While the Democratic primaries may be over, the debate about Medicare for All is here to stay. As a pandemic sweeps through the globe, Americans are being forced to take a closer look at their healthcare plans and the costs of remaining well. The United States spends a skyrocketing 17 percent of its GDP on healthcare, totaling 3.3 trillion dollars per year, much more than other developed countries like Germany, France, Canada, and the United Kingdom, which each spend around 9-11 percent of their GDP on healthcare annually. Despite paying more, in 2018, over 87 million Americans were either underinsured or had no coverage for part of the year. To make matters worse, the United States ranks near the bottom in almost every measure of comparative quality.
The COVID-19 Spotlight
As the pandemic-driven recession settles in, 27 million Americans have lost health insurance they received through their job/employer. While four out of every five people who lost their health insurance during the pandemic are eligible for free coverage through Medicaid, actually insuring the recently unemployed is a difficult task. Premiums, co-pays, and deductibles continue to create financial barriers that prevent millions of Americans from accessing the care that they desperately need.
The COVID-19 pandemic shines a light on the broken US healthcare system and highlights the need for Medicare for All, an increasingly popular solution which 69 percent of Americans now support. While Medicare for All has been labeled as a far-left, socialist ideology, it is time to view healthcare as a non-debatable, fundamental human right.
The Case for Medicare for All
There are currently two bills in Congress that outline a plan for Medicare for All. Representative Pramila Jaypal’s (D-WA) plan, also known as the House plan, is slightly more generous than Senator Bernie Sanders’ (I-VT) plan, the Senate plan, yet both have functionally the same goal: to make healthcare a right for every American, regardless of employment and socio-economic status. While the current bills will, without a doubt, be edited and changed extensively before they pass, these two bills would help Americans across the country in a multitude of ways if they pass.
Medicare for All would improve access to healthcare, allowing Americans to access the care that they need. Currently, one-third of Americans say that they have skipped filling a prescription because of cost. Moreover, 22 percent of Americans say they have opted out of receiving medical care because of the hefty price tag that comes with seeing a doctor. The cost of leaving Americans to fend for themselves can be seen during a pandemic: While there are certainly many factors that led to the US failure to contain the virus, allowing high costs to be a barrier to receiving treatment definitely does not help.
Beyond helping the uninsured, Medicare for All would also provide critical assistance for the 31 million American adults considered underinsured. People are considered underinsured if they had health insurance continuously for the past twelve months but still had out-of-pocket costs or deductibles that were high relative to their income. These groups of people often also don’t get the medical care they need. First, employed Americans’ out-of-pocket spending on health care has increased more than 50 percent since 2010, with half of all insurance policyholders facing at least a $1,000 deductible. Since 2009, premiums have increased 54 percent and workers’ contributions to premiums have increased 71 percent. However, hourly wages for the tenth percentile grew only 5.1 percent and wages for the fiftieth percentile grew only 2.5 percent, far slower than healthcare costs. Second, there is often confusion about what plans do and do not cover: This confusion often causes individuals to skip care altogether, out of fear of being charged an exorbitant amount of money. When the consequences of seeking medical care are high, people chose not to run the risk of a surprise bill. Indeed, more than one in four Americans said that uncertainty over their coverage led them to avoid treatment. For these reasons, 51 percent of underinsured adults reported problems with medical bills and debt, and 44 percent reported not getting the medical care they needed because of cost.
Both of these barriers for the uninsured would fade away under a Medicare for All system. While both the House and Senate bills allow for private insurance for any item or service that is not covered by Medicare for All, everyone would receive a universal basic level of coverage. The House bill calls for no deductibles, co-pays, or premiums. The Senate bill calls for up to $200 in copays per year for certain non-preventive prescription drugs, but no premiums or deductibles. This gets rid of the out-of-pocket expenses that often prevent people from getting the care they need. Moreover, universal coverage will increase the transparency between the provider and the patient: every person will know what they have covered and what they do not, since there will be little variation between each American’s policies.
Medicare for All would also allow certain hospitals to be better funded in two ways. First, both the House bill and Senate bill propose abandoning the current fee for service system, which pays the provider based on the particular service they provided to the patient, and instead calls for a global budget system. The fee for service system is extremely harmful to rural hospitals because they are less likely to have a steady flow of patients, since individuals in rural areas are less likely to be insured and more likely to have to travel long distances to receive care. Because the patients these hospitals serve show less consistency in terms of seeking medical help, it is difficult for rural hospitals to always keep their revenue stream steady.
Second, many hospitals are forced to take on the cost of uncompensated care for those who are uninsured. When patients show up to the emergency room without insurance, hospitals still have to serve the patient and give them the care they need. Unfortunately, when these individuals cannot pay back their medical debt, these uncompensated costs place a financial burden on hospitals. Forty-five percent of all hospitals service a disproportionate share of patients who lack adequate coverage. Overall, one in four rural hospitals are at risk of failing and nearly four in ten rural hospitals are unprofitable. Since 2010, 120 rural hospitals have closed: in these areas, mortality rates have risen 5.9 percent. The benefits of the Medicare for All will expand far beyond those that are uninsured or underinsured: for those in rural areas, being insured will do little when you have to drive over thirty miles to get to the nearest hospital in case of an emergency.
