CAP's 'Medicare Extra for All' - What it really is

Beyond ‘Obamacare’: New liberal plan on health care overhaul

By Ricardo Alonso-Zaldivar
Associated Press, February 22, 2018

A major liberal policy group is raising the ante on the health care debate with a new plan that builds on Medicare to guarantee coverage for all.

Called “Medicare Extra for All,” the proposal to be released Thursday by the Center for American Progress gives politically energized Democrats more options to achieve a long-sought goal.

In a nod to political pragmatism, the plan would preserve a role for employer coverage and for the health insurance industry. Employers and individuals would have a choice of joining Medicare Extra, but it would not be required.

That differs from the more traditional “single-payer” approach advocated by Vermont independent Sen. Bernie Sanders, in which the government would hold the reins of the health care system.

Even though the plan has no chance of passing in a Republican-controlled Congress, center president Neera Tanden said, “We think it’s time to go bolder.”

“There is consensus on the progressive side that universal coverage should be the goal and health care is a right,” she added.

The Center for American Progress is a think tank that was closely aligned with President Barack Obama and 2016 Democratic presidential nominee Hillary Clinton. A 2005 proposal from the center foreshadowed Obama’s Affordable Care Act.


Medicare Extra for All

By the CAP Health Policy Team
Center for American Progress, February 22, 2018

Health care is a right: No American should be left to suffer without the health care they need. The United States is alone among developed countries in not guaranteeing universal health coverage.

To address these challenges, the Center for American Progress proposes a new system—“Medicare Extra for All.” Medicare Extra would include important enhancements to the current Medicare program: an out-of-pocket limit, coverage of dental care and hearing aids, and integrated drug benefits. Medicare Extra would be available to all Americans, regardless of income, health status, age, or insurance status.

Employers would have the option to sponsor Medicare Extra and employees would have the option to choose Medicare Extra over their employer coverage. Medicare Extra would strengthen, streamline, and integrate Medicaid coverage with guaranteed quality into a national program.

The cost of coverage would be offset significantly by reducing health care costs. The payment rates for medical providers would reference current Medicare rates—and importantly, employer plans would be able to take advantage of these savings. Medicare Extra would negotiate prescription drug prices by giving preference to drugs whose prices reflect value and innovation. Medicare Extra would also implement long overdue reforms to the payment and delivery system and take advantage of Medicare’s administrative efficiencies. In this report, CAP also outlines a package of tax revenue options to finance the remaining cost.

Medicare Extra for All would guarantee universal coverage and eliminate underinsurance. It would guarantee that all Americans can enroll in the same high-quality plan, modeled after the highly popular Medicare program. At the same time, it would preserve employer-based coverage as an option for millions of Americans who are satisfied with their coverage.

Medicare Choice

Within the current Medicare program, Medicare Advantage provides a choice of plans that deliver Medicare benefits to seniors.

Medicare Extra would reform Medicare Advantage and reconstitute the program as Medicare Choice. Medicare Choice would be available as an option to all Medicare Extra enrollees. Medicare Choice would offer the same benefits as Medicare Extra and could also integrate complementary benefits for an extra premium.

Medicare Extra would make payments to plans that are equal to the average bid, but subject to a ceiling: Payments could be no more than 95 percent of the Medicare Extra premium.


Medicare Extra would be administered by a new, independent Center for Medicare Extra within the current Centers for Medicare and Medicaid Services, which would be renamed the Center for Medicare. To ensure that the Center for Medicare Extra is immune from partisan political influence within the administration, the legislative statute would leave little to no discretion to the administration on policy matters. In this respect, the administration of Medicare Extra would resemble the administration of the current Medicare program and not of the Medicaid program.

Administrative efficiencies

Excessive administrative costs are a key reason why health care costs are so much higher in the United States compared to other developed countries. Medicare Extra would take advantage of the current Medicare program’s low administrative costs, which are far lower than the administrative costs of private insurance. In particular, the cost and burden to physicians of administering multiple payment rates for multiple programs and payers would be greatly reduced.

In addition to having economies of scale and no need to make a profit, Medicare Extra would implement several administrative efficiencies. Providers would only need to report one set of quality measures and physicians would only need to submit one set of clinical credentials. Medicare Extra and providers would transmit claims information and payment electronically. Electronic health records would automatically convert clinical entries into claims information. Importantly, so-called churning between Medicaid and the individual market—in which individuals must frequently enroll and unenroll due to changes in eligibility—would be eliminated.

From the Conclusion

America, the most powerful and wealthiest nation in the history of civilization, has endured a long journey spanning decades to fulfill these principles. The country has slowly added step upon step toward universal health coverage. The ACA was a giant step, and the sustained political fight over the law showed that the American people want to expand coverage, not repeal it.


A Better Single-Payer Plan

By David Leonhardt
The New York Times, February 22, 2018

A new single-payer health care proposal has just come out, and I think it has a better chance of eventually becoming law — in whole or in part — than Bernie Sanders’s plan.

It comes from the Center for American Progress, the influential liberal research group (often known as CAP). The proposal would create a program called Medicare Extra through which any American, regardless of age, could buy health insurance.

The crucial difference between the Sanders plan and the CAP plan is that the CAP version would not force people to give up their current employer insurance coverage. Those who are covered through their jobs could either keep that plan or enroll in Medicare Extra. The Sanders plan, by contrast, would eliminate employer-provided insurance in favor of a single federal system.

