What Would ‘Medicare for All’ Do to Medicare?

The basic idea of “Medicare for all” is that all Americans should get access to the popular, government-run program. But a new bill toward this goal, the first introduced in the current Congress, would also drastically reshape Medicare itself.

The bill, from Representative Pramila Jayapal of Washington and more than 100 Democratic House co-sponsors, would greatly expand Medicare and eliminate the current structure of premiums, co-payments and deductibles.

Americans would be able to see a doctor and take medicines without paying money beyond the taxes that would support the program. (The precise source of that tax revenue is, so far, unspecified.) The new Medicare envisioned by the bill would cover new benefits, including dental, vision and long-term nursing home care.

It would be wrong to think of the Jayapal bill as simply expanding the current Medicare program to cover more people and more benefits. It also would make major changes to the way doctors and hospitals are paid. This would change not just how Americans get their insurance, but it could also reshape the health care system in ways that are difficult to predict.

The Jayapal bill, to be introduced Wednesday morning, has no immediate chance of passing. Even if it should make it through committee and to a floor vote, it would not be welcomed warmly in the majority Republican Senate or by President Trump, who has turned away from his onetime enthusiasm for single-payer health care approaches.

But as interest in approaches to Medicare for all grows among Democratic legislators and presidential candidates, the detailed proposal is likely to help shape the debate about what kind of changes Democrats hope to make if they retake power.

Currently, Medicare (as well as most private insurance) pays most doctors and hospitals for each service performed. There’s one fee for a standard checkup, and another for appendicitis surgery, for example.

Medicare determines prices for those various services, and medical providers are paid for performing them. Then those doctors and hospitals are largely free to allocate the money they make as they see fit. For-profit hospitals may return some of the dollars to their investors. Nonprofit hospitals might use them to buy new gadgets or upgrade to private rooms — or provide charity care for people without insurance.

The Jayapal bill would upend that system. Instead of paying hospitals per treatment, Medicare would try to come up with an appropriate lump sum payment for every hospital and nursing home in the country — what the bill calls a “global budget” payment.

Representative Pramila Jayapal, Democrat of WashingtonCreditAndrew Harnik/Associated Press

Hospitals would then determine how to offer the care its patients need under that budget. There are some release valves, like an emergency fund in case of an epidemic. The bill would also place restrictions on how hospitals could use the money. They wouldn’t be allowed to spend it on political donations or marketing, for example, or on bonuses to employees who hit productivity targets.

A separate fund, managed by another part of the reimagined Medicare, would provide funding for capital improvements. A hospital would not be allowed to, say, buy an M.R.I. machine with the money from its global budget.

This is similar to how Canadian provinces pay their hospitals. And there is one good model for the system in the United States: In Maryland, hospitals receive this type of budget for most of the care they provide.

But it would be a big change from the way Medicare works now. Hospital budgets would require a kind of government process that doesn’t exist now: a Medicare board that would decide the appropriate payment to every hospital and the set of priorities for hospital and nursing home capital improvements. The government would no longer set payment for each emergency room visit or knee replacement, but it would have to decide how much to pay one hospital versus another.

“This is really an important budgetary tool for cost containment,” Ms. Jayapal said in a conference call with reporters Tuesday. She described the change as simplifying Medicare’s payment system.

The bill imagines all this change happening very quickly. Within a year, the first budgets would be set for every health care institution in the country. By the end of two years, the system would be ready to cover the care of nearly every American. (A different proposal, introduced by Senator Bernie Sanders in 2017, would take four years to switch all Americans from the current system to single-payer.)

This change in budgeting is not intrinsic to a single-payer system. It is possible to imagine a Medicare for all system that instead sets prices for individual medical services, the way Medicare does now. But the Jayapal approach also wants to make changes under the hood of Medicare to contain costs and change some of the incentives around what patients receive.

Different bills will most likely propose different changes. Nearly every single-payer advocate wants to use the system to reduce the cost of health care in the United States — and saving money will almost certainly mean changes to the status quo.

The proposed Medicare changes are a good reminder that, while many politicians use the phrase Medicare for all, the title remains more of a buzzword than a precise description. The Jayapal bill clearly embraces the “for all” part of the message. But its “Medicare” would be a very different system, and its differences could ripple beyond insurance to reshape the kind of health care Americans receive.