Medicare for All Would End the Nightmare of “Insurance Churn”

The claim that “if you like your insurance, you can keep it” is the biggest lie in US politics. Your boss has more of a say over your health insurance than you do, and most workers could lose their health plan at any minute. That’s why we need Medicare for All.

Activists rally against the GOP health care plan outside of the Metropolitan Republican Club, July 5, 2017 in New York City. Drew Angerer / Getty

Opponents of Medicare for All often argue that its chief problem is that it forces people to change their current insurance plans (KrugmanChaitRattner). The argument these opponents make is not that Medicare for All will cause people to go uninsured. Rather, it is that it would force them to switch. This switching, called “insurance churn,” is held out as a harm in and of itself, even though the Medicare plan people would be forced to switch to would, presumably, be good.

For many months now, I’ve been arguing against this view by pointing out a simple fact: our current system also forces people to switch insurance. Worse than that, it forces them to switch insurance all the time.

The following is just a partial list of reasons people lose their health insurance plan even when they’d rather not.

  1. Turn twenty-six years old (4.5 million people in 2017).
  2. Turn sixty-five years old (3.7 million people in 2017).
  3. Employer discharges you (21.9 million people in 2018).
  4. Quit your current job (40.1 million million people in 2018).
  5. Separate from your job for some other reason (4.1 million people in 2018).
  6. Employer changes insurance carrier (15 percent of firms in 2018).
  7. Divorce (1.5 million people in 2018).
  8. Move (7.4 million people moved states in 2017).
  9. Lose Medicaid eligibility due to income increase or some other reason (35 percent come off Medicaid within a year, often into uninsurance).
  10. Spouse or parent whose plan you are on dies.

Even if you remain on the same nominal insurance plan, the insurer itself can always change its network of providers, meaning that you could lose your doctor without changing your insurance. The sources of instability in the current system are almost too numerous to count.

The claim that “if you like your insurance, you can keep it” is the biggest lie in American politics. In most cases, it is not up to you whether you keep your insurance. It is up to your boss, who can get rid of your insurance or get rid of you at any time. When pundits and politicians talk about giving “people” the choice to stay on their current insurance, they are not talking about giving you a choice. They are talking about giving your boss a choice.

Your odds of being on your current insurance a few years from now are not very good. And when you lose that insurance, there is a significant risk that it will be replaced with nothing. According to federal government, nearly one in four nonelderly adults face a spell of uninsurance within a given year.

The instability of the American health insurance system, where most people can lose their plan at any moment, is a genuine nightmare. It is the opposite of what insurance is supposed to be like. The idea of insurance is that it is there for you when you need it. It is a way of neutralizing downside risks. But Americans literally have no idea if they will be insured when that horrible moment comes. Insurance churn and coverage gaps mean that we are all a roll of the dice away from devastation.

Ezra Klein

In a new piece, Ezra Klein offers a novel definition of insurance churn:

  1. Researchers use insurance churn to refer to any change in health insurance plans. If I lose my job and become uninsured, that’s churn. If my employer switches insurance providers, that’s churn. If I move from my current job and insurance coverage to another job with a different insurance plan, that’s churn. And so on.
  2. In punditry, though, people will often simplify churn to the question of losing and gaining health insurance. In this meaning, it’s not churn if my employer switches coverage providers, but it is if my employer fires me and I become uninsured.

As a basic matter of fact, the claim made in number (2) is really not true. Overwhelmingly, pundits talk about Medicare for All as being bad, not because it causes anyone to become uninsured, but rather because it causes them to change insurance. That’s the whole gimmick behind people citing these big numbers (150 million, 170 million, whatever) of people who are on private insurance and shaking their head and saying, “Medicare for All would take their insurance plans away.” This whole debate is really about definition (1), not definition (2).

If Klein thinks people often use definition (2) for insurance churn, then I’d challenge him to find anyone doing that. I can’t think of any myself, but I can think of literally hundreds of pieces using definition (1) to attack Medicare for All.

But putting that aside, let’s actually take these two definitions and see what phrases they allow us to say.

Under definition (1), we’d say “Medicare for All eliminates insurance churn after a one-off transitional period while every other proposal forces people to churn from one plan to another forever.”

Under definition (2), we’d say “Medicare for All does not cause anyone to lose their insurance. Bidencare does, however.” The fact that nobody has ever said this (and indeed they almost always say the opposite) proves my point that literally nobody uses Klein’s boutique definition of churn in the discourse. But if they did, imagine what we could say!

Speaking more generally, if continuous coverage is all that matters, then Medicare for All is at least as good as any other proposal because it has universal coverage at all times. If “being able to stay on your current insurance plan if you want” is what matters, then no plan offers that protection and, in the long run, Medicare for All actually is better at that than anything else because it eliminates insurance changes altogether.

Weirdly, Klein accuses me of moving between definition one and definition two in my writings. I have never done that. At times, I talk about how frequently people face a spell of uninsurance (one in four nonelderly adults in a given year). At other times, I talk about how often people churn on and off of their insurance (meaning they either go off of one plan and onto another or off of one plan and into uninsurance). I’ve always consistently defined “churn” as moving away from your current insurance plan.

Besides offering a new definition of insurance churn that nobody else in the discourse has ever used, the only other novelty of Klein’s piece is his observation that Medicare for All does not actually guarantee insurance stability because, though it does so internally within the plan, it is always possible that legislators will change the law at some future point.

This is an interesting, though ultimately pointless, move. Unless Medicare Extra or Bidencare is going to be amended into the text of the US Constitution, they too could be repealed or reformed at some future date by a future government. The possibility of legislative change is thus not unique to any given plan, which is no doubt why we normally just judge plans on their own terms. “A future government could undo that plan” is literally true of all plans of all types in all areas of law, so it’s not a generally useful way to compare plans against one another.

Ultimately, the claim that “if you like your insurance, you can keep it,” which is the genesis of this whole dispute, is as dishonest as it has ever been. It’s the biggest lie in American politics, and Klein has been a leading progenitor of it. He makes no effort to actually defend that statement as true because it clearly is not true. You have very little control of whether you keep your employer-sponsored insurance. That is up to your boss, and he can get rid of your insurance or fire you at any time.

The only prominent proposal that would eliminate insurance churn and make sure that Americans never lose their insurance again is Medicare for All, which has a one-off bout of churn and then allows everyone to hold onto the same plan. Every other proposal keeps the evil churn in place forever — meaning people will be forced to switch plans constantly throughout their lives.