Running head: POLICY EVALUATION PAPER 1

Policy Evaluation Paper

LOGAN BAUMER

PSC 370-001
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Policy Evaluation Paper

The 2020 Presidential Election has brought forward several new policies and proposed

reforms to the mainstream political arena, several of which would have been taboo to even

discuss just four years ago for the majority of politicians. This discussion started with Senator

Bernie Sanders in 2016 and his campaign for universal healthcare, immigration reform,

environmental reform, and several other new programs. Just two years later, several new

progressive Democrats were elected into the House of Representatives and helped introduce

more significant proposals such as Medicare for All, the Green New Deal, free college,

affordable housing, and free pre-K education. These proposals were highly controversial, even

Speaker of the House, Nancy Pelosi mocked it as “the green dream or whatever” and ridiculed

the new representatives as “four people…living in a Twitter world” (Certo, 2019). In today’s

political landscape, these proposals are becoming mainstream. This is due to the realization that

there are significant problems that American society is facing and increasing by the day, one of

these in particular is healthcare.

The Problem

To comprehend the problems healthcare faces in the United States, it is imperative to

examine the history of healthcare and insurance in this country. Prior to the early 1900s,

healthcare was a virtually unregulated industry that would be unrecognizable today. Health

insurance was nonexistent, meaning that all patients paid for medical bills entirely out of pocket.

Although commercial insurance existed at the time, these agencies refused to write health

insurance policies due to them unable to find a “way to avoid the risks of adverse selection and

moral hazard…and lacked the means to calculated risks accurately and set appropriate

premiums” (Moseley, 2008). Healthcare costs increased starting in the 1920s due to increased
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quality standards and demand as well as advances in technology and medicine. Americans in the

late 1920s had average healthcare costs of $103 per year or approximately $1,550 adjusted for

inflation, just 5 percent of the average annual income. The Great Depression saw the

establishment of the first “pre-paid insurance plans” where people would make small monthly

payments that would grant them access to inpatient care at specific hospitals. By 1937, nearly 30

of these plans existed totaling over 600,000 members. These were combined to form the

American Hospital Association (AHA) Blue Cross network (Moseley, 2008). At the same time,

Physicians in the primary care sector established their own network, Blue Shield.

Seeing the success of these networks, commercial insurance entered the market and had a

significant advantage as for-profit corporations compared to the non-profit Blue Networks.

Regulations required Blue Cross/Blue Shield to community rate (set premiums based on the

community as a whole) whereas commercial insurance companies could engage in experience

rating (set premiums based on the health history of the policyholder). This resulted in the

massive expansion of health insurance enrollment to covering 142 million Americans by 1950. In

the 1950s and 1960s, healthcare costs skyrocketed with expenditures equating to 4.5 percent of

GDP and rising. The majority of these increases can be linked to cost plus reimbursement

practices, which encouraged physicians and hospitals to charge exuberant fees in order to make

more money. These higher costs were, of course, passed along to policyholders via higher

premiums. These increases proved to be unaffordable to many Americans, such as the elderly

and lower class. As a result, Medicare and Medicaid were established. These programs utilized

the same cost plus reimbursement practices used by commercial insurance, further increasing

healthcare costs and price inflation (Mosley, 2008).

Healthcare costs and insurance premiums continued to increase in the 1970s through the

2000s, creating an ever increasing group of Americans who could not afford health insurance,

but also could not qualify for Medicaid. By 2009, healthcare costs accounted for 17.3 percent of

GDP (Fleming, 2010). In 2010, President Obama signed into law the Patient Protection and

Affordable Care Act to help mitigate this growing problem. The law required Americans to have

health insurance coverage or face a penalty of $695 a year or 2.5% of household income,

whichever is greater (KFF, 2018). The ACA also required businesses to automatically enroll

employees into employer provided health insurance plans, expand Medicaid and CHIP, offer

premium credits or lower premiums to reduce costs for lower income families not eligible for

Medicaid, increase numerous healthcare related taxes, and require insurance companies to cover

those with pre-existing conditions (KFF, 2018). The Affordable Care Act has helped somewhat,

but insurance premiums and healthcare costs are still skyrocketing, up to 17.9 percent of GDP in

2017 and average health insurance premiums costing Americans $7,188 a year and $1,242 in out

of pocket costs (Leonhardt, 2019). Compared to the inflation adjusted figures from 1929,

Americans today pay approximately 444% more for healthcare.

