The usual response to Sen. Bernie Sanders’ Medicare for All proposal is: “It sounds good, but how can we pay for it?” But Medicare for All will, over time, actually cost less than the current system, while providing universal care.
The notion that it is unaffordable stems partly from a misunderstanding of government estimates of future health expenditures. The Congressional Budget Office, the official source of these estimates, deals only with expenditures by the federal government, not with out-of-pocket costs. Most people don’t understand that. They naturally assume that when the CBO predicts an increase in health costs, it is referring to total costs. Not so.
In addition to government costs, total expenditures also include huge out-of-pocket costs to American families — rapidly increasing premiums, deductibles and copayments and prescription drug costs. The CBO doesn’t consider these. While income taxes for some people would have to rise to cover higher government costs, in Bernie’s plan those increases would be offset by the elimination of all out-of-pocket costs. Altogether, then, total expenditures would probably be less than in our current system, and they would certainly rise more slowly.
Obamacare didn’t fix costs, coverage
Most important, Medicare for All would cover everyone. Obamacare has certainly benefited millions of people. But it has left 30 million people still uninsured,and by continuing to rely on the private insurance industry, it has not contained costs or controlled the inflation of costs.
Bernie’s plan is not some wild, disruptive idea. Medicare has been in effect for senior citizens for a half-century, and it is the most popular part of our system. Many 64-year-olds can hardly wait to be 65 so they are eligible. Bernie’s plan would simply extend Medicare to all age groups. Moreover, Medicare for All would not be a “government-run” system or “socialized medicine,” as opponents often argue. It is merely government-financed. The delivery of care by providers would remain private, as it is now for senior citizens. Patients would have free choice of providers, without being confined to networks by insurance companies, and they would not lose their insurance because of job loss.
Bernie Sanders wants to help: Medicare for All will save Americans from health care crisis
Many defenders of the current system argue that we should not force people to give up their private insurance, which polls suggest many of them like. But I’ve never personally met anyone who actually likes their private insurance, because it almost always entails micromanagement and onerous out-of-pocket costs. It’s just better than nothing, and they don’t want to lose what they have without being confident of a better replacement. Medicare for All is that better replacement.
A rally on April 29, 2019, in Washington, D.C. (Photo: Win McNamee/Getty Images)
Bernie’s plan would improve on Medicare by broadening the benefit package to encompass all health services (including dental, eye and hearing care) and eliminating all out-of-pocket costs. He calls for a four-year transition, beginning with dropping the Medicare eligibility age from 65 to 55, and covering all children. This is different from a “public option,” which would allow private insurance companies to skim off the healthier, more profitable customers while leaving the sickest to the public system. Instead, in the first year, everyone 55 and older would automatically be in Medicare.
Current system is unsustainable
Now, our patchwork system for those under age 65 treats health care as a commodity sold to those who can afford it or whose insurance companies will cover it. Some patients receive excessive care, and some none at all. This market-based system costs more than twice as much as the average in other advanced countries, while the outcomes are generally worse. Overhead costs are among the highest in the world. Private insurance companies, for example, spend about 12% to 18% of their revenue on overhead; Medicare spends less than 2%.
Prices in the health care system consistently rise faster than the background inflation rate because they can. Witness the big drug companies, which charge whatever the market will bear even as their profits soar. The same is true of many for-profit providers and health facilities, such as outpatient imaging centers. As prices go up, payers reduce benefit packages and increase out-of-pocket costs to try to lessen the impact. I believe an important part of Medicare for All should be to move to a largely nonprofit-provider system to curb the incentive to raise prices.
The next time you hear someone say Medicare for All sounds good but wonder how we could possibly pay for it, the answer is that we’re already paying more than enough to cover it. But too little of that money is going for actual health care and way too much for profits and overhead. And the current system is unsustainable. Not only can we afford Medicare for All, we can’t afford anything else.
Marcia Angell, former editor in chief of The New England Journal of Medicine, is on the faculty of Global Health and Social Medicine at Harvard Medical School and the author of “The Truth About the Drug Companies: How They Deceive Us and What to Do About It.”
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