Medicare For All Explained

Senator Bernie Sanders’ presidential campaign features a health care option to the Affordable Care Act (Obamacare) that has had a lot of attention of late. It goes by the name of “Medicare for All” or M4A. It exists today as U. S. Senate Bill 1129 and has stirred a lot of interest among voters and presidential candidates. To help both groups engage in a fact-based discussion, this summary is organized around three critical topics:   
1. How the M4A program works;

2. How it will be funded; and

3. Challenges in making a transition from the present system to a
single payer health care program. 

How M4A Works
The basic idea of M4A is pretty simple--the Federal government, as the single payer of all medical bills submitted by doctors, hospitals, health clinics, drug companies, etc., is picking up the tab for all of our health care needs so that we will no longer have insurance premiums, deductibles, co-payments or out-of-pocket drug expenses. It also assures quality by allowing unlimited access to doctors, hospitals and specialists of your own choosing.  

How It Will Be Funded

A team of economists at the University of Massachusetts-Amherst (Pollin, et al, Political Economy Research Institute 11/18) have studied the economics of our health system and concluded that M4A could reduce total health care spending by nearly 10%, to $2.93 trillion, while creating stable access to good care for all U.S. residents. In their study, the researchers used three scenarios for calculating  cost.

In 2017, the total of all health care expenditures across the nation, including patients’ costs, was $3.24 trillion. Sixty percent of this total represented the federal cost of various health care programs targeted to specific categorical programs-- Medicare, Medicaid, veterans’ benefits, active duty military personnel, Federal employee insurance, and subsidies paid under the Affordable Care Act.  Added to this 60% figure was the economists’ estimate that a 12% increase in health care M4A costs would occur as a result of increased demand for the expanded range of health services under the M4A program. Subtracted from that sum was the savings of 19% brought about by lower costs of negotiated drug prices and the elimination of private insurance profits, advertising and administration costs. That leaves a total of $1.2 trillion of revenue that would need to be raised to pay for M4A or Medicare for All. 

There are two options for raising the additional $1.2 trillion revenue to cover the cost of M4A--revoke the Trump tax cut (more than $1.5 trillion) that is criticized for helping corporations more than people—or raise additional taxes. 
New tax options include the following:

• Levy a 4% tax on household incomes above $29,000. For the median household income of $60,000, this results in $101 a month tax that would, in effect, cover the costs of all the family’s health care needs-- doctors, hospitals, drugs, dental, vision, hearing, drug treatment, mental health care and long-term care of the aged.

• Or levy a 7.5 percent payroll tax to be paid by all employers, except  for small businesses. Since M4A would relieve employers from the financial burden of funding health insurance premiums for their employees, employers would realize a substantial net gain. 

• Or, another revenue-producing program would involve some smaller payroll tax combined with a sales tax on luxury items and or some form of wealth tax on multi-billionaires.

Transition Challenges

During the four years the Senate bill estimates it will take to get a M4A program set up, the greatest problem will be disruption of the private insurance business. While the wealthy may decide to buy insurance for elective and cosmetic surgery — not to be covered by M4A there will be no major market for any other health insurance. To mitigate the subsequent impact of lost jobs on the insurance company employees, the proposed legislation provides financial assistance “ to workers who perform functions in the administration of the health insurance system and who may experience economic dislocation as a result of the implementation of this Act.”

It was noted above that when Medicare covers all health care expenses there will be—not unexpectedly— an increase in demand for health care services. In the transition to  more healthful population there will be a need for more doctors, nurses and other health professionals as well as an increase in demand for administrative and service workers. Many workers in the insurance business will find their skills are in demand in the new, expanded health care industry. Further, there will certainly be some need for additional investment in medical infrastructure that will also create jobs. 

Keith Dix 

Click here for the primary source document for the above analysis.

Click here for more information on medical health care options, beyond this article.

 

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