U.S. Markets close in 55 mins

Warren Maps 3-Year Timeline Toward Medicare for All; Stocks Rise

Misyrlena Egkolfopoulou and Sahil Kapur

(Bloomberg) -- Elizabeth Warren said Friday her Medicare-for-All plan would be implemented over three years, a major concession to the difficulty of fundamentally changing the way Americans get health care. Managed-care and hospital stocks moved higher on the news.

A Medium post Warren published Friday mapped out a strategy to enact a mandatory government-run health care system that she estimates would cost $20.5 trillion but others have tagged at more than $30 trillion.

Warren said she would inch up to Medicare-for-all, starting with a plan to cover children and poor families. That would happen through a legislative maneuver in her first 100 days in the White House, while not actually eliminating private insurance plans until her third year in office.

Health-care companies, which worried about extinction, rallied Friday, leading the S&P 500 Health Index to an all-time high. Among them, some of the nation’s largest insurers such as UnitedHealth Group Inc., Humana Inc., Anthem Inc. and Centene Corp. have climbed more than 5% in Friday’s trading.

The advance in health care is a turnaround from the first nine months of the year, when the industry trailed most of its market peers over drug-pricing regulations and Medicare for All proposals.

Even if Warren wins the White House and Democrats win control of both the House and Senate, Warren’s timeline is still optimistic, given how Congress operates.

She said she would ask Congress to use a quirk in the budget process to allow a simple majority vote -- bypassing the 60-vote Senate threshold -- and “fast-track” a Medicare for All option that would immediately cover children under the age of 18 and families making less than $51,000 a year, and provide an option for expanded Medicare for people over 50.

In the first three years, anyone else could buy into Medicare for All at a “modest” cost, Warren said, before it eventually became free.

By her third year in office, Warren said, “the American people will have experienced the full benefits of a true Medicare for All option, and they can see for themselves how that experience stacks up against high-priced care that requires them to fight tooth-and-nail against their insurance company.”

She added, “I won’t hand Mitch McConnell a veto over my health care agenda,” referring to the current Senate majority leader.

After repeated questioning about how she would finance a government-run Medicare for All system that eliminates private insurance, Warren on Nov. 1 rolled out a $20.5 trillion proposal funded by taxing the rich and large corporations.

Her gradual implementation “will give people time to adjust, people in the industry will have time to look for other jobs, pension plans will have time to start changing their portfolio and it will give the government time to gear up the bureaucracy,” said Gerald Friedman, professor of economics at the University of Massachusetts at Amherst, who consulted on Bernie Sanders’s 2016 presidential campaign on Medicare for All, the basis of Warren’s plan.

The new proposal sets Warren apart from Sanders, who has said he wouldn’t compromise with incremental health-care changes.

But Friedman cautioned that a long transition period could leave the private health insurance industry in shambles.

“If you know that in three years your company is going to be wiped out, then it could create perverse incentives, staff start exiting and companies may become dysfunctional before the government program is set up,” Friedman said.

Warren’s new proposal at least at first ends up looking much like that of her moderate rivals, Joe Biden and Pete Buttigieg: Expanded government-run insurance without mandating it for everyone.

Spokesmen for Biden and Buttigieg quickly weighed in.

“Senator Warren is now trying to muddy the waters even further,” said deputy campaign manager Kate Bedingfield. “We’re not going to beat Donald Trump next year with double talk on health care.”

Buttigieg spokeswoman Lis Smith said, “Senator Warren’s new health care ’plan’ is a transparently political attempt to paper over a very serious policy problem, which is that she wants to force 150 million people off their private insurance -- whether they like it or not.”

Even if Democrats control the entire federal government in 2021, their best-case scenario is a narrow Senate majority that would likely leave Warren far short of the votes to pass Medicare for All. And several key Democrats have pledged not to eliminate the legislative filibuster. But the party is more united around the idea of a government-run insurance option.

The budget fast-track process, known as reconciliation, has been used by majorities in both parties to avoid a filibuster. Democrats under President Barack Obama used it to pass Obamacare in 2010, while Republicans under President Donald Trump tried to use the procedure to repeal the health-care law in 2017 but came up short.

“While Republicans tried to use fast-track budget reconciliation legislation to rip away health insurance from millions of people with just 50 votes in the Senate, I’ll use that tool in reverse – to improve our existing public insurance programs,” Warren wrote.

Still, budget reconciliation creates complications as Senate rules require that such legislation be limited to changes involving taxes and spending. Republicans struggled to shoehorn their attempted repeal of Obamacare, which included regulatory reforms, into the process.

Warren also vowed to take immediate action to lower drug prices in her first day as president, including insulin, EpiPens and drugs that save people from opioid overdoses. A Warren administration would help companies produce expensive medicines as a price-control measure and use administrative authority to ensure sufficient supply.

(Updates with details in first, second, third paragraphs.)

--With assistance from Tatiana Darie.

To contact the reporters on this story: Misyrlena Egkolfopoulou in Washington at megkolfopoul@bloomberg.net;Sahil Kapur in Washington at skapur39@bloomberg.net

To contact the editor responsible for this story: Wendy Benjaminson at wbenjaminson@bloomberg.net

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.