Largely because of support for Bernie Sanders’ Medicare for all plan provided by both Alexandria Ocasio-Cortez and 2020 presidential hopeful Kamala Harris, the question of whether this plan is viable and affordable has jumped to the forefront of national discussions.
Detractors who claim that such a plan is “un-American” and/or “socialist” have always abounded from the right, even though every other advanced country in the world—including Canada, Russia, Saudi Arabia, Australia, and nearly all of the continent of Europe—already has a comprehensive health care plan provided by the government for an average of less than half the cost of our privately funded system. This debate continues to rage even though empirical evidence seems to indicate we should be able to greatly benefit from such a system.
It should be a no-brainer that if even Russia and Saudi Arabia could find a way to do this at a fraction of our current costs, the U.S. should be able to do this too—but of course, the nay-sayers are numerous, and also loud.
Those nay-sayers include people like former New York Mayor Michael Bloomberg and would-be Independent 2020 challenger/spoiler Howard Schultz, the billionaire former Starbucks CEO.
Watch the video below to see where Sen. Kamala Harris laid down her marker on Medicare for all.
The key point that Harris brings up is the fact that health care costs for countries that have implemented a national insurance pool are significantly lower than ours.
The U.S. spent $8,233 on health per person in 2010. Norway, the Netherlands and Switzerland are the next highest spenders, but in the same year, they all spent at least $3,000 less per person. The average spending on health care among the other 33 developed OECD countries was $3,268 per person.
If all these other countries can do it, we can do it—and it’s likely we can do it much better than we are now. The issue of what is or isn’t covered by your plan, such as pre-existing conditions, lifetime caps, whether you have to worry about out-of-pocket costs and co-pays, and whether a particular physician is in or out of your network—would completely vanish. Totally gone, forever. Every doctor would be available to any person who had a need for care, period.
Still, various state-based attempts at single-payer have run into cost problems in California.
[California Assembly Speaker Anthony] Rendon announced late Friday afternoon that the bill, SB 562 by state Sens. Ricardo Lara (D-Bell Gardens) and Toni Atkins (D-San Diego), would not advance to a policy hearing in his house, dampening the measure’s prospect for swift passage this year.
“SB 562 was sent to the Assembly woefully incomplete,” Rendon said in a statement. “Even senators who voted for SB 562 noted there are potentially fatal flaws in the bill, including the fact it does not address many serious issues, such as financing, delivery of care, cost controls, or the realities of needed action by the Trump Administration and voters to make SB 562 a genuine piece of legislation.”
Even Bernie Sanders’ home state of Vermont had problems with funding back in 2014.
“It is not the right time for Vermont” to pass a single-payer system, [Governor] Shumlin acknowledged in a public statement ending his signature initiative. He concluded the 11.5 percent payroll assessments on businesses and sliding premiums up to 9.5 percent of individuals’ income “might hurt our economy.”
Vermont’s outcome is a “small speed bump,” said New York Assembly member Richard Gottfried, who’s been pushing single-payer bills for more than 20 years. But opponents says it’s the end of the road.
“If cobalt blue Vermont couldn’t find a way to make single-payer happen, then it’s very unlikely that any other state will,” said Jack Mozloom, spokesman for the National Federation of Independent Business.
“There will never be a good time for a massive tax increase on employers and consumers in Vermont, so they should abandon that silly idea now and get serious,” Mozloom added.
No one should assume that Medicare for all will be free, but is the cost worth it? Many would say, “Hell, yes!” if such a plan could guarantee care for everyone without co-pays or deductibles. However, Michael Bloomberg has blasted such plans, saying, “you could never afford that.”
Speaking to journalists at an event in New York, Bloomberg appeared to criticize several Democratic 2020 contenders who have expressed support for Medicare for all in recent months.
"I think you could never afford that," Bloomberg says. "You're talking about trillions of dollars."
"You can have Medicare for all for people who are uncovered," he continues, "But ... to replace the entire private system where companies provide health care for their employees would bankrupt us for a very long time."
Schultz has made similar claims.
Earlier Tuesday, Schultz on "CBS This Morning" criticized a single-payer system that was embraced by Democratic presidential candidate Kamala Harris
at a CNN town hall.
"Why do you think Medicare-for-all, in your words, is not American?" CNN's Poppy Harlow asked Schultz on Tuesday.