Moreover, the fee for service system that our healthcare system currently employs also endangers patients. First, hospitals have an incentive to invest in projects that will maximize profits rather than what the public needs. For example, many hospitals would prefer to invest in operating rooms and other facilities that serve mostly privately insured patients instead of facilities that publicly insured patients might need. Second, it often causes healthcare providers to increase the utilization of expensive care even when they are unnecessary.
The system of fee for service was implemented over 100 years ago. This system was effective for most of the twentieth century, since there were not many options available for doctors to prescribe. If a patient came to the doctor’s office, the options were usually either a straightforward surgery or inexpensive medicines. However, as medicine has evolved and the number of available treatments has grown, the system has become outdated. Doctors are currently performing more complex procedures and interventions that yield marginal or no benefits in order to bring in profits to keep the hospital doors open. These actions have detrimental consequences to patients: not only are they being given unnecessary treatments, but insurance companies often contest these fees with denials of coverage and requirements like prior authorization. This leaves many patients and families with unexpected bills for unnecessary treatments, burdening them with medical debt.
Under global budgeting, hospitals would receive an annual lump sum, distributed monthly, based on how many patients they have to serve. This funding would include extra funds in case of unexpected deficits. This would solve the issues listed above for a few reasons. First, global budgeting would make the flow of patients irrelevant. Instead, each hospital would be given the resources they needed in order to serve all of their patients, with any surplus being returned. Second, Medicare for All would ensure that every patient walking through the door would be a paying patient, ensuring hospitals never have to take on uncompensated care. This will provide relief from the financial burden that many hospitals take on when they serve uninsured patients who cannot pay back their medical debt. Third, Medicare for All would put all patients requesting certain care or a certain service in the same boat: the needs of people covered by private insurance would no longer be prioritized over the needs of people covered by public insurance. Lastly, because hospitals are provided a global budget to provide all of their care, there is no incentive to prefer complex procedures or interventions. Instead, they would have the money to cover all of their care and development costs rather than trying to squeeze out profits to keep the doors open.
The benefits of global budgeting can already be seen in some states. After Maryland implemented a global budgeting system, they saw a 48 percent reduction in preventable complications, and the readmission rate fell from 7.9 percent above the national average to 3.4 percent above within thirty months. Moreover, they saved $319 million in the cost of care.
Addressing the Arguments Against Medicare for All
Critics have many arguments against Medicare for All. Perhaps one of the biggest concerns for most is the overall cost of the program. Neither the House nor the Senate bill specifically outlines a way to fund its new program, but there are many hypotheticals that economists and researchers present as possibilities to raise the funds needed.
Perhaps the most common way people think Medicare for All will be funded is through either deficit spending or an increase in taxes. Despite the fact that neither bill has specified a funding plan, it is clear that no politician or individual supporting Medicare for All expects the program to be fully funded through deficit spending. Sanders has proposed options to raise the additional funds, including increasing taxes on corporations and implementing a wealth tax, while Jaypal has indicated that she plans on funding it through increased taxes or a repeal of the Republican tax cuts. This defined funding mechanism changes the debate from one about cost to one about levying higher taxes: this is where much of the support for Medicare for All stalls.
However, increased taxes might not harm Americans as much as one might think. The United States currently spends $3.2-3.3 trillion a year on healthcare, while Medicare for All is expected to cost 32 trillion dollars over the next decade. In fact, some studies predict that Medicare for All will save as much as $600 billion every year. Medicare for All costs significantly less than our current healthcare system and would provide more Americans with care: the question should not be about how it is funded, but rather about how to switch the healthcare dollars that are coming from individuals and businesses to the federal government.
Sanders currently has options to fund Medicare for All listed on his website that outline how this shift can occur. First, $3.9 trillion would be raised taxing businesses that have over $2 million in payroll. While this is technically a hike in taxes, it will actually save businesses $9,000 on average per employee. Second, there will be a 4 percent income-based premium that will raise 3.5 trillion dollars: this saves the typical middle-class family $4,400 (it’s around $844 a year for a typical family compared to $5,277 under private health insurance companies). Other options also include establishing a wealth tax on the top 0.1 percent of earners or making estate taxes and personal income taxes more progressive. While these options would hike up taxes for the wealthy, those considered middle- and lower-class in the United States would save a significant portion of their income under Medicare for All.
