Better Economics for a Better Tomorrow: For starters, Medicare for all who want it

Some form of universal health insurance is inevitable. This is not just my opinion. It’s also the opinion of the late conservative Pulitzer Prize winning author Charles Krauthammer, and freelance finance columnist Malcolm Berko. The need for universal insurance coverage of some form is made obvious from the current systems failures. Some years ago, at a Health Care conference at ASU we learned that 62 percent of all bankruptcies were linked to medical expenses, of those who filed for bankruptcy, 80 percent had health insurance. Medical costs account for 1.5 million home foreclosures yearly. These problems related to health care financing occur in no other nation.

According to the Kaiser Foundation, The Affordable Care Act (ACA) led to large gains in health insurance coverage by extending Medicaid and by providing Marketplace subsidies. The number of uninsured nonelderly Americans decreased from more than 44 million in 2013 too just below 27 million in 2016. But since then, the number of insured people decreased by nearly 700,000 people because of the dropping of the individual mandate and the efforts of some states, like Arkansas, to make receipt of Medicaid contingent on work.

This brings us to Sanders’ Medicare-for-All proposal. Critics complain that the 10-year cost of $32.6 trillion is too expensive, requiring significant increases in taxation to fund the program. While Medicare-for-All would require some hike in taxes, would also result in the elimination of private insurance premiums and private out of pocked costs, with the result being that his plan would end up costing $2 trillion less than the nation is projected to spend over the next 10-years with our current system.

When the number of insurers on current insurance exchanges began to dwindle toward only one or two the proposal to allow Medicare to be an option in those exchanges was met with fierce opposition. Insurance companies saw that proposal as a threat to their very existence. On the political side of the equation, it’s all but guaranteed that so called “small government” Republicans will also oppose the proposal.

But, there is a solution to these objections and it comes from Pete Buttigieg who also happens to be a Democratic candidate for President. Buttigieg’s proposal it to make the Medicare available for all who want it. This would allow the approximately 17 million people who, even at the subsidized cost, cannot afford insurance to finally be covered, while at the same time allowing people who have insurance through their employer to keep the coverage they have. The Buttigieg proposal differs from Sanders’ proposal in that Buttigieg’s Medicare proposal would mimic the current plan which has a premium, a deductible, and a co-pay. Fortunately, the existing premiums and deductibles under Medicare are far smaller than they are with private insurance

Critics will complain that it is unfair to ask the private sector to compete with the government since the government has no profit requirements. But this is not a genuine argument. Today the government allows the private sector to compete with Medicare parts A, B, and D, the allowed competition comes in the form of Medicare part C, better known by its commercial name Medicare Advantage. Would the insurance industry survive in the long-run having to compete against a “Medicare for all who want it” program? That’s an empirical question. But if they can’t, then it’s proof that Medicare-of-All, is more cost effective than private insurance.

Today 63 percent of Americans favor Medicare-for-All, reason enough for it to be given serious consideration. It’s also worth remembering that Social Security in its infancy did not resemble the Social Security of today. January 31, 1940, Ida M. Fuller became the first person to receive an old-age monthly benefit check under the new Social Security law. Her first check was for $22.54. In 1940 the life expectancy for males was 60.8 years and for females it was 65.2 years. In other words, the system fully expected half of the females and more than half of the eligible male population to be dead before reaching the age to receive any benefits from the Social Security system. Was it the all-encompassing system it is today? No. Did it morph. into it? Yes.

Any future single payer system has the potential for cost saving far beyond the currently projected $2 trillion because it would have reduced administrative expenses along with no advertising expenses. But more important, it would also have a mandate to negotiate lower prices with health care providers, thus bringing the nation more in line with other nations who pay only 40 percent of what we pay for health care that is just as good, if not better, than what we currently have.