"It's not that it's not American," Schultz said. "It's unaffordable."
What I believe is that every American has the right to affordable health care as a statement," Schultz said, lauding the Affordable Care Act, otherwise known as Obamacare, as "the right thing to do."
He added, "But now that we look back on it, the premiums have skyrocketed and we need to go back to the Affordable Care Act, refine it and fix it.
Both Bloomberg and Schultz seem to be taking a status quo position without realizing that providing health care specifically for those who don’t already have coverage from their employer is exactly what the Affordable Care Act (aka Obamacare) already provides, using subsidies to cover the majority of premiums for those people who can’t afford it. They would seem to be taking a “mend it, don’t end it” view of things—but then just like Republicans who have opposed Obamacare without having any viable alternative, neither of them are offering any specific improvement to the current system (including Obamacare) that should actually be implemented.
The amazing thing to me about these two billionaires proclaiming definitively that we can’t afford Medicare for all is the fact that Sanders’ proposal on this subject has not even been scored by the CBO yet.
A recent study concluding that Sen. Bernie Sanders's (I-Vt.) “Medicare for all” bill would cost $32 trillion has set off a furious debate over the cost of the plan.
But there's one estimate that would make an even bigger splash: the score from the nonpartisan Congressional Budget Office (CBO).
However, it does not appear that CBO is working on a spending estimate, despite a request from Sen. John Barrasso (R-Wyo.), who asked for a cost analysis in September in order to highlight the steep costs for Medicare for all, also known as single-payer.
Barrasso told The Hill last week that he doesn’t recall receiving a response from the CBO, suggesting that his request was not accepted.
Generally speaking, Medicare is less expensive than private care. Specifically, the CBO has previously done studies comparing the cost of basic Medicare Part A and B vs. the privatized portion of Medicare (called Medicare Advantage, or Part C) that Republicans foisted onto the program more than two decades ago, and their results were these, specifically when former House Speaker Paul Ryan suggested back in 2011 that the public portion of Medicare should be ended in favor of a completely private system paid for with vouchers.
ThinkProgress reported that Ryan’s updated plan would to include more private insurance would increase costs on seniors by as much as 34 percent by 2023, and as much as 40 percent by 2030.
Beginning in 2023, the guaranteed Medicare benefit would be transformed into a government-financed "premium support" system. Seniors currently under the age of 55 could use their government contribution to purchase insurance from an exchange of private plans or--unlike Ryan's original budget--traditional fee-for-service Medicare...
But the budget does not take sufficient precautions to prevent insurers from cherry-picking the healthiest beneficiaries from traditional Medicare and leaving sicker applicants to the government. As a result, traditional Medicare costs could skyrocket, forcing even more seniors out of the government program. The budget also adopts a per capita cost cap of GDP growth plus 0.5 percent, without specifying how it would enforce it. This makes it likely that the cap would limit the government contribution provided to beneficiaries and since the proposed growth rate is much slower than the projected growth in health care costs, CBO estimates that new beneficiaries could pay up to $2,200 more by 2030 and up to $8,000 more by 2050. Finally, the budget would also raise Medicare's age of eligibility to 67.
This again re-emphasized the point that on average, Medicare is about 30 percent cheaper than comparable private plans. So how and why would expanding access to Medicare cost more than what private plans are costing us now? Well, one study from George Mason University and the Mercatus Institute that has been done (which is mentioned above and has been widely reported by, you guessed it, Bloomberg) argues that costs would rise because Medicare, as it’s currently constructed, doesn’t provide the total coverage of private plans which also include dental and vision and. This would drive government spending up to $3.2 trillion per year, or $32 trillion over a period of 10 years.
M4A Would Place Unprecedented Strain on the Federal Budget
By conservative estimates, this legislation would have the following effects:
- M4A would add approximately $32.6 trillion to federal budget commitments during the first 10 years of its implementation (2022–2031).
- This projected increase in federal healthcare commitments would equal approximately 10.7 percent of GDP in 2022. This amount would rise to nearly 12.7 percent of GDP in 2031 and continue to rise thereafter.
These estimates are conservative because they assume the legislation achieves its sponsors’ goals of dramatically reducing payments to health providers, in addition to substantially reducing drug prices and administrative costs.
A doubling of all currently projected federal individual and corporate income tax collections would be insufficient to finance the added federal costs of the plan.
