Analyzing Medicare for All

The idea of universal healthcare, or “Medicare for All” has become the newest basic policy proposal for Democrats wanting to identify with the progressive wing of the party. When 28-year-old Alexandria Ocasio-Cortez defeated fourth ranking House Democrat incumbent Congressman Joe Crowley in a June primary, she credited her bold policy proposals as to why she won—Medicare for All being one of them. But what does the term actually mean? And what would the effects of it be if it were to be implemented?

What is it?

Medicare is universal healthcare primarily for US citizens over the age of 65. Proponents of Medicare for All want the age restriction lifted, providing universal healthcare to all Americans. U.S. citizens pay the highest costs for healthcare in the world, and supporters of the policy believe Medicare for All would reduce average costs because Medicare’s costs are lower than those of private insurers. Proponents also argue the costs of prescription drugs and other medicines will decrease as the federal government gains the ability to negotiate with pharmaceutical companies.

Universal healthcare first came to prominence as a policy in Democratic party under the term “single payer healthcare” in 2016 during the Democratic primary. However, polling shows the term Medicare for All is more likely to garner widespread support. According to a study done by the Kaiser Family Foundation, 58% of Democrats had either very positive or somewhat positive impressions of “single payer healthcare,” while 81% of Democrats had very positive or somewhat positive impressions of Medicare for All. Among Americans, Medicare for All enjoys a 60% approval rating.

So what would the effects be?

The most important question is how much universal healthcare would cost. Senator Bernie Sanders (D-Vt.), who proposed a Medicare for All bill in 2017, places the cost of the program at $1.3 trillion a year, but emphasized there would be savings in administrative costs, (such as advertising). Neutral economists, however, disagree with Sanders’ estimate: health economist Kenneth Thorpe, the Urban Institute, and the Center for Health & Economy all place the price tag at double what Sanders estimates, at around $2.6 trillion a year.

The massive cost of Sanders’ proposal would have different effects on different portions of the US population. Here is how it would affect different types of Americans, according to analysis done by the New York Times:

  • 156 million insured through work - Higher taxes, but the elimination of premiums because healthcare would be provided by the government, not private insurers. For some people, these new taxes could be cheaper than their current premiums.

  • 74 million with Medicaid - More choices of doctors and hospitals, but those who work may see increases in their payroll taxes.

  • 56 million currently with Medicare - More generous coverage because the Sanders plan would cover dental, vision, and hearing aids, which the current system does not.

  • 28 million uninsured - All get healthcare because the government would provide universal healthcare under Sanders’ proposal.

  • 22 million who buy their own healthcare - New taxes, but less out-of-pocket spending. The New York Times analysis could not come to a conclusion if the new taxes would be more expensive than the current costs of buying insurance.

  • 9 million veterans and 2 million Native Americans - Keep their current plans. Veterans Affairs and the Indian Health Service would remain largely unchanged

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With Sanders’ plan, doctors and hospitals will likely see pay cuts compared to the current system. This is because the Medicare proposal would not pay as much as current private insurers do. However, hospitals will likely save on administrative costs because they won’t have to coordinate with private insurers and will no longer need to worry about patients who cannot pay their medical bills because everyone will be insured under the plan. Drug costs will also go down, reducing profits for pharmaceutical companies. Private insurance companies will be eliminated as well.

Medicare for All is a bold, progressive policy proposal which has the potential to grasp the attention of the American people. Whether or not the policy is ever implemented depends on how proponents fare in the 2018 and 2020 elections and if the American people decide they are willing to bear the costs of the broad plan.