During the most recent mid-term elections, Healthcare continued to rank atop the list of those things most important to Americans. According to Gallup, 80% of Registered Voters listed healthcare as either extremely or very important, followed closely by the Economy and Immigration both at 78 percent. With Republicans failing to do anything comprehensive regarding health care during their recent control of both houses of Congress as well as the Executive branch, the U.S. finds itself once again in a discussion around the government’s role in solving America’s health care crisis. Among the solutions most touted by Democrats is the idea of a ‘Medicare for All’ platform.
According to Vermont Senator Bernie Sander’s, the most outspoken legislator leading the charge for Medicare for All, “Health care must be recognized as a right not a privilege for every man, woman and child in our country regardless of their income. The only long-term solution to America’s health care crisis is a single payer national health care program.”
No question that in America, something should be done to insure that every citizen has access to quality affordable health care, how we accomplish this may be a bit more complex than the broad brush of ‘single payer.’ While the idea of nationalized medicine might sound good to many Americans and makes for a good talking point on the cable news talk shows, when it comes to government run healthcare, the devil may most certainly be found in the details. Our team at GDP Advisors reviewed ‘Medicare for All’ (specifically the plan outlined by Senator Sanders), and have compiled our thoughts and opinions on the measure.
Under the plan proposed by Senator Bernie Sanders, all Americans would be covered, after a short phase-in period.
WHAT HAPPENS TO MY CURRENT INSURANCE PLAN?
Should the plan proposed by Senator Sanders be implemented as outlined, all current insurance programs would be eliminated. This would include both the individual market as well as the employer market (which combined cover more than 50% of Americans.
HOW WOULD MEDICARE FOR ALL WORK?
The single-payer options would expand Medicare to cover not only medical and prescriptions drugs, but also vision, dental, as well as Long Term Care. It would also include a wide breadth of reproductive health services including abortion. The government would then set prices that it is willing to pay for procedures, via a master charge list, as it does currently with Medicare. Senator Bernie Sanders’ plan would eliminate cost sharing completely, meaning no premiums, no co-payments, no deductible. In other words, “free” healthcare for all with the exception of prescriptions drugs which, under his plan, would make participants pay up to $200 per year.
While the idea of ‘free’ healthcare (or free anything for that matter) might sound appealing, what many Americans know is that there’s no such thing as ‘free’ when it comes to most things, health care being one of them. The following may be the unintended consequences or impact of a Medicare for All system in the United States:
- LOST JOBS: if this plan were to proceed, the consequence would be millions of jobs. Not only jobs that would directly be eliminated in the insurance markets alone, but also ancillary positions such as admins at hospitals, enrollment call centers, etc., who’s jobs would likely become obsolete. The health care delivery system, which relies heavily on the private pay platform, would also be operating under thinner margins due to reimbursement rates under Medicare. As a result, other jobs such as janitorial, clerical, etc. would also likely be re-adjusted (i.e. eliminated).
- ACCESS: remember the famous “if you want to keep your doctor” statement made during the debate over the Affordable Care Act? For many Americans, this promise didn’t pan out. Under a Medicare for All platform, likely this un-kept promise would expand to even more American’s. If Uncle Sam is paying for it, likely he can tell you where to go to get it – it’s no longer your choice rather the U.S. governments.
- RATIONING OF CARE: I’m not saying death panels, but yes, there would now be a government entity that would control what possible claims/procedures would be approved and those that would be denied. Right now, insurance companies get to be the bad guy, but in a Medicare for all platform, Uncle Sam gets to make these decisions. As a result of budget management, things like age, life expectancy, past life choices, etc. could come into play when deciding what conditions/care should be provided and YOU wouldn’t be the one getting to decide because there would be NO private pay option. Each American would relinquish their right to care to the U.S. Government (regardless of their ability to pay).
- COST: based on Senator Sanders own estimation, Medicare for All would cost approximately $1.36 trillion per year (we spend just under $600 billion per year on the U.S. military, so this is more than two defense budgets combined) which means;
- TAXES: yes, lots and lots of taxes – you can’t offer free healthcare without paying for it. Here’s now the new proposed taxes to pay for ‘MfA’ would apply:
- A 6.2% income-based premium paid by employers
- A 2.2% income-based premium paid by households
- A progressive income tax rate of:
- 37% on income b/t $250k & $500K
- 43% on income b/t $500k & $2mm
- 48% on income b/t $2mm & $10mm
- 52% on income above $10mm.
- Capital Gains would also be taxed as ordinary income
- Estate Tax Increases (also known as the Death Tax)
- Limited Tax Deductions for the Wealthy (i.e. household making more than $250K per year would be limited on what they can deduct)
- Elimination of current tax expenditures (i.e. write offs) for corporations (for example employers would no longer write off health insurance premiums as an expense).
Increasing taxes on those wealthier than others might sound like a good idea to some, but let’s face it, the wealthy in our society know how to stay wealthy. Personally, I’ve never gotten job much less a pay raise from someone not wealthy. In the end, it’s the middle class that would suffer due to higher taxes as it would likely result in lower wages, fewer jobs, etc. Sure, everyone would have free healthcare, but many more could quite possibly find themselves utilizing food stamps as well.
- LOSS OF INNOVATION: While there is no question, we need to do something about the rising cost of health care (which causes increases in health insurance), Medicare currently reimburses for medical procedures and drugs on average approximately half of what the private insurance market does – that means a significant loss in revenue for companies that innovate and develop new treatments and technologies. The United States is responsible for roughly 70% of the world’s innovation and advancement when it comes to medicine. A Medicare for All could mean the end of new treatments, medications and cures. Not just every day Americans, but the world (who relies on our free-market capitalistic system in the U.S.) could suffer from a socialized platform in the U.S.
In the end, Medicare for All may sound good to an uninformed American electorate, but what that segment of our society doesn’t realize is the possible fall out. When it comes to health care, free isn’t free and many do not see that in the end everyone would be paying for single payer, some directly, but everyone indirectly. We must do something to curb the rising cost of health care in the United States but at the same time, create a system where innovation can continue, access could be obtained and incomes could be protected. There is no one-size fits all in how we approach a solution, but nonetheless we cannot continue on the path we are on today. Health care in the U.S. is not broken; it just works too well for too few. We can make it better but Medicare for All is not the answer.