M4A’s Dramatic Federal Cost Increase Arises from Several Factors
- First and foremost, the federal government would become responsible for financing nearly all current national health spending, including individual private insurance and state spending.
- M4A would increase federal health spending on the currently uninsured as well as those who now carry insurance by providing first-dollar coverage of their healthcare expenditures across the board, without deductibles or copayments.
- M4A would expand the range of services covered by federal insurance (for example, dental, vision, and hearing benefits).
- M4A would dramatically expand the demand for healthcare services, consistent with economics research findings that the more of an individual’s health costs are covered by insurance, the more services they tend to buy, irrespective of the services’ efficacy and value.
They argue that “doubling all projected federal individual and corporate income taxes would be insufficient to finance the added federal costs to the plan,” so this would still seem pretty dire.
One of the things this study addresses is the fact that Medicare is cheaper than private insurance, at least partially because it underpays for its coverage. In addition to including deductibles, in many cases it only provides for 80 percent of costs and requires many people to purchase an additional “Medigap” plan.
Insurance sold by private insurance companies which can help pay some of the health care costs that Original Medicare doesn't cover, like coinsurance, copayments, or deductibles. Some Medigap policies also cover certain benefits Original Medicare doesn’t cover, like emergency foreign travel expenses. Medigap policies don’t cover your share of the costs under other types of health coverage, including Medicare Advantage Plans (like HMOs or PPOs), stand-alone Medicare Prescription Drug Plans, employer/union group health coverage,Medicaid, or TRICARE. Insurance companies generally can’t sell you a Medigap policy if you have coverage through Medicaid or a Medicare Advantage Plan
The George Mason study assumes that Medigap plans would still be required because Medicare’s base coverage wouldn’t be expanded to remove all deductibles and copays, as well as the dental and vision coverage that isn’t part of today’s Medicare. There’s also the fact that Medicare doesn’t negotiate for its prescription drugs at a bulk rate the way that the VA does. Sanders’ plan actually does eliminate most copays, so they seem to be off target here.
Here’s the thing: $32 trillion over 10 years sounds like an overwhelming number, but the truth is that’s pretty much just what we’re spending now on health care every 10 years anyway. This is something that was pointed out by an analysis of Sanders' plan by UMass/Amherst (which was supported by Sanders himself) that suggested the current baseline costs of $32 trillion would be reduced by over 10 percent, down to $29 trillion per year with Medicare for all. (Full plan analysis is here.)
The PERI research team of Pollin, James Heintz, Peter Arno, Jeannette Wicks-Lim and Michael Ash, found that Medicare for All would reduce annual health care spending to $2.93 trillion from the current level of $3.24 trillion. Public health care revenue sources that presently provide about 60 percent of all U.S. health care financing, including funding for Medicare and Medicaid, would provide $1.88 trillion of financing for the new system. Removing the other costs attributed with the current system would leave a gap of $1.05 trillion, which the economists suggest could be raised with a set of four proposals that will generate enough revenue to create a surplus of 1 percent for the system.
The researchers propose:
- Continuing business health care premiums, but with a cut of 8 percent relative to existing spending per worker. Businesses that have been providing coverage for their employees would thereby see their health care costs fall by between about 8-13 percent. ($623 billion)
- A 3.75 percent sales tax on non-necessities, which includes exemptions for spending on necessities such as food and beverages consumed at home, housing and utilities, education and non-profits. The researchers include a 3.75 percent income tax credit for families currently insured by Medicaid. ($196 billion)
- A net worth tax of 0.38 percent, with an exemption for the first $1 million in net worth. The researchers state that this tax would therefore apply to only the wealthiest 12 percent of U.S. households. ($193 billion)
- Taxing long-term capital gains as ordinary income. ($69 billion)
Under these recommendations, the researchers find that the net costs of health care for middle-income families would fall by between 2.6 and 14 percent of income. For high-income families health care costs will rise, but only to an average of 3.7 percent of income for those in the top 20 percent income group, and to 4.7 percent of income for the top 5 percent.
The researchers also find that based on 2017 U.S. health care expenditure figures, the cumulative savings for the first decade operating under Medicare for All would be $5.1 trillion, equal to 2.1 percent of cumulative GDP, without accounting for broader macroeconomic benefits such as increased productivity, greater income equality and net job creation through lower operating costs for small- and medium-sized businesses.
