What is Medicare for All?
May 01, 2019
While Medicare for All has traditionally referenced the plan developed by Sanders, it has since become a catch-all term for universal single-payer health insurance policies. However, the labels used to advertise Medicare for All are misleading because Medicare itself is not a single-payer system. Currently, private insurance companies manage care for some patients under Medicare, so the government is not the single payer of medical claims.
In the United States, there are a range of possibilities for expanding health insurance coverage, but there is a lack of consensus about which of these possibilities would work the best. A policy could abolish the private health insurance industry, it could create a “public option”, a government plan open to everyone on the marketplace exchanges created by the Affordable Care Act (ACA), or it could make other changes with the intended result of expanding the populations eligible for government-subsidized insurance coverage. Though all of these changes attempt to expand health insurance coverage, the amount of support behind each of these proposals varies. In March 2019, 62 percent of respondents in a Kaiser Family Foundation poll said they had a positive reaction to the term “Medicare-for-all”, while only 48 percent had a positive reaction to the term “single-payer health insurance system.” This suggests that the intricate features of a health reform plan as well as the way it is presented to the public can potentially affect public opinion surrounding it. To provide insight into the current health insurance debate, Wonk Tank has answered some common questions about universal single-payer health insurance here.
What does our current version of Medicare look like?
Medicare is a federal health insurance program created in 1965 to provide coverage for Americans aged 65 and over, regardless of their health, income, or medical history. The program has since been expanded to cover people diagnosed with end stage renal disease or Amyotrophic Lateral Sclerosis (ALS). Additionally, it covers people under 65 who have received Social Security Disability Insurance (SSDI) payments for at least two years. The program is comprised of four parts. Three of the four cover inpatient hospital services, outpatient services and provider visits, and prescription drugs, respectively. The other part allows patients to select an alternative but comparable private health plan, and this component is what excludes Medicare from being classified as a single payer system. Today, Medicare accounts for 15 percent of federal spending, and the program covers over 58 million people. It is financed through a payroll tax, beneficiary premiums, and a trust fund.
How is universal health insurance different than our current health insurance?
Currently, our system of Medicare has limited eligibility, so there are groups of people who remain without affordable health insurance coverage. Since World War II, in the U.S., healthcare coverage has largely been provided as an employee benefit, so many Americans who do not receive health insurance through their jobs or who live in states that did not expand Medicaid remain uninsured. In 2017, the U.S. Census Bureau reported that 28.5 million people did not have health insurance at any point during the year. Universal health insurance could end the tradition of employer-sponsored health insurance in America. Currently, several different plans have been offered to finance universal health insurance. Some include a combination of income-based premiums paid by employers and households, increased progressive income taxation, and larger taxes on capital gains and dividends.
Why does the debate about Medicare for All matter right now?
The conversation around Medicare for All is obscured by the various terms and confusion surrounding the policy. Among those who support an American system of universal health insurance, there is significant disagreement over the role that the federal government and private insurance companies should play in that system. With the 2020 election looming, this debate is of particular salience. Bernie Sanders’ announcement of candidacy for the Democratic nominee assures that Medicare for All will be back on the debate podium this election cycle.
How would this affect the uninsured?
The majority of U.S. citizens have health insurance. However, premiums and deductibles for health insurance have been increasing faster than inflation and wages. Since 2008, average annual family premiums have increased by 55 percent, which is twice as fast as the rise in workers’ earnings and three times as fast as the rise in inflation. The increasing financial burden of coverage influences the insured when they are making decisions about seeking care. For example, in 2017, 45 percent of uninsured adults cited high costs of health insurance as the primary reason they lacked coverage. In that same year, one in five uninsured adults went without medical care that they needed due to the cost of treatment. Currently, uninsured people are less likely to receive preventative care and health services for major or chronic conditions. With universal, single-payer health insurance, all citizens would receive coverage paid for by the government.
How would this affect Medicaid and CHIP?