Moreover, some critics believe that Medicare for All will functionally service as a price control on pharmaceutical drugs. Many are concerned that the decrease in revenue would be detrimental to pharmaceutical innovation, among other areas. I have previously discussed the benefits of price controls here, which addresses the concerns about pharmaceutical innovation. It is also a mistake to equate the effects of Medicare for All to price controls, as Medicare for All could recoup a lot of revenue for pharmaceutical companies in a few ways. First, Medicare for All significantly increases the number of Americans that can access medication, thus increasing Big Pharma’s market. Currently, Americans go through huge lengths to avoid the financial burden of getting medicine: Republicans have relaxed import laws so some Americans can get medicine through Canada, and other Americans are just skipping their prescriptions entirely. Even if Medicare for All reduced pharmaceutical prices substantially, the increased amount of patients that are willing to take the medication they need could be enough to recuperate their costs. Second, the medicinal innovation that pharmaceutical companies are focusing on will not benefit the current insurance model’s business. The current private insurance system uses a business model that relies on individuals to renew their health insurance every year. When many people’s insurance is tied to their job, which can change from year to year, insurance companies have little incentive to cover a treatment that may save someone in, let’s say, twenty years, long after the recipient stops paying premiums. The current system allows insurance profit incentives to get in the way of Americans receiving the best possible care. As medical innovation looks further into medicinal care, some of these discoveries in the lab will never reach patients. Medicare for All would allow Americans to access better preventative care and open untapped markets that pharmaceutical companies should be reaching for to increase their revenue.
Many are concerned that coverage for all would lead to longer wait times and hospital closures due to lack of funding. However, for most of these concerns, there is evidence supporting both sides of the argument, depending on which countries you look at. Regarding long waiting times, the United States already performs worse than several nations with universal coverage: only 51 percent of US patients reported being able to see a provider within a day, compared to 53, 56, and 67 percent of patients in Germany, France, and Australia. Additionally, longer wait times would be a price worth paying in order to implement a system that could save 68,000 lives per year. Concerns about hospital closures are valid but misplaced: as stated above, the current healthcare system has led to hundreds of hospitals closing every year with even more on the brink of failure. Clearly, our current system has not led to well-funded hospitals that are able to provide for all their patients. The Medicare for All bill with a global budgeting system would be much better at supporting hospitals and their patients.
There is no doubt that it currently takes more than a village to run the US healthcare system: critics are concerned that a switch that streamlines the system would put millions out of a job. Specifically, critics estimate as many as 1.8 million jobs are at stake. However, a study from the Economic Policy Institute finds that there are multiple ways in which Medicare for All would boost the economy and recuperate these jobs. First, while it is important to provide adequate transitions for those working in the healthcare sector, 1.8 million jobs is a drop in the bucket compared to the normal job churn in the US economy. In 2018, there were 21.8 million layoffs without any substantial policy changes, and that was a twenty-year low. The finance and insurance sectors have laid off 1.7 million individuals over the past four years in the name of increasing productivity. The Sanders Medicare for All bill also does not plan to leave these individuals behind: the bill calls for 1 percent of the healthcare budget during the first five years to be dedicated to assisting workers with transitions into the new healthcare system.
Medicare for All would also lower the costs of running a small business, allowing more entrepreneurial startups and employment by these startups. The current healthcare system creates a lot of job lock because individuals rely on their jobs for health insurance and thus do not make the transitions that might better meet their needs. Moreover, healthcare costs are often significantly higher at smaller companies; Medicare for All would help alleviate some of that financial burden. Finally, because Medicare for All provides help more individuals access the care they need, it increases the demand for doctors, drugs, hospitals, and other healthcare delivery positions. Thus, while Medicare for All streamlines the administrative side of healthcare, it increases the jobs on the delivery side.
The demand for certain roles in the economy is constantly changing: if the determination to keep jobs always overruled all other benefits, there would seldom be a reason to ever advance. Automation, technological innovation, and even simply becoming more productive are all factors that endanger millions of jobs every year. Rather than stop this progression forward, we ought to provide a baseline so that no individual is in danger of dying when they become temporarily unemployed. Implementing Medicare for All is the first step to easing the cost of losing a job. If these bills are passed, it would reassure every American that losing their job does not mean they can no longer see a doctor or receiving proper medical care.
The pandemic has shone a spotlight on the flawed US healthcare system. When a country treats medical assistance as a privilege as opposed to a right, its citizens and hospitals are the ones that pay the price. Every American should be able to see the doctor and take their medicine without worrying about how they will pay for rent or food. Medicare for All will change lives beyond just the uninsured. It will help the underinsured feel comfortable about seeking medical care without worrying about a surprise bill. It will help hospitals be better funded in order to provide care for their patients. It will help those living in rural areas get better access to hospitals. It will help increase productivity by allowing Americans to be able to change jobs without worrying about their health insurance coverage. The price to pay for a program that would save 68,000 lives per year and change millions more is incredibly small: even if the rich must pay more in taxes, there are slightly longer wait times, and individuals in a certain sector must face transition into a different job sector, it begins the narrative that in the United States, we ought to provide our citizens with their right to live.
Sophia Lam is a third year chemistry and political science major from New York City. On campus, she’s a member of Phi Alpha Delta and a debate teacher at Debate It Forward. She’s previously worked as an intern at Boies Schiller and Flexner and at Pfizer Inc.