Substantively, the Sanders approach has a huge advantage: simplicity. But the experience of the last 25 years — across both Bill Clinton’s and Barack Obama’s presidencies — shows the dreadful politics of pushing people out of their current insurance plan.

There is a lot that I like in the CAP plan.

Ultimately, though, I still favor more modest health care proposals to sweeping, ambitious plans, for reasons of realpolitik.


Several years ago, David Himmelstein and Steffie Woolhandler explained during the debate over Obamacare what was wrong with the public option. It bears repeating today:

The “public plan option” won’t work to fix the health care system for two reasons.

1. It forgoes at least 84 percent of the administrative savings available through single payer. The public plan option would do nothing to streamline the administrative tasks (and costs) of hospitals, physicians offices, and nursing homes, which would still contend with multiple payers, and hence still need the complex cost tracking and billing apparatus that drives administrative costs. These unnecessary provider administrative costs account for the vast majority of bureaucratic waste. Hence, even if 95 percent of Americans who are currently privately insured were to join the public plan (and it had overhead costs at current Medicare levels), the savings on insurance overhead would amount to only 16 percent of the roughly $400 billion annually achievable through single payer — not enough to make reform affordable.

2. A quarter century of experience with public/private competition in the Medicare program demonstrates that the private plans will not allow a level playing field. Despite strict regulation, private insurers have successfully cherry picked healthier seniors, and have exploited regional health spending differences to their advantage. They have progressively undermined the public plan — which started as the single payer for seniors and has now become a funding mechanism for HMOs — and a place to dump the unprofitably ill. A public plan option does not lead toward single payer, but toward the segregation of patients, with profitable ones in private plans and unprofitable ones in the public plan.



By Don McCanne, M.D.

What is this "Medicare Extra for All" proposal by the Center for American Progress (CAP), and where does it or should it stand in the movement for health care for all?

First of all, it is not a single payer proposal. It leaves in place much of our multi-payer system, including Medicare, Medicare Advantage, employer-sponsored health plans, the individual and small group market plans, TRICARE, Veterans Affairs medical care, and FEHBP - the Federal Employees Health Benefits Program. Private insurers continue to thrive - selling us risk-bearing plans favorable to them and/or excessive administrative services. Their iniquitous tools such as excessive cost sharing and narrow provider networks will not go away. The fundamental health care infrastructure remains in place in spite of the fact that some admittedly beneficial tweaks are recommended in this proposal.

What this proposal really is is a glorified version of the public option - a Medicare-like government plan that would be used to attempt to cover those who are uninsured and could be a replacement for those who are underinsured. If you carefully review the CAP proposal you will see that it adds both costs and administrative complexity to our existing health care financing system. It forgoes much of the cost containment and administrative simplicity of a bona fide single payer system.

As one example, look at their description of the administrative efficiencies they tout in their plan. They claim that they "would take advantage of the current Medicare program’s low administrative costs," but their Medicare Extra plan adds other administrative costs and yet it would represent only a small fraction of health care financing considering that most of the existing multi-payer system would remain in place. They claim that electronic submission of claims through electronic health records would provide efficiencies, yet yesterday's Quote of the Day demonstrated that those savings have not been realized and costs were actually increased when considering investments in the technology. They have not seriously addressed the profound administrative waste in our system.

A particular irony in this proposal is that they suggest replacing the private Medicare Advantage plans with private Medicare Choice plans. This reverts to the prior Medicare + Choice plans which were paid at rates of 95 percent of the costs in the traditional Medicare program, allowing them to prove that they could provide higher quality at lower costs. They couldn't, and the program began to tank until it was rescued by the Medicare Advantage program which gave the private plans a tremendously unfair advantage at taxpayer expense. The authors of Medicare Extra don't even give us a hint as to how they will entice the private insurers to jump back into their Medicare Choice plans.

A little bit of history of the Center for American Progress is enlightening. It was founded by John Podesta - Bill Clinton's Chief of Staff. It has professed to represent and advance progressive/liberal values, but it really represents the neo-liberal element that has assumed control of the Democratic Party. Their current CEO is Neera Tanden who lead the forces that successfully blocked the Sanders camp from inserting a single payer plank in the Democratic Party platform, protecting Hillary Clinton who considered single payer to be a threat. The neo-liberals have been very protective of the private insurance insurance industry and have been successful to the degree that they lured many single payer progressives into their camp in support of the Affordable Care Act - legislation designed to protect and enhance the the interests of the private insurance industry. How could we have expected more out of the Center for American Progress than this highly deficient proposal with a pro-industry bias?

Already the media is jumping on this as a new, liberal, Medicare for All proposal. Even the progressive New York Times columnist David Leonhardt is calling this "A Better Single-Payer Plan." Worse, he is falling into line with the comment, "I still favor more modest health care proposals to sweeping, ambitious plans, for reasons of realpolitik." Shades of HCAN and the erection of political barriers to single payer reform. We've said repeatedly, single payer policy is right but it's the politics that are wrong. Don't change good policy; change bad politics!

We can't leave this topic without acknowledging the one bit of good news here. Single payer Medicare for All is a vastly superior model of financing health care - a model we desperately need in this nation - and a majority of the public now realizes that. The neo-liberal Democrats realize that they cannot go into an election touting a model that many feel has fallen far short of our needs, especially when the concept of an improved Medicare for all has gained so much traction. CAP recognizes the threat and takes this challenge so seriously that they have elected to "go bolder" by dummying up a fake Medicare for all plan, calling it "Medicare Extra for All." We just have to be sure that the public is not lured by this siren song. They want the real thing.

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