The Public Policy

Medicare For All

Rep. Pete Stark's AmeriCare super-entitlement is indicative of what awaits if Democrats win back Congress.

By 10.30.06

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Last Friday I examined Senator Russ Feingold's universal health care proposal to get a better understanding of what type of health care policies we are likely to see should the Democrats win Congress. While Feingold's approach is arguably modest and incremental, Rep. Fortney "Pete" Stark's proposal aims to get it all in one fell swoop.

Stark's bill (PDF) creates a program called AmeriCare that is little more than Medicare For All. It gives recipients access to the benefits of Medicare Part A (hospital benefits) and Part B (outpatient services). Recipients also have prescription drug coverage similar to that offered by Blue Cross-Blue Shield. All recipients will have to pay a monthly premium and are subject to deductibles and co-insurance.

Like most Big Government solutions, however, AmeriCare limits individual choice. You can opt out of AmeriCare, but only if you demonstrate to the government's satisfaction that you have "health benefits coverage under a group health plan...that is at least equivalent to the coverage otherwise provided under" AmeriCare. So, if you are a young and healthy person starting up a small business and finances are tight, you can forget about temporarily foregoing health insurance or purchasing a low-cost policy that covers primarily catastrophic care. You are going to pay for AmeriCare whether you can afford to or not.

Rep. Stark has promoted AmeriCare as something that "builds on Medicare, an efficient, popular, and successful program, to provide universal coverage with minimal disruption to our current system." According to a fawning article about it in the San Francisco Chronicle:

His program would be financed by contributions from employers, individuals and states, which would kick in to cover their poor residents. Stark said premiums would be kept affordable by using Medicare's administrative structure and getting discounts through the program's mass numbers....

It is estimated that at the outset it would cost the federal government $50 billion to $60 billion a year to get the program running. But advocates estimate that over time, savings would kick in. Money would also be saved by cutting the medical bills of the uninsured, who frequently wait until a problem is serious and harder to treat -- and thus more expensive -- before seeking medical care.


AmeriCare will only cost $50-$60 billion to start! Yeah, right. Apparently Medicare's history hasn't done much to stymie Stark's confidence. In 1965, federal actuaries projected Medicare would cost only $9 billion by 1990. But that's a trifling detail -- they were only off by a factor of seven.

When Stark claims Medicare is "efficient," one can only presume that he is referring to Medicare's supposed lower administrative costs. It certainly isn't efficient when it comes to paying for care. There are wide geographic disparities in Medicare spending: Miami spent an average of $8,414 per beneficiary in 1996, while Minneapolis spent only $3,341. While some of the difference can be explained by higher-spending regions having sicker beneficiaries, much of it cannot. Indeed, one study "found no evidence to suggest that the pattern of practice observed in higher-spending regions led to improved survival, slower decline in functional status, or improved satisfaction with care." Thus, Medicare is wasteful, with one study suggesting one dollar in five spent by Medicare is for care of no obvious benefit. AmeriCare would replicate Medicare's waste on an even bigger scale.

The notion that savings will kick in over time is equally risible. The main culprit of our rising health care costs is that we do not pay enough of our money out-of-pocket for health care. Stark's AmeriCare program only worsens that problem. Recipients will probably pay about $93 per month for their premiums since that is what Medicare recipients will pay for their premiums for Part B in 2007 (only a few wealthy seniors pay premiums for Part A). Deductibles under AmeriCare are $350 for an individual and $500 for a family. Total out-of-pocket costs are $2,500 for an individual and $4,000 for a family. However, if you make less than 500 percent of the official poverty level -- about $47,000 for an individual and $87,000 for a family of four -- government picks up the entire tab once your total costs for premiums, deductibles, and out-of-pocket expenses reaches 7.5 percent of income. And for those under 300 percent of the poverty line, it is only 5 percent of income. With such generous coverage, AmeriCare will control costs the way gasoline controls fire.

Rep. Stark further claims that premiums will be kept affordable using Medicare's low administrative costs and discounts through mass numbers. Looking at Medicare's recent history, it is hard not to conclude that Stark doesn't know what he is talking about. Premiums for Part B of Medicare have risen by an average annual rate of over 10 percent from 2000-2006. For 2007, the increase will be considerably lower, 5.6 percent. Yet that is due to a slowing in health care costs and that, for the first time, Part B will require wealthier seniors to pay higher premiums, thereby subsidizing the premium costs for non-wealthy seniors. In short, Medicare's recent history should inspire no confidence that premiums can be kept affordable.

So let's see: Restricting individual freedom, immense waste, and rising costs -- what else? Oh yes, bureaucratic micro-managing. Under AmeriCare the Department of Health and Human Services will keep a lid on prescription drug costs by encouraging "the use of more affordable therapeutic equivalents to the extent such practices do not override medical necessity, as determined by the prescribing physician." That would seem to give the physician the final say, but the term "medical necessity" can be broadly defined. You say Drug A does a better job of treating your arthritis pain? Well, it's not medically necessary since Drug B controls enough of your pain, according to the omniscient bureaucrats running AmeriCare. Oh, and did we mention Drug B costs less?

None of this even gets into the part of Stark's bill that micro-manages electronic medical records. But hey, the federal government excels at simpler tasks like stemming the flow of illegal immigrants. So why not let it tackle something more complicated like putting all your medical records into computer-readable form?

While Rep. Stark's AmeriCare bill may be too ambitious to be passed any time soon, it does give us a useful guide to how the Democrats would tackle health care. Any proposal will move toward forcing everyone to buy health insurance, providing overly-generous coverage, and increasing bureaucratic meddling. To sell it, they will employ a smokescreen of "lower costs." But don't be fooled. In the long run, programs like AmeriCare will increase costs and exert more government control over your health care decisions.

David Hogberg is an analyst at the National Center for Public Policy Research. He also hosts his own website, Hog Haven.

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David Hogberg is a senior fellow at the National Center for Public Policy Research.  Follow David Hogberg on Twitter.