Medicare For All Costs and What It Really Means

Medicare For All Costs and What It Really Means

There is a lot of debate about healthcare and, with it, a lot of misinformation about the quality and cost of our current system versus a Medicare-for-All system. The bottom line is that people want quality medical care, options, and for their healthcare to be affordable and not drive them into debt.

The research is clear: Medicare-for-all Single-payer offers all of that by getting rid of predatory private insurance companies, giving private healthcare facilities more control over decision making with their patients, and bargaining down prices. This reduces healthcare spending overall, while also improving the quality of care.

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QUICK FACTS

1. Medicare-for-All Single-Payer provides more options. Learn More
   
2. Medicare-for-All Single-Payer is better for the economy. Learn More
   
3. Medicare-for-All Single-Payer is better for the public and private sector. Learn More
   
4. Medicare-for-All Single-Payer is better for business. Learn More
   
5. The Kaiser poll referenced by many in the media is misleading and that damages the reliability of the poll. Learn More

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LEARN MORE

Medicare-for-All Single-Payer provides more options.

A single-payer system like Medicare-for-All will increase people’s options of doctors, hospitals, and treatments regardless of where they work or their income level.

• Single payer increases options for patients: You can keep your current doctors if you want, or go to a different one. You will have a much wider choice of providers throughout the country, as you are not restricted to providers in your insurance plan’s limited network.
  
• Coverage is portable, meaning it follows you when you move, change jobs, are in between jobs, decide to work as a contractor, start your own business, retire, etc., giving more freedom to employees so they are not forced to choose between staying at a job they dislike or losing their insurance.
  
• You can receive the treatment you need instead of being denied based on profit motives, increasing your options for treatment and preventative health.
  
• People want to choose their doctors, not their insurance companies. Medicare-for-All offers a genuine choice of healthcare providers, not the pseudo-choice of navigating among dozens of complicated insurance plans with their narrow, ever-changing networks, hidden minefields, and additional unexpected  bills.
  
• If you get sick under Medicare-for-All, you simply go to nearly any doctor or hospital in the U.S. that you choose, as 96% of all doctors and virtually every hospital in the country are “in network.”
  
• If you travel anywhere in the U.S., your health insurance follows you.
  
• Current Medicare enrollees would also benefit from the proposed Medicare-for-All plan. In addition to having no out-of-pocket costs at point of service, they would also no longer need to purchase expensive private MediGap policies, Part D drug plans, long-term care or dental insurance. Nor would they be restricted to the limited network of providers typical of privatized Medicare Advantage plans, or be forced to travel outside the country for affordable treatment.
  
• Medicare-for-All benefits will include comprehensive coverage — inpatient, outpatient, emergency care and transportation, prescription drugs, mental health, dental, vision, hearing, rehabilitation, medical devices, prenatal, reproductive, and long-term care.

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Medicare-for-All Single-Payer is better for the economy.

The country overall will spend less on healthcare. Families will save thousands of dollars compared to what they currently spend on healthcare. Patients will have no additional out-of-pocket expenses (ex: deductible, co-pays) for a robust array of benefits.

• The country as a whole will spend less on healthcare under Medicare-for-All. Three recent studies — Mercatus, University of Massachusetts PERI and Friedman — have verified this.
  
• Net savings for the country range from 3.5% to 24.6% depending on the study and the decade:
  • $2.1 trillion or 3.5% (Mercatus for 2022-2031)
  • $5.1 trillion or 11.9% (UMass PERI for 2017-2026)
  • $11.5 trillion or 24.6% (Friedman for 2019-2028)
    
• The media are fixated on the increase in health spending by the federal government, which is not the same thing as total health spending in the overall country (also known as National Health Expenditures).
  • Contrary to the media’s confusion, we can afford to spend less as a country and also cover everybody with better benefits.
  • The media and unsupportive legislators fail to point out that the additional federal spending is merely replacing other spending — premiums, deductibles, copays, etc. — that households and employers are already paying for in our current system. It’s not new money. It is not additional money. It is a shift of money with a net savings.
    
