Medicare for All 101

Healthcare wasn't always the Number One Issue on most Americans' minds. It used to be fairly inexpensive, as there wasn't all that much doctors could do. But as medical breakthroughs and technology developed, it all began to cost more. 

Healthcare insurance began with Blue Cross and Blue Shield in the 1920s and 1930s as not-for-profit programs. But less than 10 percent of the population had coverage in 1940. Then, in a move to limit inflation during World War 2, President Roosevelt froze wages. In order to attract workers, companies offered more benefits, including health insurance. In 1943 the Internal Revenue Service made employer-based health insurance tax-exempt, making it cheaper to get health insurance through a job than by other means. By 1950, more than 50 percent of the population had employer-based health insurance. By 1960, more than two-thirds did.

While it was never illegal to sell for-profit health insurance, as Cigna and Aetna have done since the early 1950s, for-profit plans grew slowly. As rising healthcare costs became a serious political issue in the 1970s, HMOs (Health Maintenance Organizations) were viewed as a market-based solution to rising federal healthcare expenses. President Nixon signed the HMO Act of 1973, which Congress approved with bipartisan support. Over time, this led to tremendous growth in for-profit HMOs and other health insurance enterprises. In 1994, "the Blues" allowed their member companies to become for-profit, and now most of them are. 

As health insurance companies' primary focus turned to profits (or retained earnings, for the remaining not-for-profits) and shareholder return, their efforts to avoid paying for healthcare resulted in an enormous bureaucracy of claims deniers, negotiators, and case managers, in addition to their already substantial overhead costs for advertising, marketing, and claims processing. Their efforts generated a corresponding explosion of costs to doctors and hospitals in order to get payments preauthorized and approved for services recommended and rendered. With over 900 separate insurance companies and thousands of plans, administrative overhead now accounts for over one-third of total US healthcare spending. As our 2022 total spending was $4.5 billion, that's well over one trillion dollars being spent on administrative overhead rather than actual healthcare. Savings from reducing this enormous administrative burden could be used to provide comprehensive health care for all Americans.

Despite all that money we spend, we can't claim to have the world's best healthcare.

• We still have close to 30 million Americans who have no healthcare insurance.
• We have around 44 million who are underinsured. Although they have insurance, high cost-sharing (deductibles, co-pays, etc.) discourage them from seeking care. Underinsured people who have a serious illness or accident can't avoid getting care and then may be unable to pay their bills, threatening bankruptcy. 
• Among comparable developed countries, the US ranks at or near the bottom in infant and maternal mortality and several other categories. Our life expectancy is several years shorter than that of most industrialized countries.
• Although the US is the world's largest market, we have the world's highest prescription drug prices. The largest purchaser of prescription drugs in the US is Medicare, but Congress (after heavy lobbying by the pharmaceutical industry) barred Medicare from negotiating prices.

If we really had great healthcare, we wouldn't have gotten to enjoy Breaking Bad, the outstanding TV series based on our lack of good coverage and the desperate lengths some people might go to to avoid driving their families into bankruptcy. But isn't that a trade you'd be happy to make?

We believe that the best solution is single-payer, universal, improved Medicare for All (M4A).

You may not know that Original Medicare (Parts A & B):

• is a single-payer system.
• provides comprehensive, reliable insurance for everyone over 65, as well as several million under 65 with kidney failure, blindness, and other disabling conditions.
• offers free choice of nearly every doctor and hospital in the US.
• has functioned for over 50 years with a lower administrative overhead than any other healthcare insurance plan.
• is the most popular healthcare insurance plan.

Despite all of those good aspects, Part B pays only 80% of approved charges. Many buy expensive Medigap coverage to cover that 20%. Prescription drugs are also not covered unless one pays more to enroll in Part D, the prescription drug  plan.

Studies suggest that moving from the complex myriad of private insurance companies and plans to a single-payer system could save around $600 billion each year through administrative streamlining. Another $150 billion can be saved by negotiating prices of prescription drugs and medical devices, such as hip and knee implants, stents, and pacemakers. That sum is more than twice what would be needed to provide comprehensive, reliable insurance for everyone in the US which would include:

• free choice of nearly every doctor and hospital in the US
• coverage of all medically-necessary care
• dental, vision, and hearing care
• prescription drug coverage
• no deductibles or co-pays (no more supplemental Medigap
• policies)
• minimal or no out-of-pocket costs

Medicare for All could do that for less than we’re currently spending. It makes common sense, and it’s the right thing to do. Everyone needs and deserves reliable healthcare without the risk of bankruptcy.

Since we're currently paying more overall than Medicare for All will cost, the money is there. We won't know exactly how it will be funded until a payment plan is passed by Congress, but here are some financing proposals that make sense to us. In brief, payroll taxes and several progressive taxes should be adequate to fund Medicare for All with 95% of households paying less than they pay now, for greatly improved and permanent coverage.

• 2021 total US healthcare spending:               $4.10 Trillion
• Estimated annual cost of M4A:                       $2.93 T
• Existing public funds:                                        - 1.88 T
• New funds needed for M4A:                            $1.05 Trillion

Where might we get the $1.05 T?

• 8% payroll tax or 2% gross receipts tax =          $400-600B
• 4% income-based premium =                                      $350B
• 3.75% sales tax on non-necessities =                          $200B
• Tax long-term capital gains as ordinary income =     $ 70B
• Raise marginal rates of incomes > $250K
• More progressive estate tax =                                      $  25B
• 1% tax on top 0.1 percent of households =               $130B  

                                                                          Potentially  $1.2-1.4 Trillion

How does this affect the working middle class?

              Right now:

• Typical insurance plan for family of four = $20,000
• Employers pays ¾ =                                        $15,000
• Employee pays   ¼ =                                       $  5,000
•                   plus deductibles & copays 

              Under Medicare for All:

• Average US salary is around $50,000
• 8% payroll tax = $4000 divided between employer & employee
•                                                                     Employee pays $2000
• 4% income-based premium on $50,000 after standard deduction      =                                                                                               $ 844
• Total annual healthcare insurance cost to employee = $2844
•                with NO deductibles or copays
•                an immediate "raise" of over $2000

And also:

• Both employer & employee no longer pay current 3% Medicare tax
• Employer no longer pays $15,000 for private insurance
• Employees can negotiate for higher wages, which have been going to insurance premiums

In the end, both households and businesses should save nearly 10% on average each year on healthcare costs. Medicare for All will be good for everyone. It will not crash the economy or raise suffocating taxes. All except those with incomes over $400,000 should pay less in taxes to fund this than they now pay each year in total overall healthcare costs. It's a genuine win-win.