This means that the George Mason Study assumed that the government would just take over all of our current health care costs as they currently are, without really paying attention to the fact that the government already pays for Medicare, Medicaid, and Obamacare, which costs $1.8 trillion per year. So the difference was really an increase in government spending of just $1.05 trillion. Last year Trump cut taxes on the rich by more than $1.5 trillion so apparently, we can afford it—if we decide that we can. This is a matter of how we want to spend and where we think it’s worthwhile to invest: in people or in corporations?
The proposal specifies net worth and capital gains taxes which, besides primarily affecting the bottom line of billionaires like Bloomberg and Schultz , would completely fill this $1.05 trillion gap and leave us with a measly $0.45 trillion deficit. Who cares about that—right, Trump? The other benefit would be that all of the current private premiums, copays, and out-of-pocket costs that people are paying would be eliminated as if, for example, everyone on Obamacare automatically received 100 percent subsidies regardless of their income.
They estimate that health care costs for 8 percent of the public would fall by between 3 and 14 percent, while they would rise on the top 20 percent of income earners by 3.7 percent. The top 5 percent of income earners, like Bloomberg and Schultz, would see costs rise by 4.7 percent. Instead of higher costs being applied to who is sickest, costs would be based on who has the best ability to pay in order to protect all citizens, not just some.
In this video Sanjay Gupta, who years ago unfairly and inaccurately trashed Michael Moore’s Sicko, has a distorted take on Sanders’ plan.
In this report Gupta correctly states that in 2017 total health care costs were about $3.5 trillion. But he then says that “Sanders says we could cut health care spending from $3.5 trillion to $1.4 trillion.” But that’s not what the Sanders/Umass report (which Gupta doesn’t reference) says, as I’ve shown above. Sanders argues that current Medicare/Medicaid spending is $1.8 trillion out of the total $3.2 trillion, and therefore $1.4 trillion is the revenue gap that would have to be added to the governmental share of spending if we adopt Medicare for all. He does not say that $1.4 trillion would become total spending for health care. And he actually estimates that health care costs would drop from $3.2 trillion to $2.6 trillion.
Gupta mentions the George Mason/Mercatus Institute study noted above and its $32 trillion spending estimate, but then says this is “new federal spending”—which is not the case at all because Mercatus didn’t document our current baseline of $18 trillion over the same 10-year span for Medicare/Medicaid as they now exist.
Then he says that Sanders’ plan would “only save $22 trillion from the private sector,” which isn't part of what Mercatus says. This data seems to come from a third report by the Urban Institute which also says federal spending would increase by $32 trillion and there would be “$22 trillion in savings from the private sector,” as Gupta states.
In total, federal spending would increase by about $2.5 trillion (257.6 percent) in 2017. Federal expenditures would increase by about $32.0 trillion (232.7 percent) between 2017 and 2026.The increase in federal spending is so large because the federal government would absorb a substantial amount of current spending by state and local governments, employers, and households. In addition, federal spending would be needed for newly covered individuals,expanded benefits and the elimination of cost sharing for those insured under current law, and the new long-term support and services program.
State and local governments could save $319.8 billion in 2017 and $4.1 trillion between 2017 and 2026 as the federal government absorbs these costs under the Sanders plan (not shown in table 1). A maintenance-of-effort requirement could make state and local funds available to help pay for the plan, but the legality of such a requirement is in question.
Private health care spending by households and employers would drop as the federal government would absorb their spending under current law. Private sector expenditures for these groups would decrease by $1.7 trillion in 2017 and by $21.9 trillion between 2017 and 2026. These considerable savings would partially offset the impact on the private sector of new taxes required to pay for the Sanders plan.
The Urban Institute then claims that Sanders' tax proposals wouldn’t cover the increased costs.
Analysis by the Tax Policy Center indicates that Sanders’s revenue proposals, intended to in once all new health and non health spending, would raise $15.3 trillion in revenue over 2017 to 2026. This amount is approximately $16.6 trillion less than the increased federal cost of his health care plan estimated here. The discrepancy suggests that to fully finance the Sanders approach, additional sources of revenue would have to be identified; that is, the proposed taxes are much too low to fully finance the plan.
$15.3 trillion plus $16.6 trillion is, again, $32 trillion, so they aren’t assuming any of the existing funding in their plan, either.
