Moving the whole country to public insurance could result in two tiers of health care. In fact, it did in Brazil.
In the middle of a vigorous argument over Medicare for All during the Democratic debate tonight, former Representative John Delaney pointed out the reason he doesn’t support moving all Americans onto Medicare: It generally pays doctors and hospitals less than private insurance companies do.
Because of that, some have predicted that if private insurance ends, and Medicare for All becomes the law of the land, many hospitals will close, because they simply won’t be able to afford to stay open at Medicare’s rates. Fact-checkers have pointed out that while some hospitals would do worse under Medicare for All, some would do better. But Delaney insisted tonight that all the hospital administrators he’s spoken with said they would close if they were paid at the Medicare rate for every bill.
Delaney also brought up another, less discussed fear about Medicare for All: that it will, in effect, set up a two-tiered system, one in which wealthy people can afford to go to the best doctors outside the insurance infrastructure, while others are funneled into the public system. “If you start under-paying all the health-care providers, you’re going to create a two-tier market where wealthy people buy their health care with cash,” he said, while people “like my dad, the union electrician,” will be “forced into an underfunded system.”
A two-tiered system is by no means destined to happen under Medicare for All—more on that later. But some countries that transitioned to single-payer health care have, indeed, found their health systems bifurcating. In 1988, Brazil promised free public health care to every citizen, and it has delivered, in the form of the Sistema Único de Saúde, or SUS. As a result, Brazilians got healthier and lived longer, and they have very few catastrophic health expenditures.
Still, the system looks more like “a safety net with holes,” as one doctor put it to me a few years ago. The public SUS is rife with shortages and long waits. “You have to take four buses to get to the ER,” one physician told me. “Your stomach could explode before you get there.” Instead, wealthy Brazilians go to private doctors using private insurance plans.
A two-tiered system doesn’t have to be a disaster, of course—and it’s not necessarily worse than what we have. (Indeed, just a few years ago, leading health-care economists were arguing for a two-tiered health system in the United States.) In the U.K., some providers take private insurance and cash, while government-salaried National Health Service doctors take all patients for free. Yet the U.K. is still considered to have a better-performing health-care system than the United States. Even one of Senator Bernie Sanders’s favorite countries, Denmark, has a two-tiered health system.
Instead, whether the two-tiered system actually happens, or affects Americans negatively, hinges on the ultimate shape that a potential Democratic administration’s health plan takes. We just don’t know enough yet about what the prospective Democratic victor would be able to get passed through Congress. Would the public system be adequately funded? Then it would work better than the shoddy Brazilian SUS. Would doctors be required to accept Medicare? If so, doctors wouldn’t be able to bill patients privately, period. Perhaps most important, would Medicare reimbursement rates be higher than they are today? That would make doctors and hospitals, and maybe even voters, more likely to accept the plan happily.
