By Robert Field
Should Medicare-for-All replace private insurance? That question, although central to many current health reform debates, presents a fundamental contradiction. If Medicare-for-All were to eliminate private coverage, it wouldn’t be Medicare, which has made room for private insurers from the start.
Medicare could have been designed as a pure single payer with comprehensive coverage for all health care needs. However, that approach would have risked alienating several important constituencies, including the insurance industry, and provoking their opposition. Before the program was enacted, private Insurers enjoyed a sizeable market through which they sold coverage of some sort to about half the nation’s elderly. Medicare eliminated that market but created an attractive new one to replace it. It did this by enabling insurers to sell Medigap policies that filled some of the program’s most significant coverage gaps, such as coverage for vision and dental care, and that reduced or eliminated its sizeable copayments and deductibles. When the program launched, more than 80 percent of beneficiaries who had previously maintained private coverage purchased these new supplemental policies. Medicare also gave some insurers the chance to earn additional revenue by administering claims as carriers and intermediaries.