored.

The idea that Medicare for All makes private insurance illegal (for everything covered under the public plan) has become conventional wisdom among wonks.

Charles Gaba:

Jon Walker:

It is also meant to aggressively focus on equality by denying everyone, except the rich who can afford concierge medicine, a way to pay for faster treatments by banning duplicate insurance.

Dylan Scott:

Under the Medicare for All bill written by Sen. Bernie Sanders (I-VT), every American would be moved into a government health plan within a few years. Private insurance effectively would be banned from covering most major medical care.

Ezra Klien:

This is evident in the text of Sanders’s bill, which doesn’t actually abolish private insurance. It outlaws “health insurance coverage that duplicates the benefits provided under this Act.” If the proposed benefits contracted during the legislative process, it would open more room for private insurers to enter the system.

Benjy Sarlin:

Physicians for a National Health Program erroneously believes that current-law Medicare also bans private coverage:

The NHP would, like Medicare, ban private insurance that duplicates the public coverage to forestall the emergence of a two‐tiered health care system, in which insurers would compete by lobbying to underfund the public part of the system.

Jonathan Cohn:

And even among candidates themselves. Here's what Warren's website says right now about Sanders's bill:

Senator Sanders’s Medicare for All Act allows for supplemental private insurance to cover services that are not duplicative of the coverage in Medicare for All

That's what I thought until it was pointed out that the current Medicare statute actually has a version of this non-duplication clause:

It is unlawful for a person to sell or issue to an individual entitled to benefits under part A or enrolled under part B of this title...a health insurance policy with knowledge tht the policy duplicates health benefits to which the individual is otherwise entitled under this title.

The phrasing is a little different but it's basically the same as the clause in Sanders's bill.

But Medicare does not ban the sale of private insurance to people who qualify for Medicare benefits. For example, Medicare covers dialysis for everyone, even people under 65 years old, but nevertheless private insurance typically also covers dialysis. It is also legal to sell insurance to traditional Medicare enrollees even if that plan covers things that Medicare also covers. So what's up with the non-duplication clause?

Section 303 of Sanders's bill lays bare that the bill does not prohibit private insurance, even for things that overlap with the public plan:

nothing in this Act shall prohibit an institutional or individual provider from entering into a private contract with an enrolled individual for any item or service for which no claim for payment is to be submitted under this Act.

That's clear as day: Since "nothing in this Act" prohibits private contracts, the non-duplication clause must ban balance billing, not private insurance. You can have private insurance pay for things covered by Medicare, so long as it pays instead of rather than on top of what Medicare pays. This is indeed how it works in the current-law Medicare program. Niskanen argues the non-duplication clause in Sanders's bill would cause many doctors to opt out of Medicare and thus preserve rather than abolish private insurance.

It's no secret that Sanders copied this clause from the House Medicare for All bill, which is just the latest iteration of John Conyers's "Expanded and Improved Medicare for All Act" first introduced in the House in 2003. It also has a non-duplication clause. There's even a version of this clause in the Medicare For America plan. All of these non-duplication clauses are obviously based on current-law Medicare, so the most reasonable assumption is that they work the same as current Medicare does—they do not make private insurance illegal for anyone or any thing.

But the clearest version of that comes from Sanders's 2009 amendment. It has a non-duplication clause that says the:

health security program shall prohibit the sale of health insurance in the State if payment under the insurance duplicates payment for any items or services for which payment may be made under such a program.

We called it wrong. The Medicare statute uses "duplicate" as a term of art for what health wonks would call balance-billing. None of these statutes and bills would prohibit anyone from enrolling in both Medicare and private insurance so long as the private plan coordinates benefits in such a way that providers cannot bill both for the same service.