• Savings will be a result of reduced paperwork and negotiating power of a single-payer system.
  • Simplified administration under Medicare-for-All will generate savings of over $500 billion a year.
  • Government will be able to negotiate drug prices, which will reduce costs by hundreds of billions per year.
    • The 2018 Univ of Mass PERI study estimated that Medicare-for-All would save $214 billion per year from negotiating lower drug prices (2017) — almost half (40%) of what the U.S. currently spends on pharmaceuticals. (Pp. 7 & 49)

“Spending on prescription drugs in the United States totaled more than $480 billion in 2016, almost 15 percent of the $3.3 trillion total spent on health care that year. Instituting a Medicare-for-All system would finally allow the government to negotiate the price of prescription drugs on behalf of all Americans. Under its prescription drug benefit, known as Medicare Part D, Medicare is currently prohibited from negotiating drug prices[… ] One study estimated that Medicare-for-All could save nearly a third of total spending on outpatient prescription drugs. In a study published in the Annals of Internal Medicine in 2017, the authors estimated that a Medicare-for-All system would save nearly $115 billion on drug costs that year.”

THE CASE FOR MEDICARE-FOR-ALL by Public Citizen, Pg. 22-23

“Pharmaceutical companies defend their enormous profits by emphasizing the importance of pharmaceutical innovation. But these companies often spend less than one in five dollars in revenue on research and development (R&D). Further, much of their R&D is directed to products expected to maximize profits rather than meet priority health needs (so, for example, they invest heavily in drugs that compete with medicines already on the market, often referred to as “me-too” drugs, rather than novel therapies). Finally, most pharmaceutical breakthroughs come from publicly funded research, not that directed by Big Pharma. And, of course, innovations in pharmaceuticals mean nothing if people can’t afford them. At the same time that pharmaceutical companies are reaping enormous profits, too many Americans cannot afford to take the medicines they need. Nearly one in five Americans report that they or a family member has not filled a prescription, cut pills in half, or skipped doses because of cost. Medicare-for-All would ensure that Americans are able to access the prescription drugs they need while lowering drug costs for the entire health system.”

THE CASE FOR MEDICARE-FOR-ALL by Public Citizen, Pg. 24

• There will be no additional costs (e.g. copayments, deductibles, coinsurance) to the patient at the time of care. 1 2
  
• In addition to having no out-of-pocket costs at point of service, Medicare patients will also no longer need to purchase supplemental coverage like expensive private MediGap policies, Part D drug plans, long-term care or dental insurance. Medicare.gov
  
• The average middle-class family will see an increase in after-tax income of between 14% and 18%.
  • For example, a household with $65,000 in income will see its income boosted by $9,750 (15%) under a Medicare-for-All system (“Yes, We Can Have Improved Medicare for All” by economist Gerald Friedman)
    
• According to the May 2018, Milliman Medical Index, the current cost of healthcare for the typical family of four with employer-based insurance is on average $28,166, with $15,788 paid by the employer and $12,378 paid by the employee in the form of premiums ($7,674) and out-of-pocket costs ($4,704).

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Medicare-for-All Single-Payer is better for the public and private sector.

Private and public hospitals and healthcare professionals will save money and focus more on their patients because they will be free from the bureaucracy and burnout that comes from dealing with multiple insurance payers.

• In a single-payer system, the only thing being replaced is insurance companies. The government does not take over the delivery of our healthcare. That is left to the public and private practices as they are now.
  
• A majority of nurses, physicians, and hospital administrators support single-payer for a reason – it’s better for everyone. 1 2
  
• A single-payer system is more efficient for doctors and medical staff, eliminating much of the time spent doing paperwork. Such a system in the United States would be a big win for health professionals, who will be able to spend more time with patients and focus on their patients’ needs.
  
• Medicare-for-All would save $327 billion per year from administrative costs. Doctors could cut their overhead in half and free up more billable hours taking care of patients. (P. 7)  1

“Around one-third of U.S. health care dollars are spent on administrative functions, including insurance company overhead; administrative costs of hospitals, practitioners, nursing homes and other providers; and costs incurred by employers in managing their workers’ benefits. Studies have routinely found that the United States has the highest rate of administrative health care costs among wealthy countries. Excessive administrative spending is wasteful because it doesn’t do anything to treat patients or improve public health. Through simplified administration under Medicare-for-All, some researchers have estimated that we would save more than $500 billion a year.”

THE CASE FOR MEDICARE-FOR-ALL by Public Citizen, Pg. 12

“Increased administrative costs are one of the key reasons that health care costs have risen sharply over the past 40 years. Costs relating to managing health insurance are a major component of these rising administrative costs. Private insurers spend around 12 percent of their annual budgets on administration. Traditional Medicare is much more efficient, spending only around two percent on administrative costs.”

