Medicare for all would cost more than what we are paying now. We need to stop avoiding this fact. [View all]

[Recursion]

Last edited Mon Nov 2, 2015, 02:27 AM - Edit history (1)

Looking at 2013 (the last year we have full data for), 168 million Americans have private health insurance of some form, while 47 million have Medicare and 41 million have no insurance (Kaiser, below). 50 million of the people with private insurance cannot actually get medical care because they cannot make their copays or deductibles (Commonwealth). The 168 million pay $916 billion in premiums to receive $801 billion in treatments for an overhead rate of 12.5% (CMS; the next two sentences too). Medicare, meanwhile, receives $585 billion in revenues to deliver $550 billion in treatments, for an overhead rate of 6%. So, a 6.5% savings off of $916 billion yields $60 billion dollars saved if we do nothing but migrate everyone on private insurance to the Medicare model.

Medicare has another advantage: it pays doctors, drug companies, etc. less than private insurance, on average 20% less (CNN). If that's a good guide, we would be saving an additional $160 billion, and the 168 million people currently with private insurance would be paying $680 billion for $640 billion in treatments, and we'll be saving $220 billion dollars. All well and good. But now let's look at the uninsured and underinsured. Remember: all we've done so far is take the exact same treatments people are getting today and find a cheaper way to pay for them. We haven't addressed the 50 million insured people skipping treatments, or the 40 million with no insurance. That's 90 million people who will now be getting health care under Medicare For All that aren't now.

The 118 million people who currently actually get treatment through private insurance would in this plan be costing on average $5700 per year (680 billion divided by 118 million). If the underinsured and uninsured start using medical care at the same rate as those 118 million, that will be an additional $513 billion in expenditures, meaning instead of paying $220 billion less, we'd be paying $293 billion more in total than we are now.

But what's worse is that we probably wouldn't spend that, because if we simply literally expand Medicare to everyone, they would have a $1200 deductible, a 20% copay for all treatments, no out of pocket maximum, and a $550 / month deductible, assuming the non-Senior Medicare enrollees would not get a premium subsidy from the Trust Fund like Seniors do. (And if we want the plan to be more generous than the current Medicare system then we have to increase the baseline cost we're talking about by that much more.) So it's not clear that that's actually going to help the underinsured at all (it sounds like exactly the sort of plan that isn't helping them now). But it really does to me illustrate the fact that if our actual goal is to make the $513 billion dollars in foregone health care actually happen, we're going to have to pay $513 billion dollars one way or another.

Single Payer may be a great idea (though very few countries actually do it; most achieve universal health care some other way), but the notion that it's going to cost less than our current "strategy" of simply not treating people is just a fantasy. It's going to cost a whole lot of money. And we really need to be up-front about that.

As an idea of the scale we're talking about here, $293 billion is about 50% of the entire defense budget, or a 12% payroll levy, or a 16% corporate tax (on top of our current levies and taxes), or a 20% VAT (depending one what we exclude).

https://www.cms.gov/Research-Statistics-Data-and-systems/Statistics-Trends-and-reports/NationalHealthExpendData/index.html

http://kff.org/other/state-indicator/total-population/

http://www.commonwealthfund.org/publications/press-releases/2015/may/underinsurance-brief-release

http://money.cnn.com/2014/04/21/news/economy/medicare-doctors/