Should the U.S. have Medicare for All?
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KEY SOURCES
Pew Research Center
Urban Institute
New England Journal of Medicine
Political Economic Research Institute
RAND
Kaiser Foundation
Mercatus Center
CATO Institute
Committee for a Responsible Fed Budget
Fraser Institute
Kellogg Insights
WHY THIS QUESTION MATTERS:
According to a recent Gallup survey, the affordability and availability of healthcare topped the list of Americans’ worries for the fifth straight year. It’s no surprise that this issue has also become a focal point on the road to the 2020 Presidential elections. But with so many conflicting proposals on how to achieve affordable and quality healthcare - it can become difficult for voters to make sense of the conflicting information.
The aim of this article is to address some of the pros and cons of the Medicare for All Act of 2019 -- a bill which was introduced in the Senate in April 2019. The questions below provide an overview of the key components of the bill.
THE BASICS OF MEDICARE FOR ALL:
Will all Americans be covered? Yes
Are there any significant costs of care for patients (premium, deductibles, etc.)? No
Will Americans have an option to keep their private or employer insurance? No
Will the plan require increased taxes? Yes
Will the prices of medical care and pharmaceuticals be regulated by the government? Yes
A SNAPSHOT OF U.S. HEALTHCARE SPENDING:
In 2017, the U.S. health care spending reached $3.5 trillion, or $10,739 per person. This is equivalent to 17.9% of the national gross domestic product (GDP). The United States per capita health care costs are nearly double what other high-income countries pay per capita. According to research published in 2018, high healthcare costs in the U.S. were largely driven by the high prices of labor (or medical professionals), goods (or pharmaceuticals and devices), and administrative costs.
In the current structure, private health insurance covers the majority of spending, accounting for 34% of the total share. The government sponsored Medicare and Medicaid are the next largest spenders, accounting for 20% and 17% of the share of spending respectively. The remainder of spending (10% of total share) came from an individual's out of pocket expenses.
When asked about the quality of healthcare, Gallup polls find that Americans are generally satisfied with their own healthcare but see the cost, coverage, and quality of the healthcare system more generally as a problem for others. Because healthcare costs continue to rank at the top of American’s concerns, politicians from across the aisle have proposed many different options to update the current system. One proposal which continues to be debated in 2020 presidential campaigns is “Medicare for All.” Before jumping into the specifics of the proposal, let’s review what Medicare currently looks like today.
MEDICARE EXPLAINED:
On July 16, 1798 President John Adams was the first political leader in the federal government to sign into law some form of public health coverage, meant for seamen returning from long voyages. Since then, the role of government in healthcare has been fervently debated. Notably in 1965 President Lyndon Johnson signed Medicare into law. The original plan included a “Hospital Insurance” (part A) and “Medical Insurance” (part B). Over the years more people have become eligible and additional benefits have been added. The biggest changes to the plan occurred with the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA). The MMA allowed private health plans approved by Medicare to become known as Medicare Advantage plans (part C). Additionally, Medicare was expanded to include an option for prescription drug coverage (part D).
As it stands today, Medicare is a federal health insurance program for individuals who are 65 or older in addition to certain younger people with disabilities. The program has remained popular, with six in ten Americans saying that Medicare is working well for most seniors.
Although the newly introduced “Medicare for All” shares the same name as the existing program, it is actually quite different than the current system. Medicare for All’s benefits and coverage is much more broad that the existing program. In fact, “Medicare for All” would replace all other existing insurance options including Medicare, with limited exceptions. We will get into the details in the next section.
MEDICARE FOR ALL:
In April, the Medicare for All Act of 2019 was introduced in the Senate. Since then many other versions of the bill have been discussed amongst political leaders and 2020 presidential candidates. Please note that the remainder of this article focuses specifically on the bill introduced in April.
WHAT DOES THE BILL SAY?
The bill “establishes a national health insurance program that is administered by the Department of Health and Human Services (HHS).” Specifically, all U.S. residents would be automatically enrolled in the program upon birth. Individuals would not be responsible for any cost-sharing such as deductible, coinsurance, and copayments. Insurance from private insurers and employers would be terminated. In short, if enacted the Medicare for All structure would represent the largest overhaul to the U.S. healthcare system to date.
