Issues & Insights
Bernie Sanders Medicare for All event

Medicare For All:  This Idea Has To End

Sen. Bernie Sanders is still promoting Medicare for All to “solve” several problems with the current health care system. What are those problems? Cost and access are the top two.

Advocates for socialized medicine schemes like Medicare for All get both wrong.

The U.S Doesn’t Spend ‘Too Much’ on Health Care

Typical framing of the cost issue shows U.S. healthcare spending relative to gross domestic product (GDP). But, health care spending should be divided by household disposable income, which is the amount of income available to spend after taxes. The U.S. ranks no. 1 in household disposable income in the world, and leads 2nd place by more than 20%.

Gross domestic product, in contrast, is a measure of the productivity of the economy rather than of income. On a per-capita basis, the U.S. typically ranks between 10th and 15th place in the world, and trails countries like Luxembourg, Ireland, and Monaco (which has a per-capita GDP that is more than three times the U.S.) Clearly, GDP is an antiquated measure developed shortly after WWII that doesn’t reflect reality.

Below is a remarkable graph of health care spending as a percentage of household disposable income, where U.S. spending is in the gray “appropriate” range, a graph that has never been seen before as it’s counter to the narrative that the U.S. spends too much on healthcare:

Source: Random Critical Analysis. (Note: CHE is Switzerland.)

Would costs increase or decrease under Medicare for All? The starting point needs to be current health care spending, since that’s a reflection of the health of the U.S. population and the reimbursements of the current system.

It’s inappropriate to compare one country’s cost (call it X) to another country’s cost (call it ½X) and think that costs can be reduced by half. Instead, costs would start at the current level, with increases or decreases from there depending on the new plan’s changes, including payment levels to providers.

In other words, if the plan were 10% richer, and 10% more services were used because the benefit is “free”, then the new plan spends 20% more than the current system. Offsetting this increase may be a decrease in payments to providers, but only to the extent those providers stay in business (for example, Medicare currently reimburses providers at about 30% below the average payor, such that there may be savings if providers continue to do the same amount of work for 30% less).

A researcher at the Mercatus Center at George Mason University found that costs likely would increase significantly, in an op-ed titled, “No, My Study Didn’t Find Medicare for All Would Lower U.S. Health Costs by $2 Trillion”. The author Charles Blahaus showed a range of projections, some of which cost more than the status quo, which is never mentioned by Medicare-for-All proponents. Some proponents, like Alexandria Ocasio-Cortez, claimed the study “saved millions”, but that’s not what the study said.

Improving Access Doesn’t Require Socialized Medicine

Medicare for All promises to cover everyone in the U.S. The plan eliminates all deductibles, copays, and premiums. Declaring that everyone should be covered is relatively easy, for example, through expansion of Medicaid.

However, in 1987 the Senator was quoted as saying, “If we expand Medicaid [to] everybody — we would be spending such an astronomical sum of money that, you know, we would bankrupt the nation.

However, there are many ways to achieve coverage for everyone with a less comprehensive approach (and less costly than the estimated increase in federal spending of $33 to $39 trillion).

I propose a simple approach to do this in my book, Medicare For All – Really?! by introducing a catastrophic plan that would cover everyone with costs above $100,000. The point is to cover everyone for large claims, with the market providing the option to purchase coverage before the government plan kicks in.

The latest proposal of Medicare for All focuses on more recent issues such as the COVID pandemic, for example, focusing on the financial woes of community health centers by increasing spending $130 billion over five years. Adding costs to the system at such a time when belt-tightening is the focus is disastrous.

The Bottom Line

Is it possible that Medicare for All could work, to lower costs yet provide access to all? In the opinion of this health care actuary, absolutely not!

There is zero chance that Medicare for All could provide a better health care system at lower cost.

Rich Yurkowitz is a health care actuary and author of Medicare For All – Really?!

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  • Answer: NO IT CANNOT!!! If the billionaire marxists are willing to pay for it until their TOTAL WEALTH has been reduced to my meager level then I will “chip in”. Otherwise, GFU democrat/communists!!!!!

  • Medicare for all controlled by leftist government and big pharma patient murderers? No thanks…the quality or amount of the health care you receive could be determined by a social credit score. No thanks.

  • Government control comes from accepting free stuff and boy are those leftists good at handing out someone else’s money with which to do it..

  • hospital closures are coming, start studying first aid and basic medicine, diet, exercise, workplace safety, that kind of thing, how to set broken bones, prairie home remedies. The medicare system is corrupt, people are stealing the money outright and people currently reliant on it are going to be in for a rude awakening. Currently it is estimated or reported that 10 percent of medicare funding is lost annually to fraud waste and abuse but it could easily be 2x/3x that. Medical and defense spending both have the same sickness, corruption. Be wise and be ready…

  • When has any government program saved its citizens money? Or been run efficiently? Or succeeded without massive fraud? Nope, not going to work – not in this corrupt administration, or EVER!

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