Mounting support for Medicare for All has left conservatives hyperventilating. Commercial insurers and their Republican allies are working overtime to convince Congress and the electorate that we simply can’t “afford” Medicare for All. A report by the Mercatus Center’s Charles Blahous, who spearheaded President George W. Bush’s attempt to privatize Social Security, is the latest entry in this fuzzy math sweepstakes.
Happily, for those of us who seek health-care security for all Americans, Blahous and his friends miss the point. Our commercial health insurance system is crazy and unsustainable, and Medicare for All is the only realistic path to reduce national health spending and improve the quality of our health-care system.
Sen. Bernie Sanders’s Medicare for All proposal improves and expands the current Medicare program, replacing commercial health insurance with federally administered coverage for all Americans. The proposal eliminates premiums, deductibles and co-pays, and includes new coverage for vision, hearing and dental care. It allows everyone to use the doctors and hospitals they know and trust, anywhere in the country, without the restrictive networks, arbitrary denials and high out-of-pocket costs that go hand in hand with commercial insurance.
Medicare for All, like Social Security, is social insurance, designed to pool and broadly distribute the costs of care across the entire population. At its core, Medicare for All gives doctors and hospitals the freedom to compete for patients without insurers getting in the way.
Blahous writes that Medicare for All is expensive. That’s correct, but it’s the wrong starting point. The current commercial health insurance system is much more expensive than Medicare for All and is unsustainable by any measure.
We spend more than $3.3 trillion a year on health care — about 18 percent of gross domestic product. That’s twice as much per capita on health care as the average of other high-income countries. In return, we get health-care outcomes that rank dead last among our peers. Health-care costs in this country are projected to increase by 5.5 percent a year over the next eight years. You do the math: The status quo doesn’t work. Period.
Medicare for All, by contrast, provides a compelling path to keeping health-care costs in check. To begin with, Medicare for All would eliminate the administrative waste and profit margins created by the commercial insurance system with hundreds of insurers negotiating different agreements with thousands of health-care providers. Total annual savings on administrative costs under Medicare for All are estimated as high as $500 billion a year (far more than Blahous estimates in his report).
Most important, Medicare for All would empower the federal government to use the collective bargaining power of 330 million Americans to reduce the cost of health care, something that commercial insurers have been unable to do. Blahous himself estimates that the extension of current Medicare rates to all health-care services coupled with lower prescription drug prices under Medicare for All would eliminate $445 billion in annual costs in 2022.
In all, Blahous concedes that Medicare for All would reduce national health spending by $2 trillion over 10 years, even after accounting for the cost of guaranteeing everyone coverage and offering better benefits. (And again, many health economists would say Medicare for All would drive far greater savings.)
Blahous’s concern is that Medicare for All will transfer the rest of the cost of health care from the private sector to the federal government. Okay. So how will we pay for Medicare for All? The same way we pay for the defense budget and everything else: through taxes. Does that mean that ordinary Americans will pay more under Medicare for All than they pay for health care today? No.
Think about it. Today, the typical family of four spends more than $28,000 on health care a year. Individuals pay that cost indirectly through lower wages (which fund the employer’s share of health insurance) and directly through out-of-pocket costs. Under Medicare for All, the typical family will see higher wages and lower expenses and spend much less on health care than it does today.
To be sure, the transition to Medicare for All will disrupt the health-care marketplace. Insurers will wind down. Pharmaceutical companies and medical device manufacturers likely will see their profits drop. Hospitals and doctors will need to work smarter and more efficiently; they will see an overall reduction in their rates, but they will save on administrative costs and their bills will all be paid.
There are always winners and losers in policy reform. Today, commercial insurers and other corporate interests in the health-care industry are the winners, and the American people are the losers. Medicare for All flips that paradigm. We can’t afford to live without it.