Medicare for All: Part 2

In our last newsletter, we wrote about the phrase “Medicare for All” and how it means different things to different people. This week, we’re digging into one of the major proposals out there in order to better understand how it would affect health care.

In 2016, Senator Bernie Sanders announced his comprehensive plan to overhaul how Americans pay for health care, releasing it to the public just hours before a Democratic presidential primary debate. Since then, “Medicare for All” has been a topic of conversation at dinner tables across the country. So, what would health care under the Sanders plan look like?

Single-Payer

Currently, our payment system for health care services is a tangled web. Private insurance companies (like the ones who provide insurance coverage through employers), the federal government, and state governments all have a hand in paying for health care services. The Sanders plan would make the federal government the payer of health care costs, and would virtually eliminate all other payers. (Private insurance companies would be allowed to cover services that aren’t part of the new program, but since the new program would be quite comprehensive, private insurance would exist on the fringes.)

That means that Americans would no longer get health insurance through their employers, and that employers would actually be barred from offering insurance. Medicaid patients would also become part of the new program.

There are two exceptions. People currently getting coverage through the Veterans Affairs system or Indian Health Services would continue to do so.

Expanding Coverage

The Sanders plan offers generous coverage – more generous than some other single-payer systems around the world, in fact. Standard services such as hospital stays, primary care, maternity care, mental health, substance abuse treatment, and lab tests would be covered. It would also expand the services that are offered under the existing Medicare program. For example, dental and vision services, which aren’t currently covered by Medicare, would be covered in the future.

Prescription drugs would be covered, though possibly with some limited cost to patients.

Copays and Premiums

Patients would not have deductibles or copays under the new system. Two possible exceptions are prescription drugs (though any copays would be capped at $200 per year) and long-term care.

Phased in Over Four Years

The Sanders plan wouldn’t do everything overnight. Instead, it would phase in a new system over a four-year period. During the first year, the eligibility age for Medicare would be lowered to 55, then 45 in the second year, then 35 in the third year, and then finally to everyone in the fourth year. Children would be covered immediately in year one.

Cost

Then there’s the elephant in the room: cost. One widely-cited study comes from the libertarian Mercatus Center at George Mason University in Virginia. The study produced two interesting numbers, and your political leanings might influence which number interests you more.

The Mercatus study estimates that Bernie Sanders’ plan would cost the federal government $32.6 trillion over 10 years. It’s hard to argue that single-payer health care would require a massive increase in government spending – the federal government would indeed be taking on a huge new role in running a health care system for all Americans. If you prefer a small, limited federal government, then this approach might concern you.

At the same time, however, the study estimates that the Sanders plan would actually save the overall health care system $2 trillion. Single-payer advocates argue that this new model could force private health care providers to lower their costs, and would eliminate the money private insurance companies spend on marketing and administrative overhead. They say that Americans are paying a lot for health care now as it is, so it doesn’t matter much whether they pay for it through taxes under Medicare for All, or through premiums, copays, and deductibles through private insurance.

It is important to note that costs for the Sanders’ plan have not been estimated by the Congressional Budget Office, or apparently by the Sanders campaign either. In health care, more than many other programs, cost estimates have to account for enormous numbers of variables. Each new detail of coverage under the program will have impacts on the projected cost.

Can we expect to see Sanders’ Medicare for All plan pass anytime soon? Probably not– even Sanders himself says so. But with health care still front and center in voters’ minds, and with steady increases in the cost of care each year, we’ll certainly continue to hear about it as the 2020 presidential election approaches.

Next issue, we’ll look at another idea under the Medicare for All umbrella: Medicare buy-in plans.