THE CASE FOR MEDICARE-FOR-ALL by Public Citizen, Pg. 12

“Another study found that American medical practices spent almost four times more than Canadian doctors on dealing with payment issues: $82,000 per physician annually compared to $20,000. The same study found that nurses in the United States spend nearly 10 times as many hours interacting with payers as their Canadian counterparts. Most of the discrepancy in hours spent was due to nurses spending time obtaining prior authorizations from insurance companies.”

THE CASE FOR MEDICARE-FOR-ALL by Public Citizen, Pg. 15

“A recent survey found that more than 55 percent of doctors now support a single-payer system, while in 2008 nearly 60 percent expressed opposition. In interviews conducted by the survey firm, physicians expressed exhaustion with all the paperwork and billing, which takes away time from treating patients… A streamlined payment system would free up substantial time for providers to focus on providing care, instead of doing paperwork.”

THE CASE FOR MEDICARE-FOR-ALL by Public Citizen, Pg. 61

“A recent study that focused on four states found that physicians spent about two hours on administrative work for every hour they spent with patients. Providers then spent another hour or two of their personal time each night on additional administrative tasks… The excess level of paperwork is hurting physicians. A recent survey found that more than four in ten physicians reported experiencing burnout.”

THE CASE FOR MEDICARE-FOR-ALL by Public Citizen, Pg. 61

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Medicare-for-All Single-Payer is better for business.

Businesses will save money because they will no longer have the burden of providing healthcare for their employees. And workers will no longer have a gap in coverage when they switch jobs.

• Warren Buffett has said healthcare costs hurt businesses more than corporate taxes, and calls medical costs “the tapeworm of American economic competitiveness.”
  
• Medicare-for-All will increase business competition because workers will be free from dependence on large employer health plans to start their own businesses or to take a job at a smaller company.

“By freeing Americans from their dependence on their employers to maintain access to health care, Medicare-for-All would encourage entrepreneurialism. Our health care system hamstrings individuals by tying access to health care to employment and putting employees at risk of no longer being able to afford health care if they leave their job and lose employer-sponsored health plans. This is a phenomenon known as ‘job lock.’”

THE CASE FOR MEDICARE-FOR-ALL by Public Citizen, Pg. 36

“But the truth is that people who love their employer-based insurance do not get to hold on to it in our current system. Instead, they lose that insurance constantly, all the time, over and over again. It is a complete nightmare.”

Matt Bruenig, People’s Policy Institute

“You like your employer health plan? You better cross your fingers because 1 in 4 people on employer plans will come off their plan in the next 12 months.”

Matt Bruenig, People’s Policy Institute

“If you like losing your insurance all the time, then our current healthcare system is the right one for you. If you like having permanent coverage no matter your life situation, then you should want Medicare-for-All.”

Matt Bruenig, People’s Policy Institute

“Workers who have employer-sponsored insurance are much less likely to start their own business than workers who receive health insurance through their spouse or those who are uninsured, according to a study by the RAND Institute for Civil Justice.”

THE CASE FOR MEDICARE-FOR-ALL by Public Citizen, Pg. 36

“Because of their size and the lack of economies of scale, small businesses are hit particularly hard by the employer-sponsored insurance system. They face a significant disadvantage when negotiating with insurers and end up paying higher prices than larger companies. Employers with fewer than 10 employees face premiums nearly 20 percent higher, for the same benefits, than those paid by large businesses, and employers with 10 to 25 employees can expect to pay around 10 percent more.”

THE CASE FOR MEDICARE-FOR-ALL by Public Citizen, Pg. 38

• Per Senator Sanders’s most recent “financing options” that he offered with his 2017 Medicare for All Act, a 7.5% income-based premium paid by employers would save businesses over $9,000 per year in healthcare costs for the average employee (P. 2): “In 2016, employers paid an average of $12,865 in private health insurance premiums for a worker with a family of four who makes $50,000 a year. Under this option, employers would pay a 7.5 percent payroll tax to help finance Medicare for All – just $3,750 – a savings of more than $9,000 a year for that employee.”
  
• One employer estimated his healthcare costs at 22% of payroll. Replacing that with a modest 8.2% employer-side payroll tax for Medicare-for-All would be a win for businesses and workers alike.
  • “After a 2-3 year transition period, we also propose that business revenues overall be provided either through the 8.2 percent payroll tax or a 1.78 percent gross receipts tax.” (P. 9) UMass PERI study
  • Based on the 8.2% payroll tax option, those businesses currently providing health insurance will realize the following percent change in healthcare spending (P. 85):
    • Small businesses (0-9 employees): –36.1% (decrease)
    • Medium-sized businesses (10-19 employees): –10.5% (decrease)
    • Medium-sized businesses (20-99 employees): –7.6% (decrease)
    • Large businesses (100-499 employees): –9.8% (decrease)
    • Large businesses (500+ employees): +5.7% (increase) = only +0.1% of gross receipts

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The Kaiser poll referenced by many in the media is misleading and that damages the reliability of the poll.

