The Reality of Medicare for All
Updated: Jan 27
According to a Kaiser Family Foundation and New York Times survey, more than one in four Americans had trouble paying a recent medical bill in 2016. This has led to dismal health outcomes, with 21% of adults ages 18-64 not undergoing and 32% postponing a medical test or treatments recommended by a doctor due to cost. These figures have created a case for a majority of Americans and their politicians to believe that the U.S. is in desperate need of an upgrade of their healthcare system. For progressive Democrats, their upgrade seems to depend upon universal health care. Currently, the United States is the only developed country that doesn’t have a universal health care option. The model universal health care plan, “Medicare-For-All'' has been the overwhelming slogan of the 2020 Presidential campaign, a term that slipped off the lips of every Democratic presidential hopeful, each with their own plan, wishing to win over an underinsured American public drowning in medical debt. But what exactly does this plan, “Medicare-For-All '' entail? What will it mean for the current American system? What would it take to make it work? Finally, is it likely to even come into play?
Currently, the United States uses a multi-payer system where residents of the states finance their medical costs through different sources including private health insurance companies, employers, and the government through programs like Medicare and Medicaid. The latter government programs are exclusive to primarily the elderly and low-income individuals. Unfortunately, many encounter a gap in their or a loved one’s employment, do not qualify for government programs or are not able to pay for private insurance on their own and must pay for health expenses completely out of pocket. A single-payer system would change that by using taxes to allow the U.S. government to take on the role of insuring all of its citizens. This would give the government the means to be the sole negotiator in medical pricing and care, which proponents of the proposal argue would allow for health care savings in the long run as well as, increasing access to medical care, reducing inequities, and decreasing the role of private insurance.
The most well-known among the universal health care proposals are those of Sen. Bernie Sanders (D-VT) and Rep. Pramila Jayapal (WA-07), but there are many proposals on the table from total overhauls to expansions of public programs. Sander’s and Jayapal’s bills contain many similarities, including comprehensive benefits which currently cover more than most private insurance plans, a tax-financed system, a replacement for all private health insurance, as well as the current Medicare program, lifetime enrollment, no premiums, and all state-licensed, certified providers who meet eligibility standards can apply. The remaining bills change up the standard single-payer system by allowing opt-outs of the program, offering it to citizens who do not qualify for the current Medicare program, or limiting the program to citizens within the ages of 50 and 64.
Critics of both plans worry the cost to the federal budget would be trillions more than the current private plan and high taxes would burden the American public. However, none of the organizations who estimated the cost were able to agree on a rough estimate, not even if it would be above or below the current cost of healthcare. Others remind that a consideration must be made for the savings the average family would make in out-of-pocket costs including co-payments, co-insurance, and deductibles which would be largely eliminated under Medicare-For-All. Other costs may be saved in respect to administrative costs and negotiations between the government and private stakeholders such as pharmaceuticals and hospitals. All of the paperwork jobs required to manage the variety of plans and costs would be rendered unnecessary. However, it is impossible to estimate the strength of these negotiation abilities and once again estimates as to savings are inconsistent.
This comes to the discussion of what would happen to all that exists currently. The current American system relies on many stakeholders. Drug manufacturers would have to pare prices down considerably under a single-payer system. The government would have substantial negotiating power and could take back patents if companies refused to pay the government its desired rate. One analyst at Raymond James, an independent investment bank, expects prices could be reduced as much as 30%. Hospitals would face similar issues, but how much depends on the proportion of the current take of private payers to Medicare or Medicaid patients. Private payers pay significantly higher rates and a hospital that depends on their business would see a significant reduction in revenues. A study published by the American Hospital Association and Federation for American Hospitals, both opposed to a single-payer system, looked at how even a less extensive Medicare-like health plan offered on the individual exchange might affect hospitals’ bottom lines. The study found that hospitals could lose $774 billion over a decade from lower reimbursement rates. Sanders and Jayapal bills, would also, “prohibit employers and insurance companies from offering insurance that covers the same benefits that would be provided under the Medicare-For-All program”. Insurance companies would become largely inefficient leftovers, and it is estimated the industry could lose 860,000 to 1.5 million jobs.
No matter the advantages or disadvantages of a Medicare-For-All proposal, many policy analysts believe it’s unlikely to pass anytime soon. The presidential candidates’ crazed and passionate debates would have you imagine that once they are in office the hard part is over. However, that is far from true. President Trump has spent much of his term aggressively opposed to the Affordable Care Act, but the end result has left it relatively intact. Major legislative change such as Medicare-For-All would depend on congressional approval and even with a supporter as president, the proposal does not have enough supporters in the Democratic-controlled House and even fewer in the Republican-controlled Senate. Even if Democrats win control of the Senate in 2021, many of the hopefuls are known to be skeptical or hostile to Sanders' and similar proposals. This hurdle is only heightened by the strong opposition from hospitals, private insurance companies, and pharmaceutical companies who are active policy lobbyists and will mobilize to kill any bill that comes through Congress. That is if the Supreme Court or lesser courts do not decide to challenge the proposals’ legality and, even then, the lawsuits against the proposal would be numerous.
So why would Sen. Sanders and other supporters even push a plan that’s doomed from the gate? Jennifer Palmieri, director of communications on Hillary Clinton's 2016 presidential campaign, explains, "I think that a very legitimate reason for why a candidate would propose a bold health care plan like Medicare-For-All even if they're not going to be president or if they can't get it passed is, over the long term, it moves public opinion and political will in your favor and it may be easier to have something like public option." However, others argue all this debate over an overarching plan exhausts public support for smaller, easier issues that may actually pass, such as high drug costs or charges by hospitals and insurance premiums. It’s likely that elements of pressure will start making the debate about Medicare-For-All less relevant. Healthcare systems will continue merging and buying up acute care centers, for instance. Prices will keep rising. Public outrage may force the government to step in and regulate the healthcare system over time. Once there’s a consolidated, regulated industry, it may not be that different than a single-payer system.