Why West Virginia Wins With Medicare for All
Private insurers & big pharma are spending a fortune to scare folks about “Medicare for All”. Here’s the truth.
Medicare For All would save West Virginians money, provide better health care, and produce better outcomes. It would be a massive stimulus for West Virginia’s workers, families and small businesses, and it would immediately put $10 million back into West Virginia’s budget.
The biggest charges against Medicare for All are: 1) it would hurt current Medicare recipients 2) it would limit choices for patients and 3) it would be too expensive. All are false.
In fact, Medicare for All would be a huge benefit for the 433,000 West Virginians currently receiving Medicare. It would save them a great deal of money. It would add long term care benefits and hearing, vision, and dental to their current coverage, and would eliminate Medicare’s current premiums, co-pays and deductibles. That means one in every four state residents who now receive Medicare would instantly be better off financially.
Medicare for All would likewise eliminate co-pays and deductibles for every West Virginian receiving employer health coverage. And with everyone covered, pharmaceutical companies would have no choice but to negotiate prices, bringing down costs for everyone. By some estimates, costs would decrease by as much as 50 percent for brand-name drugs.
Medicare for All would also give West Virginians the only choice that matters: the ability to choose your doctor and hospital, without interference from corporate executives or your boss.
Under our current private insurance system, West Virginians have little to no choice. There are only two private insurers in the entire state: Highmark BlueCross BlueShield, and CareSource. In 11 counties, including the entire Eastern Panhandle, Highmark is the only private insurer. These private insurers limit your choices, including your choice of insurance company.
Today, if you like your doctor and they don’t accept your insurance — or, if the insurer won’t work with them — your choice is taken away. Under Medicare for All, you would never again have to worry about losing your doctor. And your doctor won’t have to deal with the ever-changing policies of a private insurer.
Many politicians and lobbyists also claim that Medicare for All would be too expensive because, they say, ‘the private sector is more efficient than government’. False. The overhead for private health insurers has ballooned from an average overhead of 9% in 1970 to an average overhead between 12% and 18% today. By contrast, Medicare continues to operate with closer to a 3% overhead.
Why the big difference? Simple. Private health insurance corporations aren’t primarily insurance corporations — they are primarily private corporations. This means they’re are not primarily concerned with making sure their customers get the care and treatments they need, efficiently and affordably. Private corporations are primarily concerned with maximizing returns for shareholders.
There are two ways that they do this, and both are baked into the business model of private insurance.
How Private Insurance Insures Its Own Bottom Line
The way that insurance companies in general make profits is simple. They accept monthly premiums from all their members, and then they deny as many claims as possible. If they must pay out a claim, they fight to pay out as little as legally possible. After they pay their fixed business costs, their profits are simply what they collect from their members minus what they pay out in the form of claims.
To maximize profits, private insurers pay legions of middle managers to deny our claims, so that more of our premiums can be churned into profits and returns Those, in turn, are paid out as bonuses for executives and lobbyists or dividends to investors. Out of every dollar of premium you pay here in West Virginia, 12 to 18 cents don’t insure anything — except their bottom line. Much of this wealth simply leaves the state.
Looking at the only health insurer that covers all 55 counties in WV, the Kaiser Health Network reports that “Scott Serota, CEO of Blue Cross and Blue Shield Association, earned a bonus of $1.6 million on a base salary of $856,055, and BCBSA chief lobbyist Alissa Fox received a $130,000 bonus plus base pay of $278,760.”
Under Medicare for All, those middle managers’ salaries, those executive bonuses, and any investor payouts would be removed from the primary health care equation.
The second way that private insurance corporations make money is by choosing their customers. Until the passage of the Affordable Care Act, this was flagrant: private insurers declared that “pre-existing conditions” (like diabetes, thyroid conditions, depression, or any other chronic physical or mental condition) were reason enough to deny a patient insurance.
Since the ACA, insurers aren’t legally allowed to be as blatant as they had been, but they still choose their customers. One way they do this is by charging people more for conditions like being old, or living in the wrong zip code, or needing health care. When premiums go up enough, people drop their insurance to afford other necessities like food or rent. This leaves the private insurer with a healthier pool of members, each of whom are less likely file a claim that might cut into the insurer’s profits.
The other way that private insurers choose their customers is by simply leaving markets that they deem unprofitable or too risky — which is exactly why West Virginia has only two private insurers. (Rebecca McPhail from the WV Manufacturer’s Association recently argued that West Virginians can tolerate more toxins in our water because West Virginians are more obese and drink less water than the average American. Small wonder private insurers are leaving the state.)