According to Gupta, in a fairly apples and nuts argument, the base of $32 trillion needed and $22 trillion saved on private cost means that Sanders still has a gap of $10 trillion over 10 years, and that the increased taxes won't cover those increased costs, even though the new taxes he suggests would generate $13-15 trillion, according to the same report he’s quoting. Still, I don't get that math because what people in the private sector save on health care isn’t going to impact tax revenues. The worst case would be to be paying for private care and also paying taxes for everyone else’ care at the same time, so the transition process needs to be well-thought out to avoid a double-dip situation. My main problem with this construction by Gupta seems to assume that the existing tax structure of Medicare, Medicaid ,and Obamacare taxes, which currently brings in $18 trillion, would simply disappear somehow. $18 trillion in current revenue with $15 trillion in additional taxes is $33 trillion—so bingo, the money is there, if you bother to count it all.
It’s also not exactly clear to me how absorbing all the costs of private care would cost $32 trillion, but the savings from all the people and businesses who are currently paying into the private system (and also Medicaid, which would be essentially replaced) would only be $22 billion. And again both Mercatus and the Urban Institute say that “additional” costs would be $32 trillion, while the Sanders campaign says this:
The Sanders campaign estimates that their health program would lead to new public expenditures of $13.8 trillion from 2017 to 2026. This figure incorporates the campaign’s estimate of the costs of coverage for the remaining uninsured, the universal expansion of benefits, the elimination of deductibles and copayments, the introduction of long-term care coverage, savings from lower administrative costs and provider payment rates, and the impact of provider supply constraints.
After subtracting $3.1 trillion in reduced tax expenditures resulting largely from the elimination of the current tax exclusion for employer-sponsored insurance, the campaign estimates that $10.7 trillion of new revenues would be needed. They propose a 2.2 percent income-based premium on households, a 6.2 percent payroll tax imposed on employers, additional revenues from revisions to the estate tax,increases in taxes on capital gains and dividends, new limits on deductions for high-income taxpayers,and increases in income taxes that largely affect high-income people. They anticipate that low-income individuals would save because the amounts they would be required to pay in new taxes would be less than what they are required to pay today in premiums, cost sharing, and other tax payments.
Sanders estimates that the increased costs would be $13.8 trillion, not $32 trillion, while their revenue estimates are $10.7 trillion—which is less than the $15 trillion that the Tax Policy Center says their proposals would generate. The gap seems to be that both Mercatus and the Urban Institute completely ignore the $18 trillion that Sanders says is currently being spent on health care by the government. So the additional $13.8 trillion they estimate for the new Medicare for all program, which together does come to $32 trillion, would be additional spending on top of what is already being by the government now. That $13.8 trillion spending increase would be easily paid for by $15 trillion in new revenues.
Again, neither Gupta nor Mercatus seem to give full credit to the fact that federal and state governments would no longer be spending $545 billion a year, or $5.45 trillion over 10 years, for Medicaid, because that would be absorbed into the larger program.
Federal spending on Medicaid in 2015 was about $350 billion, almost one-tenth of the $3.7 trillion federal budget. That money is supplemented by the states, so total spending on Medicaid services was $545 billion that year. Those numbers have been increasing as health costs rise and the number of people who are eligible for the program expands.
That right there is about half of the spending gap that Gupta brings up and could probably be used to resolve any remaining funding gap with some small changes to the revenue structure, if needed.
And oh by the way, if this change saves the public $22 trillion in spending on private care with only $15 trillion in additional taxes, I think that’s a $7 trillion economic win. And if UMass is correct that the cost of health care will shrink under this plan to $29 trillion over the next 10 years, then that’s another $6 trillion for the economy to play with on top of the $7 trillion in savings from what we’re now paying the Insurance industry, for a grand total $13 trillion economic benefit.
This savings actually might be a selling point for reluctant conservatives who still happen to be one of those elusive dodo birds: the “deficit hawk.” It could be argued that this plan replaces and ultimately repeals the ACA, since you don’t need an employer mandate or an individual mandate if the majority of health care costs are being handled in the tax code. There would be no more need to expand Medicaid, because there would be no more Medicaid. It would be folded into the main program and income requirements or work requirements would become irrelevant. States would also gain a cash injection because their portion of cost support for Medicaid, CHIP, and S-CHIP would be moot. Lastly, how much do you need a set of 50 big healthcare exchanges and rules over pre-existing conditions, preventive coverage, or a guarantee that 85 percent of premiums will be applied to actual care, when almost everyone is getting their health insurance largely from Medicare, which already has all those features?
