A leading Democrat in the House of Representatives lost in the New York Democratic primary when 28-year-old Alexandria Ocasio-Costa upset Joe Crowley. She credited her victory to her policy recommendations, including a plan for “Medicare for All.”
What is “Medicare for All?” How does it differ from Obamacare? How would “Medicare for All” affect key constituencies in the nation? Below is a basic primer on the proposal.
Advocates for “Medicare for All” say Medicare updates the U.S. by “joining the rest of the industrialized world, where health care is universal” and will save money and improve health outcomes. Pretty compelling. The detractors say that the program is too expensive and other solutions will get similar outcomes for cheaper. That said, no expert advocates going back to the system before Medicare.
Medicare was established in 1965 and was structured to be expanded. Primarily universal health care for people over 65, Medicare covered people with disabilities in 1972. Many thought Medicare for children, Medikids, was coming soon. Drug benefits, Part D was added in 2006.
Advocates like Columbia Professor Linda Fried supports lowering the initial age of Medicare eligibility to 50. Lowering the age would end the so-called age tax where private insurance charges more for covering people between ages 50 and 64.
Because of political and business pressure from the medical and insurance industries, Princeton Sociologist Paul Starr argues the momentum to expand Medicare slowed down. Incremental solutions that focused on private-sector, market-based solutions to cover all residents became the American way of health insurance reform.
Economists have long identified the inefficient incentives of private insurers to avoid insuring the sick and people over age 40 and use administrative measures to avoid paying claims. Adverse selection and active trimming of risk are unavoidable problems with private insurance. Moreover, only big pools, like the government, have enough bargaining power to lower drug prices and other vendor costs.
Senator Bernie Sanders has introduced the Medicare for All Act of 2017, and many Democrats support “Medicare for All” legislation in the House. Currently, advocates argue the program would help young, low-income, and self-employed workers many who are among the 41 million underinsured Americans and another 27.6 million Americans with no health insurance. But many more groups would be affected.
New York Times writers Katz-Sanger and Park identify the constituencies who would be affected, and how, if “Medicare for All” passed:
- 156 million people insured through work would probably pay higher new taxes but would be insulated from premium hikes and coverage shrinkage. 80% like their current insurance and Medicare Care for All would mean they get something else.
- 74 million people with Medicaid would have more choices, but possibly higher taxes.
- 56 million people currently with Medicare would have more generous coverage.
- 28 million uninsureds would get health care insurance coverage.
- 22 million people who buy their own insurance would have new taxes, but less out-of-pocket spending.
- 9 million veterans would keep their existing health care system.
- 2 million Native Americans could also keep their current source of care.
- Drug company profits would likely fall as the government would have more bargaining power to negotiate lower prices. This certainly will cause political resistance from drug companies but may be popular among voters. In early July Pfizer raised the cost of Viagra, a nervy move attributed to the lack of political risk from Trump and the Administration to curb drug costs.
- Health insurance companies would mostly be eliminated, and executives – among the highest paid in the nation – would lose their jobs.
- Doctors and hospitals would likely face pay cuts, but would no longer face unpaid bills so they may be winners.
Then there are the direct and upfront costs of the policy. Everyone agrees “Medicare for All” would be costly and would require new taxes. Senator Sanders puts the bill at $1.3 trillion because the coverage is wider and better than existing programs. There will be massive administrative cost savings, especially in advertising – what economists call a deadweight loss.
More neutral experts double the estimate. Kenneth Thorpe, at Emory University, puts the cost at $2.4 trillion a year. The Urban Institute estimates $2.5 trillion a year. The Committee for a Responsible Federal Budget projects a cost of $2.8 trillion a year, or 16% of GDP. To put that in perspective, health care spending in the U.S. is 20% of GDP. That is almost twice the share of other nations. “Medicare for All” would raise that share with more coverage before it lowered it with efficiency savings.
And, if you think you have heard programs similar to “Medicare for All,” it is because it was once described as “Single Payer.” Focus groups found the “Medicare for All” label sells better than “Single Payer” and that has been true for awhile.
Heath care reform is complicated and vital to the economy. Given the midterm elections in November, I expect we will hear more health care reform ideas.