The fact that insurance companies choose their customers is a big reason why the champions of Medicare for all started with Medicare for seniors in 1965. And it’s the major reason why the various watered-down “Medicare for All Who Want It” schemes would fail to achieve the same savings for Americans as expanding Medicare for All and extending it to everyone will.
“Medicare for All Who Want It” is appealing to private insurers and their lobbyists precisely because they know that they would be able to continue raking in profits by cherry-picking their members. Under these watered-down proposals, private insurers will protect their bottom line by maneuvering to only cover the young, healthy, and wealthy while leaving older, sicker, and poorer patients for Medicare.
Good for the State, Good for Public Employees & Good for All Workers
At the state level, Medicare for All would immediately free up $10 million annually that currently goes towards minimally funding the Public Employees Insurance Agency (PEIA), and every public employee in West Virginia would immediately benefit too.
The 2018 teachers’ strike was, in large part, a response to West Virginian officials only providing the bare minimum of funding for the PEIA.
As retired PEIA Finance Board member Perry Bryant told WCHS-TV in February of 2018, “You have a 5 or 6 percent rate of inflation [for the PEIA], which for health care is not out of line with what you see with a Blue Cross/Blue Shield, that would require about $50 million to $60 million a year just to keep even. When [state officials] appropriate only an additional $10 million, you’ve got $40 million to $50 million worth of harm that you’re going to have to pass on to employees.”
The ‘harm’ that the PEIA passes on to public employees appears in the form of “steep increases in co-pays, out-of-pocket maximums for medical care, as well as major increases in prescription drug costs,” all of which end up coming directly out of a public employee’s pocket.
Public employees would save on all those out-of-pocket costs and get to keep more of their paycheck. The state would save at least $10 million per year and would never again have to engage in legislative negotiations to decide how to make sure that public employees aren’t seeing their real incomes fall.
For conservatives who want to eliminate state agencies, eliminating the PEIA and freeing up tens of millions from the state budget should be a major perk of Medicare for All.
Looking beyond the public sector, the average income for a household in West Virginia is about $44,000. Let’s take a hypothetical household where only one parent is working as a contractor, bringing in $44,000 in contracts a year.
According to the Kaiser Health Foundation, the average low-cost bronze health insurance plan for a 40-year-old in WV costs about $500 a month in 2019, or about $6000 a year. For this contractor to insure only themselves with a relatively cheap plan, the contractor is spending ~14% of their annual income just on insurance premiums before even stepping foot into a doctor’s office or filling a single prescription.
With that, the contractor has ‘access’ to healthcare. The problem is, having ‘access’ to healthcare by paying $6000 in premiums is a bit like having ‘access’ to a Rolls Royce by slipping $50 to a doorman on your way into the dealership. You still might not be able to afford the car, and the person you paid can’t really sell you the car.
If the contractor suffers any sort of illness or injury, they will need to factor in costs for out-of-pocket co-pays, x-rays, prescriptions and probably return visits. If the contractor becomes even more sick, they won’t see their insurance start paying for anything until they personally spend around $6000 to reach his bronze plan deductible.
Before insurance starts paying for anything, the contractor has been forced to spend $12,000 out of pocket — or around 27% of his income. This doesn’t even include if they have a partner and a family who also need to be covered and may need to receive care.
If we change the scenario and look instead at an employee making $44,000 with the same plan from his employer, the math only changes slightly. Their employer is paying the $6000, while the sick employee is left on the hook for the $6000 deductible before insurance kicks in.
And that’s only if the employee hits the deductible before being fired for taking too many sick days, in which case they lose their insurance anyway. Under Medicare for All, no one would have to worry about losing their insurance because they lost their job, for any reason. Both employer and employee save money under Medicare for All; and employees gain added security that they will be covered seamlessly, even if they lose their job.
People may worry about taxes going up under Medicare for All, but so long as the tax isn’t as high as 14%, both the contractor and the employee in these scenarios will be saving money. For the contractor, if the tax is even as high as 5%, he will be keeping the other 9%. That’s $3850 of his hard-earned money that he will keep; or, more than entire extra month of income on the year. And that doesn’t include the savings he’ll see from lower pharmaceutical drug prices and no deductibles or co-pays.
West Virginia’s families, workers and small business owners would all have more freedom and more money in their pockets under Medicare for All.
In short, Medicare for All is excellent for everyone but Big Pharma and insurance companies — those who profit from our sickness. Don’t be fooled by the millions of dollars they are spending to convince us otherwise.
