Medicare for All has become a central topic of debate amongst the 2020 Democratic Primary field. But what is Medicare for All? Why do we need it? Who supports it? What does it cost? Only Divided We Fall has both sides of the issue.
Sean Corcoran is in his 3rd year of his MD/PhD training at the Boston University School of Medicine and the University of Cambridge through the NIH Oxford Cambridge Scholars Program. In the past he has helped lead Boston University’s chapter of Students for a National Health Plan, the student branch of Physicians for a National Health Plan. Previously, Sean worked at CRISPR Therapeutics on gene-editing cures for sickle cell anemia and beta thalassemia that are now in stage 1 clinical trials in the US and Europe.
Dear Joe —
Health care was the biggest issue in the 2018 midterms for a reason: the rising costs of health care threatens the bottom lines of families and business in every community in America. Unlike any other developed country in the world, when an American gets sick, they have to think about their ability to pay before they even call the doctor. Families regularly make decisions about whether to seek care or put food on the table.
Inadequacies in our healthcare system
American health care is the most expensive in the world. Health outcomes such as life expectancy and infant-mortality, which are recognized as proxies for the effectiveness of a country’s health care system, are worse than in other developed countries and are exacerbated by income, race, and social status. We see the doctor less, our hospital stays are shorter, and Americans are routinely denied care or forego care because of inability to pay.
What do Americans want to do about these systemic inadequacies in our health care system? American attitudes around health care have shifted since the passage of the Affordable Care Act (ACA or Obamacare). The majority of Americans have decided that health insurance should be a responsibility of the government to its citizens. With this in mind, there are several possible solutions that would more equitably deliver care to our citizens. However, there is only one solution that would both control costs and deliver care to Americans regardless of their social status or ability to pay.
Medicare for All
That solution is Expanded and Improved Medicare for All. Expanded and Improved Medicare for All encompasses the following five principles:
- A single public program: not a patchwork solution
- Comprehensive coverage: all evidence-based and medically indicated services requiring a medical professional would be covered, including dental and eye care
- Free at the point of service: financed through tax contributions based on ability to pay, not shifting costs onto the sick (i.e. no fees, no co-pays, no cost-sharing)
- Universal coverage for all US residents: non-citizens included
- Job training/placement assistance and income support for people currently employed by the private insurance industry and those directly affected by a simpler system (medical billing offices)
The moral argument for this system is simple: no one should have to delay or forego necessary medical care because of their financial or social status. The budgetary argument for Expanded and Improved Medicare for All doesn’t fit into a few easy bullet points, but it is just as convincing and clear.
The Costs of Private Industry
When economists analyze the US health care system and look for inefficiencies, they look first at the for-profit insurance provider. Overhead at private insurers in the US is in the range of 15% of total costs, while overhead at Medicare is in the neighborhood of 2%. Medicare for All would eliminate the role of the for-profit private insurer, resulting in massive reductions in administrative costs. These savings—in the hundreds of billions of dollars annually— could be funneled into providing care for the 30 million Americans without health insurance and the nearly 100 million Americans who are under-insured, without increasing overall costs of financing health care.
While overhead at private insurance companies is wasteful and inefficient, the real way that private insurers make their money is simple: they deny care. The more care they deny, the more money they get to keep, and the less care patients receive. A health care financing system who’s existence relies on making sure patients receive as little care as possible is not a healthy system.
The next thing economists notice about the cost of health care in America is our rising prices. Over and over again, researchers have found that the driver of our ballooning costs is, “The Prices, Stupid” to quote one of the most famous papers in health policy.
The best way to control costs is through a Medicare for All universal system that would use regional global budgeting and eliminate fee-for-service medicine. For the first time, hospital and doctor costs would be controlled through regional management and pharmaceutical costs could be controlled through negotiation. This would be good for both doctors and patients—there would no longer be an incentive for a physician to perform certain medical procedures or prescribe certain medicines because they would make more money providing them, patients would receive more medically necessary care, and health care resources would be distributed in a more regionally appropriate manner.
By controlling prices and getting rid of the private insurance industry, Expanded and Improved Medicare for All would save hundreds of billions of dollars per year that would be directly translated into needed medical care for more people. Even with the expansion in coverage and benefits to every resident of America, all recent estimates—liberal and conservative—of an Expanded and Improved Medicare for All system show that national health expenditures would be decreased by trillions of dollars over the next 10 years. Expanded and Improved Medicare for All would make our wallets bigger and our bodies healthier.
Drawback of Medicare for All
Opponents of expanded and improved Medicare for All cite a few potential drawbacks seen in other nations. They cite long-wait times for non-emergent procedures in Canada, reduced doctor’s salaries, difficulties of implementation, and problems with a reduction in medical innovation. Some of these are red herrings and others are serious policy questions that will take careful study and leg-work to get right.