Should these costs continue to increase at their current trends, the Centers for Medicare

and Medicaid Services projects that by 2027, healthcare expenditures will become 19.4 percent

of GDP, Medicare and Medicaid will expand by 7.4 and 5.5 percent annually. Out of pocket

expenses, private insurance, and prescription drugs will increase 4.8, 4.8, and 5.6 percent

annually, respectively (CMS, 2018). These increasing problems with healthcare have made it

necessary to examine and implement reforms. One of these policies being proposed is Medicare

for All.
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Background

Medicare for All is not the first time universal healthcare has been proposed in the United

States. In 1944, President Roosevelt included the right to medical care in his economic bill of

rights. President Truman a few years later also proposed a national health insurance system but

was called “a communist plot” by members of Congress and denounced by the AMA. (Moseley,

2008). In the 1990s, First Lady, Hillary Clinton advocated for a universal healthcare system. The

United States is the only developed country without a free universal healthcare system and one

of a few in the entire world that lacks one. Examples of systems that are allied countries have

include the National Health Service in the United Kingdom, Medicare in Australia, Seguro

Popular in Mexico, and Medicare in Canada.

The Medicare for All Act of 2019 is an introduced bill in the United States Senate by

Senator Sanders, Baldwin, Blumenthal, Booker, and several others. There is a similar bill (H.R.

1384) in the House of Representatives. The bill has been referred to the Finance Committee, but

no action has been taken due to Republican control of the Senate. The Medicare for All Act

would implement a single payer, national health insurance system that would provide complete

health coverage and have no cost at the point of service. Sections 102 and 103 of the bill

establishes universal entitlement and freedom of choice, meaning every resident of the United

States is given coverage and can obtain services from any healthcare provider. Covered services

listed under section 201 include hospital, ambulatory, primary/preventive care, prescription

drugs, medical devices, mental health, substance abuse treatment, laboratory/diagnostic,

pediatric, oral health, vision, audiology, emergency services, and several other categories. Cost

sharing (deductibles, coinsurance, copayments, and other charges) are forbidden under the Act

with the exception of certain prescription drugs and biological products, where there can be a
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maximum cost sharing of $200 per year. Services, drugs, and treatments that are considered

experimental in nature are excluded from coverage in the Act under section 203, however,

individuals can appeal for these services and treatments to be covered. Section 401 of the bill

mandates uniform reporting standards in the form of creating a national database that details

benefits provided, health outcomes, and several other factors. The bill also prohibits duplicative

coverage (from other insurance companies) and drug prices are negotiated with manufacturers.

Drug prices are also lowered via the Medicare Drug Price Negotiation Act, wholesale purchasing

of drugs from other countries via the Affordable and Safe Prescription Drug Importation Act, and

cutting prescription drug prices in half via the Prescription Drug Price Relief Act using the prices

of the drug in other countries such as the United Kingdom and Canada. Implementation of the

bill is guided through a four year transition period, where Medicare eligibility lowers to 55 in the

first year, 45 in the second, 35 in the third, and everyone in the fourth year. Implementing this

policy would make our healthcare system very similar to other countries.

Description of Evaluative Criteria

Due to the Medicare for All Act being proposed legislation rather than law, it would be

arduous to evaluate this policy like one would of legislation that has been signed into law.

Rather, this evaluation will analyze the policy given the contents of the bill and projections based

from it as well as connecting it to a similar program, the United Kingdom’s National Health

Service. There are 3 criteria that are feasible in evaluating the Medicare for All Act:

effectiveness, equity, and political feasibility. (Kraft, 2018). Effectiveness evaluates how well a

policy accomplishes its goals and objectives. In the case of the Medicare for All Act, how well

the legislation would provide universal healthcare for Americans. Equity evaluates how a policy

impacts different groups and whether or not there is a bias towards one group or more general
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equality. In relation to this Act, it evaluates how the system would cover Americans in terms of

financial status and health conditions. Lastly, political feasibility examines how politicians would

perceive the Medicare for All Act and the willingness to support such legislation.

