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Don’t be so scared of Medicare for All

Robert Reich, professor of public policy | November 22, 2019
Robert Reich in video advocating for Medicare for All.

Robert Reich in video advocating for Medicare for All.

Republicans and even some Democrats are out to scare you about Medicare for All. They say it’s going to dismantle health care as we know it and it will cost way too much.


The typical American family now spends $6,000 on health insurance premiums each year. Add in the co-payments and deductibles that doctors, hospitals, and drug companies also charge you — plus typical out-of-pocket expenses for pharmaceuticals – and that typical family’s health bill is $6,800.

But that’s not all, because some of the taxes you now pay are for health insurance, too — for Medicare and Medicaid and for the Affordable Care Act. So let’s add them in, again for the typical American household. That comes to a whopping $8,975 a year. Oh, and this number is expected to rise in the coming years.

Not a pretty picture. If you’re a typical American, you’re already paying far more for health insurance than people in any other advanced country.

And you’re not getting your money’s worth. The United States ranks near the bottom for life span and infant mortality. Or maybe you’re one of the 30 million Americans who don’t have any health insurance coverage at all.

You see, a big reason we pay so much for health insurance is the administrative costs involved in private for-profit insurance. About a third of what you pay goes to the people who oversee billing and collections. And then of course there are the marketing and advertising expenses, and the profits that go to shareholders or private-equity managers.

What happens if we have Medicare for All?

Let’s first consider a limited version that keeps private insurance — as proposed by candidates including Joe Biden, Pete Buttigieg, and Kamala Harris. The insurance costs remain the same because it’s the same private insurers and the same co-payments and deductibles. The only difference is more of this would be paid through your taxes, rather than by you directly, because the government would reimburse the insurance companies.

This could help bring down costs by giving the government more bargaining leverage to get better prices. But we don’t know yet how much.

Now, let’s talk about a different version of Medicare for All that replaces private for-profit health insurance, as proposed by Bernie Sanders and Elizabeth Warren. In this version, total costs — including a possible combination of premiums, co-payments, deductibles, or taxes — are even lower. This option is far cheaper because it doesn’t have all those administrative expenses. It’s public insurance that reimburses hospitals, doctors, and pharmaceutical companies directly and eliminates the bloat of private insurance companies.

Economists at the University of Massachusetts-Amherst say Medicare for All that replaces private for-profit insurance would reduce costs by about 10 percent, mostly from lower administrative and drug costs. The Urban Institute estimates that households and businesses would save about $21.9 trillion over ten years, and state and local governments would save $4.1 trillion.

You’d pay for it through a combination of premiums, fees, and taxes, but your overall costs would go way down. So you’d come out ahead.  And everyone would be covered.

You’d keep your same doctor or other health-care provider. And you could still buy private insurance to supplement Medicare for All, just like some people currently buy private insurance to supplement Medicare and Social Security. The only thing that’s changed is you no longer pay the private for-profit corporate insurers.

Any Medicare for All is better than our present system, but this second version is far better because — like Medicare and Social Security — it’s based on the simple and proven idea that we shouldn’t be paying private for-profit corporate insurers boatloads of money to get the insurance we need.

It’s time for true Medicare for All.

Cross-posted from Robert Reich’s blog

Comments to “Don’t be so scared of Medicare for All

  1. A couple of observations:

    The most important factor accounting for the excess expenditure in the US is prices and therefor incomes of providers including the drug industry.

    Disrupting the system to bring prices and incomes to international levels would be a major blow to an important industry and simply not going to be accepted.

    It is important to remember that incomes of physicians and other health professionals include payment for education whose costs are covered by the public sector in other countries.

    Medicare for all just as current Medicare is administrated in part by contract through the private sector.

    With Baby Boomer doctors in sight of retirement there would be a large loss of providers who would not take the income cut to bring prices to current Medicare levels.

    The system would adjust eventually. Patients with income would opt out to private concierge medicine as they do today.

    The current system wastes a lot of money by paying for unproven and dis-proven procedures – knee scopes for one. Medicare for all would be no less susistible to lobbying.

  2. Socialized medicine from tax dollars will cost us less and our government should provide it. We should vote and tax the top 1%. We should include real health care for un-naturalized migrate citizens. They pay taxes on products they buy. Healthcare is a right, the United States can afford it!

  3. The concept of Medicare for All isn’t bad in theory, but any comparisons to other government implementations are moot. A government must operate efficiently and in the best interest of the constituents for such a system to succeed.

    Unfortunately, the US political system is not structured to attract leaders that prioritize efficiency and the true interest of the greater good. Instead, the lure of power and self-serving actions allow lobbyists and other backscratchers to cram otherwise good legislation with selfish, efficiency killing throw-ins.

    Not even the most optimistic of cost models would work given the inefficiency of US government spending.

    The fact that the current private sector model is so costly is because the legislation allows it to be. If there are gaps and loopholes in the system they will be exploited. These things happen when massive legislation is rushed through and backend deals are thrown in to push it through.

    Unfortunately, it’s hard to conceive a well-structured bill getting through the house and the senate with the current state of bipartisan politics.

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