As far as wait times are concerned, it is true that for non-emergent procedures, Canada does have long wait times. Unfortunately, there is no way to compare the US health care system because private entities are not required to track this data; however, it is clear that the wait times seen in Canada are a choice made by the Canadian people. Wait times are a function of the number of doctors trained and the number of medical procedures they can perform in a given time. If Canada wanted to reduce their wait times, they could spend more money on doctors. They have decided that they don’t want to do that. There’s no reason we have to make that decision in America. And for the 30 million uninsured in the US, wait times for receiving health care are infinitely long.
Second is the issue of doctor salaries. Doctors rightly note that doctors in other countries make less money than American doctors do. That is because their health care systems spend less money than ours does. Leading Medicare for All proponents such as the Physicians for National Health Plan suggest maintaining doctors’ salaries at current levels, reducing education costs to zero, and drastically reducing malpractice insurance costs and administrative costs. By conservative estimates, doctor pay could be reduced by up to 10%, but with the reductions in malpractice insurance and administrative costs seen in other countries, doctors net pay could go unchanged or increase.
Third is the issue of innovation. America’s research endeavors are second to none in the world, but this is largely due to the impact of our investment in the National Institutes of Health (NIH). Most innovation in the US health care system occurs because of publicly funded research through the NIH. The science and innovation largely discovered in academic labs is then used by private companies to screen known targets and make drugs work. Internationally, nobody would say that England, Germany, or France’s health care systems aren’t innovative.
Finally, there is the question of implementation. Implementation of any major policy will be difficult, and will require work by our government. I don’t have any answers as to how this will work (I’m a medical student not a bureaucrat), but the original implementation of Medicare can teach us a lesson: this is totally feasible. Medicare was implemented in less than a year, without the help of computers, in the 1960s. Almost 65% of our current health care system is already publicly financed. It will not be impossible to get to 100%.
Expanded and improved Medicare for All would provide all medically necessary care to everyone in America. It would save us money and help fight the inequity that is slowly tearing our country apart. It is fiscally responsible and morally imperative. Neither the private sector nor conservatives have come up with a comparable solution to our problems. If we are to keep Americans healthy and safe, it must start with giving every American access to our health care system.
Dear Sean —
Thank you for your opener. While I disagree with Progressives—often quite strongly—I am glad to have voices like yours in the conversation. If nothing else, I think Progressives are good at identifying and elevating problems with our government and within our country, problems that might be ignored or minimized otherwise. My objections generally arise in regards to the precision of these criticisms and well as the realism of the attendant solutions. The debate around healthcare and Medicare for All is a perfect example.
What is the Problem?
Before proposing to overthrow the entire healthcare system in the United States, it would behoove us to ask, what is the problem exactly? You are correct to point out that the United States spends over two times per capita what other wealthy countries spend on healthcare while achieving worse outcomes, at least by certain measures such as infant mortality and life expectancy.
Is this the justification? It probably shouldn’t be, as there are significant nuances to these claims. In a thought provoking article by Tim Norbeck and Walker Ray of The Physicians Foundation, the authors point out how exogenous factors influence these health outcomes. For example, the U.S. has a higher poverty rate, homicide rate (especially from guns), suicide rate, and rates of obesity than any other wealthy countries cited in the study, all of which negatively impact life expectancy in the U.S. The U.S. also has higher teen pregnancy rates than the other countries, which along with discrepancies in how infant mortality statistics are calculated contribute to the higher measured infant mortality rate in the United States.
My argument is not that these exogenous factors are determinative. Rather, it is that they may be influential and that to cite two specific health outcomes and declare that the U.S. healthcare system is in need of “structural reform” may be a hasty conclusion. You cite a few other statistics—that Americans see physicians less and hospital stay are shorter—but I am not convinced those are statistics are useful indicators. What other measures do you think merit revolution when it comes to healthcare in the United States? As I see it, a healthcare system that currently covers 91% of the population and in which which 69% rate their personal healthcare as excellent/good for coverage and 80% as excellent/good for quality does not merit revolution. You concede the U.S. is “second to none” in scientific research and the development of lifesaving drugs and treatments. This does not strike me a system in need of structural change.
For my part, I will concede that there are at least two areas that trouble me about the healthcare system in the United States. The first is cost. We should not be paying close to double what other wealthy countries in the world are paying. Especially if out outcomes are (at best) just as good. Second, I think we should work to expand coverage to the 9% of Americans who are not covered, especially if these uninsured Americans are the most vulnerable among us.
Who Wants Medicare for All?
Before we discuss the policy minutia of Medicare for All, I think we ought to spend a moment discussing the politics of the matter. If the American people do not support the policy or if there is no chance of the policy being passed, the subsequent discussion is moot.
Progressives are quick to point out the Medicare for All is popular, citing polling as high as 70% in favor (42% strongly, 28% somewhat) of the idea. The problem, though, is that support for the program is extremely sensitive to how the question is phrased, with support in the 40-50% range when the poll defines Medicare for All as a “national health plan … in which Americans would get their insurance from a single government plan.” Support for Medicare for All drops to 37% (with 58% opposed) when respondents are told that the proposal would eliminate private insurance. When respondents are told that a government run system would result in higher taxes and could lead to delays in care, support plummets to 37 and 26% respectively. The slogan polls nicely. But Americans don’t like what they see when they peak behind the curtain.