Again, the fact is Sanders and UMass are correct that current health care spending is indeed about $3.5 trillion per year, as noted by the Center for Medicare and Medicaid Services.
The National Health Expenditure Accounts (NHEA) are the official estimates of total health care spending in the United States. Dating back to 1960, the NHEA measures annual U.S. expenditures for health care goods and services, public health activities, government administration, the net cost of health insurance, and investment related to health care. The data are presented by type of service, sources of funding, and type of sponsor.
U.S. health care spending grew 3.9 percent in 2017, reaching $3.5 trillion or $10,739 per person. As a share of the nation's Gross Domestic Product, health spending accounted for 17.9 percent.
It simply does not. make. sense. that Sanders’ plan would somehow add an additional $3.2 trillion per year in federal costs when total health care costs are currently $3.5 trillion. I don’t see how that works. There’s something wrong with the math there, which does not compute. Again, the solution to the conflict seems to be that the Mercatus/Urban assumption appears to be that this would be a “new” program, one that is significantly different from Medicare or Medicaid as they currently exist. So they call it “new and additional spending,” ignoring the fact that there is no reason why current and existing Medicare and Medicaid revenue streams shouldn’t be applied to this program. They consider it a “new program” and then look at the “new spending” which Sanders proposes, then they stop and forget all the money that’s been coming in to pay for this since 1965 and has been stored in the Medicaid and Medicare trust funds for all these decades.
If I were kind I would call that kind of mistake a little dumb, and if wasn’t feeling that way I would think it’s more than a bit devious and misleading.
This proposal is going to be a significant change and it needs to be implemented intelligently. It should be phased in step by step over a number of years, as Obamacare originally was. Some of the new taxes should come in while old taxes for Medicaid and Obamacare are reassigned as we open up Medicare as an option on the exchanges with full 100 percent subsidies. his would allow anyone with current private insurance, or people on Medicaid or trapped in the Medicaid gap, to sign up as they see fit and when they feel comfortable with the idea. As this goes along, Medicaid can slowly be phased out, while some of its features such as long-term care are added to the main program. Prescription drug prices will have to be fixed, as well as eliminating copays as we go along.
Short of a total Medicare for all, there may be several mid-level options such as Super-Medicare or significantly beefing up of Obamacare subsidies to 500 or 600 percent of the poverty line. That would prevent some of the sticker shock that people who currently don't qualify for those subsidies are experiencing, but almost all of these scenarios are an improvement on the current status quo. We’ll have to see how this goes once Congress begins to take it up seriously.
In the end, this is not about taking people’s private or employer-based care away from them; that would be a clear mistake. This is a proposal that would make that option largely unnecessary, but not totally. Private Insurance wouldn’t be completely eliminated, just is hasn’t been in Canada, for example, because their public system doesn’t cover home care, long-term care, or dental. Depending on how things ultimately work out there would likely still be private insurance as provided by employers, just as there would likely still be Medigap plans and private plans through Medicare-Advantage.
If people like those programs, they could clearly keep them—as long as the private industry is interested in providing them. The government should never say you can’t have a reasonably effective plan that a private insurer wants to provide. Obviously, if people want elective services such as plastic surgery there will be options and private plans for that, but an even less adventurous plan could exist where people are simply given a choice of either keeping their existing private plan or joining the Medicare for all pool, even if they have to initially pay premiums out of their own pocket for it until there are subsidies or they reach 55 or 65 years of age. Iit could still have a major positive impact on businesses that no longer would have to subsidize their employees, as UMass suggests.
Medicare for All will produce large cost savings for both businesses and households,” says co-author Jeannette Wicks-Lim, associate research professor at PERI. “Under our proposal, all businesses that now provide health care coverage for their employees will receive an across-the-board 8 percent cut in premiums. For families, our results show that Medicare for All will promote both lower average costs and greater equity. For example, middle-income families who now purchase private insurance on the individual market would see their health care costs fall by an average of 14 percent under Medicare for All.”