The various universal single-payer health insurance coverage proposals differ in their treatment of other public insurance programs, including Medicaid and CHIP. Implementing this type of national insurance coverage could naturally lead to the elimination or reduction of federal spending obligations for programs like Medicaid and CHIP. Universal health insurance would, by definition, cover all American citizens regardless of health, age, or income. However, there is still debate over whether targeted insurance programs should remain in light of the fact that low-income earners, people with disabilities, and children have different and greater needs from public insurance programs than wealthier individuals. Therefore, targeted programs designed to facilitate the specific coverage needs and provider networks required by these groups could add efficiency to a universal system.
How would this affect me, if I have private insurance?
The economic impact of Medicare for All would differ greatly depending on one’s income bracket and previous source of health insurance, as well as the specifics of the plan passed. While individuals would save money on health expenditures, taxes would increase. The vast majority of those who are insured through their employer would not experience a net benefit, while those who have private insurance might. Yet, this may not be the case for low wage earners who receive employer provided insurance. Some Medicare for All policy versions advocate for employees to get the choice between employer sponsored coverage and Medicare coverage. While Medicare for All would drastically improve the health of those who currently cannot afford expensive treatments and private insurance, it would decrease the quality of healthcare the most wealthy Americans receive: private consultations, phone conversations, or concierge doctor services would not be covered, among other luxury healthcare practices. Wealthy Americans seeking such luxury services may still be able to access them through private companies.
What is the argument for Medicare for All?
The crux of the argument in support of Medicare for All is that healthcare is a public good and should be run as such, as opposed to a business. A 2017 survey found that 25% of Americans said that a family member skipped necessary medical care due to cost. The absence of regular check ups and access to medical care is detrimental to one’s well-being. Due to the ambiguity of specific policies under Medicare for All, in addition to the various models proposed by various politicians, it is difficult to determine the financial impact. Some assert that Medicare for All could be less expensive than the current system. While private insurers in the United States currently spend up to 25% of total expenditures on administrative costs, single-payer systems such as those in Taiwan and Canada spend less than 2% on overheads. Moreover, Medicare for All would provide the opportunity for the American government to use its negotiating prowess to acquire advantageous terms with drug companies and service providers.
What is the argument against Medicare for All?
Against Medicare for All are many who fear the control it would give the government over the health-care system. Adversaries argue that the policy would lead to an overall lower quality system that would not make its universality worthwhile. The tax hikes that would be required to pay for Medicare for All, in any of its various policy forms, make many more oppose the policy. Moreover, some argue that in the status quo, those with private insurance benefit those with Medicare, as the medical profession is made attractive due to the monetary benefits of private services, not Medicare reimbursements. This provides a net benefit for the system, encouraging more people to study medicine and perform effectively as doctors. There would also be repercussions to medical facilities and professionals under Medicare for All. On one hand, pay cuts could occur for doctors and hospitals based on the Medicare program’s current reimbursement rates compared to those of commercial insurers. On the other hand, hospitals could benefit from the absence of unpaid bills from patients who struggle financially and may see their administrative costs decrease due to a lessened need to transact with insurance companies, send patient bills, and debt collection. Overall, hospitals would likely still lose money. Some argue that there would be serious detriments to medical research and development investment due to lower profits in the pharmaceutical and medical device industries. Ultimately, the specific financial harms cannot be empirically discerned due to the vagueness around Medicare for All in current political discourse.
Medicare for All in current political discourse takes on many meanings and lacks a cohesive policy structure. This makes it difficult to analyze. While candidates may favor aligning themselves with broad ideology that supports equitable insurance scheme, it is less productive than fixating on concrete and incremental systematic changes. When politicians begin to advocate for specific healthcare policy that pushes America closer toward Medicare for All in a series of steps, more productive debate and useful public scrutiny will ensue. Rather than continuing the vague conceptual battle surrounding Medicare for All, it is time to delve into the intricacies of American healthcare and attack problems head-on. Political gridlock may force Medicare for All advocates to vouch for more nuanced and less extreme changes.