No matter how you slice it, the chances of Medicare for All passing both houses of Congress and being signed into law by a President are slim. Democrats would have to hold control of the House of Representatives and the Presidency as well as a filibuster-proof majority in the Senate, which is not possible in the foreseeable future. Republic control of either house or the Presidency makes Medicare for All dead on arrival. Even if Democrats did control the both Houses and the Presidency, there is no guarantee that moderate Democrats would support the measure. Recall that 34 Democrats in the House of Representatives voted against the Affordable Care Act, a much more modest proposal. The Democratic Party encompasses a diverse coalition. Note that 6/10 Democratic voters in battleground states say that they prefer a candidate who would work with Republican lawmakers instead of someone who would fight for a “bold progressive agenda.” Their representatives will not support Medicare for All. Until the day the Progressives take over the Democratic Party (which will be the day that I and many other Americans leave it), Medicare for All will not be enacted into law.
The Costs of Medicare for All
Regardless of the justification and popularity of Medicare for All, let’s talk about the policy. Thank you for outlining your “five principles.” It will not surprise you to learn that I disagree with most of them. But my objection is strongest in regards to program implementation and costs.
The first principle you cite is that Medicare for All is: “a single public program: not a patchwork solution.” Supporting a “public program” and opposing a “patchwork solution” sounds nice. But let’s be clear. By “public program,” you mean the nationalization of the healthcare industry by the U.S. federal government to the tune of $1.5-3.5 trillion dollars in spending per year (note: current annual federal expenditures on Social Security, Medicare and Medicaid, debt interest, and discretionary spending totals $4 trillion).
Such an unpopular and costly takeover of the health insurance industry would strip 200 million people of their private insurance plans, eliminate private insurance companies, and put 1.5 million people out of work. But we are not to worry! We are constantly promised that these 200 million will have “even better plans” and that job training and income support will be provided to former employees of the private insurance industry …
Advocates say that this takeover will be “efficient” and save “hundreds of billions of dollars per year”. Let us be precise. Total healthcare expenses (currently paid for by a combination of federal and state governments, employers, and private citizens) may go down under Medicare for All (if you assume in the “efficiency” of Medicare for All, which I do not), but federal government expenditures will increase by trillions of dollars. These historic spending increases will result in significant taxes increases that even Elizabeth Warren is afraid to admit. All of this is predicated on the idea of “government efficiency.” Anyone who has been to the DMV or, as is true in my case, is employed by the federal government and a member of the United States military, knows that the phrase “government efficiency” is an oxymoron. The private sector is more efficient that the public sector by leaps and bounds. The phrase “waste, fraud, and abuse” is not just a political talking point. It is a fundamental truth about incentive structures and organizational bureaucracy.
You state that Medicare for All will be “free at the point of service” which means “no fees, no co-pays, no cost-sharing.” Such a system, without the “skin-in-the-game” of premiums, deductibles, and co-pays will fail as a result of tragedy of the commons (ie. individuals will act according to their own self-interest (using as many free services as possible) at the cost of depleting the shared resource for the group (increasing costs and delays). These fees should not be prohibitive. But they should be enough of a disincentive for the abuse of precious healthcare services. This is a critical rationing and cost-reduction mechanism. “Free at the point of service” sounds nice. But why should those who can afford it have the government cover all of their medical expenses?
Clearly there are a lot of details that need to be sorted out with Medicare for All. Yet you say, “Implementation of any major policy will be difficult, and will require work by our government. I don’t have any answers as to how this will work (I’m a medical student not a bureaucrat).” This is precisely my objection. You are proposing an unprecedented government expenditure and economic takeover, but hand waive the most critical details: cost and implementation. Although General Omar Bradley did not live to see these Medicare for All proposals, I suspect he would have repeated his famous aphorism: “Amateurs talk strategy. Professionals talk logistics.” Medicare for All and its proponents fail this test.
While I oppose a revolution in healthcare, I support reform. I believe that Democrats should stop talking about “repealing and replacing” the Affordable Care Act and instead build on a system that already covers 9/10 Americans. I am intrigued by “Medicare for All Who Want It” (ie. putting a public option on the ACA exchanges) to expand coverage even further and would be curious on your thoughts on the subject. I believe that allowing the Secretary of Health and Human Services to negotiate drug prices with pharmaceutical companies (due to the outside influence public healthcare already has in the United States) as well as tying drug prices to international prices will help drive down costs. I have heard good things about Medicare Advantage from experts in the field and would be curious on your thoughts as well. Without a doubt, I support federally funded medical research through the National Institutes of Health (as well as the Department of Defense, I would point out) to creating new technical solutions to our most pressing medical needs.
There are many promising options to improve healthcare in the United States by building on what currently works. Let us not light the house on fire because our fingers are frostbitten. Let us remember that it is easier to burn down a barn than to build one up. And let us work together to find common sense and cost effective ways to improve healthcare in the United States.
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