Evaluation of Proposed Policy

From the effectiveness criterion, the Medicare for All Act would be able to achieve all of

its objectives. The bill calls for a widespread reform of the American healthcare system from one

based on private insurance and government programs (Medicare and Medicaid) to a singular

government run system. As discussed in the background, the bill creates a national health

insurance program similar to those in other countries. The legislation would eliminate cost

sharing, reduce prescription costs, and expand coverage into other areas that regular health

insurance does not cover such as dental and vision coverage. The language in the bill is written

in a way to prevent loopholes such as prohibiting physicians from being part of the Medicare

program and also private insurance, ensuring costs stay low.

The National Health Service (NHS) is regarded as one of the most successful

implementations of universal healthcare in the world (Webster, 1998). Established in 1948, the

program was made to unify the United Kingdom’s health systems and provide care for all

residents of the country. The NHS took over the majority of private hospitals and made them

state run. Care at these hospitals and any NHS affiliated institution is completely free. The mass

majority of the things covered by the NHS are also covered under the Medicare for All Act. The

NHS has had a long range of successes including a rapid decline in cancer death rates due to

effective treatments, greater than 80 percent decline in infant mortality rates since 1960, and

drastic decreases in strokes and heart disease due to preventive treatments (Duncan, 2018).

However, the NHS is not a perfect system. Common with other countries with universal
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healthcare, wait times can be incredibly long for procedures and physician visits. Accident and

emergency (ER) wait times can be extraordinary long. The NHS has a goal set for 95 percent of

patients to be seen within 4 hours, the actual rate usually falls below 80 percent. Average wait

times in the United States in contrast are approximately 30 minutes and 90 minutes to receive

treatment (Esposito, 2015). In 2018, more than 4.2 million people were waiting for procedures,

3,000 of whom had been waiting for over a year (Duncan, 2018). Along with long wait times,

there are significant bed shortages throughout the NHS system, resulting in patients having to

travel long distances to receive treatment in particular for mental health. Uncommon drugs and

treatments can also be difficult to access with the NHS, where guidelines prioritize cost

effectiveness. Similar language is found in section 203 of the Medicare for All Act, where

experimental drugs are not covered by the program. With the similarities the two programs have,

it can be reasonably assumed that the Medicare for All Act would achieve its policy goals but

would have similar problems to the NHS.

From the equity criterion, the Medicare for All Act would be a relatively just system in

terms of coverage. Section 102 of the bill states that “every individual who is a resident of the

United States is entitled to benefits for healthcare services under this Act”. Section 104 adds a

non-discrimination clause that prohibits exclusion from the program based on race, color,

national origin, age, disability, sex, gender identity, sexual orientation, pregnancy, and medical

conditions. Even non-citizens are protected under this Act, however there is language in the bill

that prohibits people from being covered who enter the country exclusively to use the benefits

provided by the program.

From a macroeconomic perspective, equity diminishes, and inverses compared to the

current healthcare system. This is primarily from the potential economic costs of implementing
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the program. Studies show that implementing Medicare for All would result in “the disposable

income of skilled households declining by 16.76%” due to a significant increase in taxes that

exceeded the costs of health insurance currently paid (Kelly, 2020). Unskilled or lower class

households would fare far better under Medicare for All. Their income tax rate would stay the

same and increase their “disposable income by 7.49%” (Kelly, 2020). In the current system,

lower class individuals suffer due to their inability to afford expensive health insurance

premiums whereas the middle and upper class can afford access to care.

From a political feasibility criterion, the Medicare for All Act would struggle due to the

United States’ partisan political system and the power of interest groups. A rapidly increasing

number of Democrats support the bill, with 15 Senators from the party listed as authors on the

legislation. All Republicans, who have a majority in the Senate, strongly oppose this legislation

along with numerous other bills that Democrats have proposed. Besides from the ideological

argument that it is a “socialist” policy and will greatly increase government influence in

healthcare, Republicans also disagree with how the bill would be funded (largely through tax

increases).

