Bridging Democratic Disagreements on Healthcare

Most political observers agree that Democrats should “focus more” on healthcare in their public messaging. Voters list healthcare costs as a top concern and consistently trust Democrats more than Republicans on the issue. The more Democrats can make elections about healthcare policy, the better.

But what should Democrats actually say they want to do about healthcare? There’s broad agreement within the party on reversing the Trump Administration’s cuts to Medicaid and reinstating the Affordable Care Act premium tax credits the Trump Administration let expire. But beyond that, Democrats disagree, with ideas ranging from Medicare for All to Medicare for All Who Want It (some kind of Medicare opt-in existing alongside private insurance) to Medicare for Some More (e.g., for kids or for adults ages 50-64) to some kind of public option.1 These disagreements muddy the party’s message and make it hard for the public to know what exactly they are getting on healthcare if they vote for Democrats. The party’s default approach is often a lowest common denominator message that emphasizes the narrower things they agree on, like reversing Medicaid cuts and reinstating ACA credits, which are vital but affect fewer than one-tenth of Americans combined. There’s nothing in that message for the other 90% of Americans, many of whom also have big gripes about healthcare costs.

Timing is also a concern. Last year, I described something I called the Affordability Conundrum: voters want immediate cost-of-living relief on necessities like housing and utility bills but both supply-side and demand-side solutions are often inadequate for delivering it on the timeline and scale that voters desire. Healthcare has its own version of the Affordability Conundrum. People want relief from high (and unpredictable) healthcare costs today, but the deep structural problems that help produce higher costs can take many years to fix. Most proposals pick one approach or the other: either immediate relief that ignores broader structural problems (e.g., reinstating ACA premium tax credits) or structural reforms that could take years to generate lower consumer costs.

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A new proposal offers a promising alternative. The Kitchen Table Project — a group of some of my former Biden Administration colleagues and other outside experts — recently released a new paper on healthcare reforms. The centerpiece of the proposal is a monthly cap on out-of-pocket costs for every American. They propose either a flat cap (e.g., $250/month for everyone) or a scaled cap that rises based on income. The cap is accompanied by various other reforms to help offset the cost of the proposal, like site-neutral payments, addressing Medicare Advantage overpayments, capping prices in certain highly concentrated healthcare markets, and expanding the supply of doctors. The full report offers additional detail.

I like the out-of-pocket cap as a potentially unifying healthcare proposal for Democrats for several reasons:

• It saves families an enormous amount of money and psychological strain about large and unpredictable healthcare costs

• It directly addresses what voters identify as their most significant healthcare concern — monthly costs

• It can deliver tangible relief quickly

• It is simple and easy to explain to the public

• Unlike many other prominent healthcare proposals that help only a subset of the public, it benefits everyone

• It has worked well in Japan, delivering cost certainty for families alongside high-quality healthcare

• And it is compatible with whatever other healthcare reform a Democratic policymaker may want to pursue, from Medicare for All to ACA expansion, because none of these programs currently have a monthly out-of-pocket cap

As the report notes, policymakers would need to hash out several details to actually enact such a cap. They would need to choose the cap amount — the report prices out both a $500/month and $250/month cap — and decide whether the cap would vary by income (as it does in Japan) or remain the same for everyone. They would also need to decide whether to reduce the cap after it has been hit multiple months in a row, as Japan does to ease the burden on people with chronic illnesses requiring extended treatment. Finally, they would need to decide how quickly to put the cap into effect. These details will dictate the impact on families and the ultimate cost of the proposal.

While some will doubtlessly complain that imposing cost caps will distort healthcare markets, that ship has sailed. Recent research shows that consumer cost-sharing does not produce the comparison shopping that would discipline prices. Moreover, cost-sharing leads patients to cut useful care along with bad, producing negative health consequences. Consumer cost sharing does not produce meaningful cost control; it mostly shifts just shifts high costs onto consumers.

Serious healthcare reform is always politically fraught. The out-of-pocket cap and accompanying structural reforms would take a bite out of hospitals, doctors, insurers, and pharmaceutical drug manufacturers, and they won’t be happy about it. But the out-of-pocket cap gives Democrats a simple, understandable, and workable proposal that should retain public support even in the face of industry attacks.

Addendum:

Since I’ve gotten some questions from folks, I want to say explicitly what I said implicitly in the body of this post: this proposal, despite the merits I identify above, does not address every problem in our healthcare system. Most notably — and as the authors of the report note — it does not solve the problem of high healthcare premiums, which are also a large drain on family budgets. Policymakers need to pursue other robust structural policy options (not just targeted subsidies) to address premiums to comprehensively reduce healthcare costs for families. It’s also important for the party to continue developing and debating ideas to address a host of other issues like rural healthcare access and the quality of maternal care. And for supporters of a single payer healthcare system (like me), it’s important to continue pushing for ways to get from our current system to that system as quickly and painlessly as possible. But I think an out-of-pocket cap is a good potential addition to core Democratic healthcare messaging because of its simplicity and the benefits it can offer everyone.