Because the federal government would be responsible for providing healthcare to every American, the system would be financed by taxes rather than a mixture of taxes, premiums, and patient out-of-pocket payments. Authors of the bill suggest a number of potential revenue streams to cover the new expenses, including increasing income-based premium paid by employees, increasing income-based taxes paid by employers, and increasing the marginal tax rate up to 70% on those making above $10M.
What do you think?
THE COMMON THREAD:
Supporters and opponents of the bill both say that Americans should have access to quality and affordable healthcare.
FIND YOUR THREAD:
Supporters argue that Medicare for All will be the most effective way to ensure that every American has health insurance and the single-payer system will drive efficiencies in service. Opponents argue that a Medicare for All system would reduce the quality of healthcare and put a significant burden on taxpayers.
Yes, we should implement Medicare for All
Reason 01
All citizens would automatically receive health insurance and would not be responsible for out of pocket expenses.
60% of Americans believe that it’s the federal government’s responsibility to make sure all American have health care. (Pew Research Center)
Medicare for All would automatically enroll all U.S. citizens in health care at birth, increasing insurance coverage by 28.3 million people. (Urban Institute)
The plan would cover virtually all hospital and physician care, preventive services, prescription drugs, mental-health services, dental and vision care, and medical devices. Meanwhile, individuals would have no out of pocket expenses. Coverage is maintained even if you are fired or switch jobs. (Medicare for All Act of 2019)
Reason 02
A federally run, single-payer health care system would make healthcare more efficient and reduce overall healthcare costs, which have skyrocketed in the U.S.
In 2009, it was estimated that one-third of health care costs were a complete waste and did not actually contribute to American’s health. (NEJM)
With a single-payer system, the cost of care may be reduced by 10% based on the lower administrative costs associated with the economies of scale of a single government insurer. (Political Economy Research Institute)
Drug prices should also decrease under Medicare for All, as the government would be able to negotiate drug and device prices, instead of leaving negotiations up to countless individual insurance providers. (RAND Institute)
Reason 03
Medicare for All allows individuals more flexibility and less stress.
With Medicare for All, you can see any doctor that has opted into the program. You no longer need to worry about in network vs. out-of-network providers (which currently make up 18% of hospital admissions). (Kaiser Family Foundation)
The intention of Medicare for All is to allow patients to focus on getting better vs. understanding the complicated matrix of the current healthcare system and costs. (Medicare for All Act of 2019)
No, we should not implement Medicare for All
Reason 01
Government sponsored healthcare would put a significant burden on the taxpayers.
Medicare for All is estimated to cost $32 trillion over 10 years. Even if the federal corporate and income tax were doubled, it would not cover this cost. (Mercatus Center)
The benefits of Medicare for All are are far more extensive than anything offered by other national-health-care plans around the world, creating a high risk of overuse and runaway costs. (CATO Institute)
Taxing the rich, corporations and the financial sector could cover only one-third of the total cost of the program on its own. Taxes on all Americans, including the middle class and businesses, would likely need to increase to pay for the costly program. (Committee for a Responsible Federal Budget)
Reason 02
A government run healthcare system would reduce the quality of care.
In Canada, which already has publicly funded healthcare, the median wait time to see a specialist for a medically necessary treatment was over 4.5 months, which is a 113% increase from 1993. (Fraser Institute)
Under a federally funded health care, it is estimated that medical providers would make 40% less than they would under private health insurance. Additionally, demand for their services would increase by 11%. Researchers question if requesting doctors to cover more while being paid less will impact availability of quality care. (Mercatus Center)
Lowering healthcare worker’s wages may incentivize individuals to avoid those fields. Meanwhile, reducing pharmaceutical prices may suppress the industry’s motivation to invest in research and development to innovate and invent new drugs. (Kellogg)
Reason 03
Individual’s ability to control their own health care would be reduced.
Today, 91% of Americans have health insurance. Under Medicare for All, every American with existing insurance would be kicked off their current plan and re-enrolled in the new government-run system. (CATO Institute)
Research from Gallup shows that seven in 10 people with employer-sponsored coverage are satisfied with their plan. Under the new system these individuals would have no option to keep these existing plans. (Gallup)
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