According to Senator Sanders, Medicare for All would cost 47 trillion dollars over the

next 10 years but would save 5 trillion dollars compared to retaining the current healthcare

system. His payment plan uses the 30 trillion dollars that is currently projected be spent by

federal, state, and local governments over the next 10 years along with 17.5 trillion dollars of

additional revenue sources. These include a 4 percent “healthcare tax” would be paid by all

employees on income exceeding $29,000, meaning a family making $60,000 would pay an

additional $1,240 in taxes. Employers would pay a 7.5 percent healthcare tax on payroll

exceeding the first $1 million. The top marginal tax rate would increase to 52 percent on incomes
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exceeding $10 million. Itemized deductions would be limited to $50,000 and capital gains would

be taxed the same as wages. The estate tax exemption would decrease to $3.5 million and include

a progressive increase in the tax up to 77 percent. The federal corporate income tax rate would

increase from 21 to 35 percent. Lastly, an additional “extreme wealth tax” would be added that

ranges from 1 to 8 percent (Sanders, 2020). These revenue proposals would be highly

controversial among Republicans, especially the first two, even though most families and

corporations would pay less in those additional taxes compared to the insurance premiums

currently paid.

As mentioned earlier, interest groups would have significant influence in the fate of this

bill. On the vote to repeal the Affordable Care Act in 2017, numerous interest groups such as

Heritage Action, the Club for Growth, Freedom Partners, and Americans for Prosperity

convinced Republicans to vote in favor of repeal, even though their constituents in many cases

favored keeping the legislation (Reynolds, 2017). It is likely that these groups along with

numerous lobbyists from the private insurance industry would try to convince politicians to vote

against the Medicare for All Act. If the bill was likely to pass, these same groups would attempt

to add language through amendments to benefit themselves and add loopholes to regulations.

Alternate Proposals

The Medicare for All Act would certainly be a significant reform of healthcare in the

United States. I believe that a public option is indeed needed in order to provide better care for

Americans, especially those who don’t qualify for Medicaid and can’t afford to pay for health

insurance even under the Affordable Care Act. My primary concerns with the legislation are its

exclusion of covering experimental drugs, treatments, and procedures as listed in section 203.

Individuals with rare diseases, cancers, and other conditions that require treatments that the
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government considers “experimental” would be forced to pay out of pocket. The costs for such

services would likely be unaffordable for the majority of Americans. I would amend the bill to

require experimental drugs, treatments, and procedures to be covered under the plan. Secondly, I

am concerned about the potential for increased emergency room wait times, bed shortages, and

increased wait times for procedures that are common in the NHS to also occur under this plan.

There must be a high emphasis on maintaining patient care and quality standards as they

currently are rather than reduce them to cut costs. In addition, funding protection must be

implemented to ensure that the system would not be cut in budgets, which would lower the

quality of the system. This has happened several times with the NHS, the last being in 2015

(NHS Support Federation, 2016). Americans who choose to purchase private insurance in

addition to the Medicare program should be given an option to either have a partial tax credit

based on their insurance premiums paid. Those with private insurance would likely use private

healthcare providers that are outside of the Medicare system, lessening the burden on the

Medicare system. Lastly, the United States has been a key innovator of new drugs, treatments,

and procedures. This proposed system needs to ensure that this research will continue and even

expand to bring the best possible healthcare to all Americans.

Conclusions

The United States is facing its greatest health crisis in 100 years. Millions of Americans

who depend on their employer provided health insurance are in jeopardy of losing it due to

massive layoffs from the Coronavirus pandemic. Without this health insurance, healthcare

becomes unaffordable for the majority of Americans. This crisis has shown the significant

vulnerabilities in our current healthcare system but has also shown its best through its heroic

workforce. Healthcare reform policies such as the Medicare for All Act would provide people
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with peace of mind knowing that they will have healthcare that they can actually afford. As

mentioned previously, it is not without its disadvantages, but I believe it is a thoughtful proposal

to consider in the ongoing debate about healthcare reform.

References

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