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What could the Democratic Party’s health care debate mean for Duke?

Two sides of the Democratic Party’s health care are emerging, and the debate could have far-reaching implications for Duke.

David Anderson, research associate for the health policy evidence hub at the Duke-Margolis Center for Health Policy, identified the two basic ways of dividing the current health care debate—a Medicare for All plan, such as the one proposed by Sen. Bernie Sanders, I-Vt., and a more “keep and fix” strategy like the one proposed by former Vice President Joe Biden.

Anderson explained that a more moderate plan like Biden’s would “likely have minimal effects on Duke,” whereas Sanders’ would have more significant implications.

However, Don Taylor—professor in the Sanford School of Public Policy—cautioned against predicting the exact effects of the policies before the particulars are set out. He explained that “the details are very important” in the political world of health policy.

Sanders’ Medicare for All plan, Anderson said, is a single-payer health plan that would completely revamp the U.S. health care system with a system of universality that would cover most people with no cost sharing. 

On the other hand, Anderson added, Biden’s approach focuses on keeping the current Affordable Care Act system intact while patching the gaps. Biden also plans to address “the fact that the subsidy limit of the [ACA] is too low right now,” Anderson explained. 

He said that the income limit to qualify for subsidies for relief is currently 400% of the federal poverty level, which, for single individuals, goes up to about $49,000 a year. 

Anderson referred to this issue as the “family glitch.”

“Once you get above that [income] cutoff point, especially as you get older, insurance gets real expensive real fast,” he said. “If you went on the market tomorrow and you had no subsidy, you're looking at $150, $200 a month. Approaching 40 with the same situation, [the] cheapest plan I'm looking at is $500 a month. That adds up fast.”

Biden’s plan, essentially an “ACA version two,” Anderson said, would mend this family glitch by increasing the income eligibility cutoff to receive subsidies that would reduce patient out-of-pocket costs.

Although Anderson said Biden’s plan “does a better job of dealing with the payment reform side,” it lacks the universality component highlighted in Sanders’ plan. Under Biden’s proposal, there would still be programs with income limitations, sign-ups and other administrative burdens that discourage or exclude healthcare recipients, he added.

If a plan like Sanders’ Medicare for All were to be adopted, Anderson predicted it would likely have repercussions for Duke, depending on how the proposal is structured and how Duke calculates its payer mixes or blended payment rates, the “mixture of payment streams that make up a clinician’s revenue stream.” 

He explained that the primary types of patient insurance—ranging from the highest paying to the lowest paying—are commercial, exchange, Medicare/Medicare advantage, Medicaid and uninsured. 

“Clinicians tend to prefer to serve as many commercially insured patients, as they get paid quickly and at a high level,” he wrote in an email to The Chronicle.

Medicare-for-All's universality would "check [any student or employee] who's fallen through the cracks" and ensure everyone is covered, he said. Given Sanders' current proposal, he predicted that Duke may lose money in some payer mix or blended payment rate calculations.

"If your blended payment rate is above your average Medicaid/Medicare and commercial average, it's more money [for Duke],” Anderson said. “If your blended rate is close to what Medicare pays, then a university hospital like Duke is probably looking at losing money.”

Since the Duke University Hospital system is a key academic, intellectual and financial component of the University, Anderson asserted that a significant amount of money coming out of the hospital would "probably spill over to the campus side.” 

Anderson further elaborated on the broader financial implications of both proposals. In the next 10 years, the United States is projected to spend roughly $35 trillion on healthcare, he said. Of that amount, about half would be for the federal budget—Medicare, Medicaid and federal employee health benefits—and the other half would be for the private sector.

“Sanders' plan is projected to spend between $33 and $34 trillion dollars over the course of the next decade,” Anderson said. “97% of [that] is going to be on the federal bucks instead of distributed elsewhere. So, from a societal point of view, there's no new cost. Instead, it's a massive redistribution of where those costs are being incurred and where those costs are being paid.”

To Anderson, the main financial question is whether those $17 to $18 trillion extra dollars on federal books would be paid for through taxes, borrowing or inflation. He said that Sanders's plan would include financing from all three sources. 

Biden’s plan would save the federal government money more than Sanders’ because its Medicare buy-in strategy would allow people to buy Medicare at age 50 or age 55, he added.

However, according to both Anderson and Taylor, the biggest factor to consider for the Democratic Party’s debate on health care pertains to the implementation of the proposed plans and getting a plan past the Senate. 

“The most important numbers in federal health reform are 60, 218 and 1,” Taylor said. “The number of votes it takes to break a filibuster in the Senate, pass a bill in the House, and one president who is willing to put their power and credibility on the line for something that might backfire politically.”

Anderson argued that it’s less about the differences and more about the commonalities if any of them hope to pass the Senate.

"The biggest thing is not the differences between the Democratic candidates," he said. "Everything will be filtered through whatever they can get through the Senate. In my opinion, [we should] hold constant whatever is [the same] be between the candidates in the Senate because the Senate's going to approve pretty much whatever... they're going to approve, [regardless of] who's president."

Taylor added that “for context, the last time the Democratic Party had 60 votes in the Senate was when Obamacare was passed. He noted that there were not even 10 votes in that same caucus for the version of Medicare for All that Sanders has proposed. 

“A more practical big idea for health policy is ‘universal coverage’ or developing a way that all persons have access to health care services they need,” Taylor wrote in an email to The Chronicle. “This will inevitably mean continuous reform of the clunky, employer-based health care system that we have had for more than half a century.”

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