Thinking Through "Medicare for All"

A friend of mine, who is an avid Democrat and social progressive, asked me recently if I supported “Medicare for All” and I answered honestly that I hadn’t figured that out yet. When I was in my 20s, I’m sure I’d have embraced it wholeheartedly. Back when I was living on student loans and going to graduate school, taxes were the least of my worries because I paid almost none and it seemed right and just. I knew the tax bills would climb when I was out of school and working, but so would my income. Now that I’m in my 60s and facing retirement in the near future, my view on income, taxes and health insurance comes from a completely different perspective. After my conversation with my friend I set out to do a little research to help clarify my thinking on “Medicare for All.”

I was restricted to finding what I could on this topic through the internet, and I found a great deal about what it might mean in the U.S. and what it has meant in other countries.

It is helpful to know that many countries have developed publicly funded health care systems, and in looking at their experiences, we can find some useful ideas. There is an excellent website from the International Commonwealth Fund that compares systems from 19 different developed countries. All of them have some form of a publicly funded system, but none of them cover all of someone’s health expenses. Most also require copays and complementary or supplementary private insurance. Without a publicly funded health insurance system, the U.S. pays about double per capita for insurance premiums and health care expenses in total compared with most other countries.

Let’s start with a look at the total health care costs for most Americans. Here are a few facts:

•Today, one-third of people in the U.S. are covered with publicly funded systems including Medicare, Medicaid, and the VA

•On average, the individual health insurance premium in the U.S. last year was $5714, the highest among developed countries

•The average out of pocket expenses for healthy young adults was $2903

•The average deductible on a health insurance plan was $5714

•People without health insurance pay the highest prices for medical care because they can’t benefit from the lower rates insurance companies negotiate

•Healthcare expenses are a major factor in bankruptcies in the US

Now, let’s compare the U.S. with some other countries systems.

The Affordable Care Act (a.k.a. "Obamacare"), as originally drafted, seems most similar to the public health system in the Netherlands. The citizens are mandated to purchase insurance from private carriers, just like ACT in the U.S. as originally conceived. Insurance policies are regulated in terms of what must be covered, and insurers are required to cover all applicants. Out of pocket deductible expenses average $465 per year for adults with children and the elderly exempted from deductibles. This is less than 20 percent of what we pay in the U.S. out of pocket.

Australia seems to truly have a private-public balance. Sixty-seven percent of medical expenses are covered through public funding, with most of it administrated at the local and state level. The state’s contract with providers in their area and the federal government determines what is covered. Citizens are required to carry private insurance, and if they fail to do so, their premiums are increased by two percent for every year they go without insurance, beginning when they are 30 years old. This seems like a creative way of incentivizing the purchase of insurance. The average premium for supplemental coverage in Australia is $1992

In Great Britain, the publicly funded system covers 79.5 percent of healthcare costs with some copays on things like prescriptions, dental, and vision care. The average per capita out of pocket expense is $586. The average premium for supplemental insurance in the UK is $1,435.

In Denmark, the publicly funded system covers 84.2 percent of healthcare costs, funded with an average eight percent tax on taxable income to cover the cost. Health care tax dollars are allocated locally. Supplemental insurance covers 12 percent of health care, and four percent of medical expenses are out of pocket.

In Canada, the public system covers 70 percent of healthcare costs, with supplemental private insurance covering the rest. The tax bill to cover health insurance varies by income with the lowest income citizens paying $443 annually and citizens at the median income of $56,349 paying $3620. A family in the upper 10 percent of income would pay $37,361 annually in taxes to cover healthcare in Canada.

This brings us back to the question of what I think about “Medicare for All.” In a “Medicare for All” system, I assume most of my medical expenses would be covered by the public plan, and my private insurance would cover less. Also, the government would then have the power to negotiate lower rates on many things, much like my insurance company does now. Since both my husband and I are in our early 60s, we are old enough to have begun to have some health issues, but not old enough to retire or to benefit from Medicare. As a result, we spend quite a bit on healthcare.

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My taxes would definitely go up substantially under a Medicare for all system, but my premiums for supplemental insurance would go down, and my out of pocket expenses would go down. If I used the total of eight percent as seen in other countries, that sounds like a massive tax increase, yet in the context of my other medical costs, it seems more reasonable. If my taxes and medical expenses were similar to the public systems in any of the other countries, I would have had years when my costs would be higher and years when my costs would be lower. At the same time, any of the plans would prevent either me or anyone else from being bankrupted by medical expenses.

In conclusion, I’m supportive of “Medicare for All,” but I’d like to see the details of the plan before I commit. We need to ensure that young, healthy people contribute and that medical malpractice payouts are reasonable and contained.

While “Medicare for All” would be a significant jump in taxes for the top 10 percent of earners (note the $37,000 per year for Canadian top earners), it would be great for the bottom 60-70 percent and acceptable to the other 20 percent. With appropriate private-public balance in health coverage, it is unlikely to lead to overuse of healthcare. The power to negotiate cost rates on services, medications, and procedures would be immensely helpful and would help our medical costs to fall more in line with the rest of the world.

In my next post, I’ll focus directly on mental health and public funding.