For the financials at this point we have the George Mason study, the Urban Institute study, and we have the UMass/Amherst study supported by Sanders himself, without a CBO study to balance out the differences. The worst case $32 trillion scenario suggested by George Mason and Urban Institute seems to really be just a matter of transferring funding for the existing system largely from private premiums to increase the national tax base by about $1.4 trillion per year. This would extend an expanded Medicare system which would allow anyone, regardless of income or the severity of their illness, to have access to primary care and hospitals without a copay or deductibles. I don’t think that’s a bad deal. The better-case scenario from UMass is that only an additional $1.05 trillion in revenues would have to be generated in order provide the same results due to the fact that generally, Medicare is about 30-40 percent cheaper than private insurance. Even if you add an additional 20 percent cost to cover copays, deductibles, and the Medigap issue, we would still have an average 10 percent savings over what we are currently paying.
For comparison, Obamacare generated $567 billion in revenues using additional taxes, but also accomplished about $477 billion in cost savings, partly because it actually made Medicare more cost-effective.
The following five new ACA taxes would bring in an additional $567 billion in revenue:
- Hospital insurance tax - $212 billion.
- Non-compliance tax - $64 billion.
- Cadillac health insurance tax - $32 billion.
- Medical device and insurers tax - $107 billion.
- Raising medical deduction limit to 10 percent - $104 billion.
Also, there were five areas where the ACA imposed a total of $477 billion in cost savings:
- Reduce drug subsidies to the wealthy - $87 billion.
- Reduce hospital DSH payments - $37 billion.
- Reduce Medicare payments - $197 billion.
- Reduce Medicare Advantage payments - $135 billion.
- Service education loans directly. That eliminated the cost of the private loan servicer, Sallie Mae - $20 billion.
I would argue that even the worst-case scenario from George Mason isn’t really all that bad or as dire as Schultz or Bloomberg claim, while the better-case from UMass is frankly much more likely because Medicare really is more efficient than private care. Obviously, this will require more government spending, but we will probably gain various cost benefits from expanding the pool of participants so widely. Even just within the Obamacare example, this means access to a wider pool generally causes individual plans purchased on the exchange to be cheaper than employer-based plans, even without subsidies and tax credits.
Average Cost of 2016 Plans (Via Medical Mutual) |
|
Individual Plan |
$4,632.00 |
Individual Plan with Premium Tax Credits |
$1,272.00 |
Employer-Sponsored Plan (Employer and employee typically share this cost) |
$6,435.00 |
While averages can give you an idea of typical costs, the real story is often more complex. In many states, individual plans are less expensive. That’s because individual health insurance spreads the risk over a large group – possibly millions of people depending on the plan and insurance company. Plus, as stated above, you may be eligible for a subsidy from the federal government to help pay for your individual insurance policy.
Consequently, plans offered through Medicare for all would also have a similar wider pool than any other competing provider and should be—repeat, “should”—ultimately be cheaper than other plans of equal quality through an employer.
Accepting the idea that this proposal is financially viable is the first hurdle, but the next hurdle is how to transition from what we have to what this will become. We need to get past arguing about the financials and get to detailing the specifics of implementation.
Part of the panic we see from the insurance industry and lobby and their shrill chants of “Socialism Socialism Socialism!” comes from the fact that they literally can’t come up with a single example where the private system they support doesn't come out more costly than public alternatives. They’re all for the “free market” until suddenly someone is totally smashing them on price, then they turn protectionist and have to claim we have to save “jobs” by protecting an industry that doesn’t add any value to the process. All an insurance company does is collect money from premiums and pay claims. As shown by Sicko more than a decade ago, the way they make a profit is to make sure they collect more money from one end and limit the payouts on the other end.
That’s how we got “pre-existing conditions.” That’s how we got the concept of “lifetime caps.” That’s the industry some people think needs protecting, padding their profits by throwing people who’ve paid them good money out into the cold to deal with chronic and potentially terminal health issues on their own.
These are the people and the industry that deserve our pity and sympathy? I don’t think so. But that doesn’t mean that Medicare for all will force them out of business or “kill them,” as some of the media have begun to say, which is just more scare-mongering. They’ll survive. They may be considerably smaller, but they’ll survive.
Unlike during the original Obamacare debate when the idea of even including a public option was tabled by Sen. Joe Lieberman, we deserve to openly have this debate and to consider these options seriously without scary accusations of “socialism,” or knee-jerk reactions that it’s “too expensive.” Frankly, just about every honest cost comparison between private care and Medicare seems to show that we’re more likely to gain better care at a lower cost than the current system provides. The best part is this will largely benefit those who have the least means, and the greatest need.