While it appears to produce sound methodology (# of people polled, randomized questions and answers, etc.), support appears to be sensitive to the wording of the policy, which focuses more on the increase in taxes as opposed to the overall healthcare costs people will save.

• The January 2019 run of the Kaiser survey had a margin of error ±3 percentage points based on an overall sample size of 1190 adults living in the mainland U.S., plus Alaska and Hawaii.
  • It reported 56% support for single payer, but support rose to 74% for a Medicare-type plan that would allow people to keep their current private plan.
  • 75% supported optional Medicaid buy-in, while 77% supported offering Medicare to individuals between the ages of  50-64.
    
• Some of the questions in the Kaiser poll misrepresent what single payer actually means.
  • For example, questions 9 and 11 seem to focus on the increase in taxes that people will pay as opposed to the overall healthcare costs they will save.
  • While question 11 does include a section on eliminating premiums and reducing out-of-pocket costs (67% approval), question 9 does not include that, but does still include a section about an increase in taxes.
  • Further, question 11 appears to imply that a Medicare-for-all plan would threaten the current Medicare system and lead to delay in care, which is simply not true.
    
• Misleading question examples from the Kaiser Poll include:
  • Question #7 is misleading in that answer options (A), (B), and (C) would be covered under (D) a national Medicare-for-all plan, as well as (E) repealing and replacing the ACA, if that replacement were Medicare-for-all.
    • Question #7: How important do you think it is for Congress to work on each of the following priorities priorities now:
    • Answer options:
      • A. Making sure the ACA’s protections for people with pre-existing conditions continue. (Total 21%, Democrats 31%, Independents 24%, Republicans 11%)
      • B. Lowering prescription drug costs for as many Americans as possible. (Total 20%, Democrats 20%, Independents 20%, Republicans 20%)
      • C. Protecting people from surprise high out-of-network medical bills. (Total 9%, Democrats 4%, Independents 10%, Republicans 8%)
      • D. Implementing a national Medicare-for-all plan. (Total 11%, Democrats 20%, Independents 8%, Republicans 3%)
      • E. Repealing and replacing the ACA. (Total 11%, Democrats 3%, Independents 7%, Republicans 27%)
      • F. None of these (25%).
        
  • Question #9 does not offer a choice about whether the person taking the poll thinks they would pay less in premiums, co-pays, etc., thus lowering the out-of-pocket costs of healthcare. Instead, they only ask about the individual paying more taxes.
    • Question #9: If a national Medicare-for-all plan was put into place, do you think you and your family would be able or have to do the following or not:
    • Answer Options:
      • A. Be able to keep your current health insurance. (Would 55%, Would not 37%, Don’t know 8%)
      • B. Have to pay more in taxes to cover the cost of health insurance. (Would 77%, Would not 19%, Don’t know 4%)
      • C. Be able to access the health care that you need. (Would 67%, Would not 27%, Don’t know 6%)
        
  • Question #10 does not include a category of people who are wealthy. The way it is framed seems to imply that the person filling out the poll are not seniors, low-income, or those who do not have health insurance.
    • Question #10: If a national Medicare-for-all plan was put into place, who do you think would be better off, worse, or would not have much impact:
    • Answer Options:
      • A. People like you. (Better 31%, Worse 26%, Not much impact 39%, Don’t know/refused 4%)
      • B. Seniors who currently get their insurance through Medicare. (Better 33%, Worse 21%, Not much impact 39%, Don’t know/refused 7%)
      • C. Low-income people. (Better 62%, Worse 15%, Not much impact 20%, Don’t know/refused 5%)
      • D. People who currently do not have health insurance. (Better 69%, Worse 13%, Not much impact 16%, Don’t know/refused 3%)
        
  • Question #11 appears to be implying that Medicare-for-all would do all of the things listed in the answer options, but (A) and (E) are misleading and (F) is simply not true.
    • Question #11: Would you favor or oppose a national Medicare-for all plan if you heard that it would:
    • Answer Options:
      • A. Require most Americans to pay more in taxes. (Favor 27%, Oppose 60%, Don’t know/Refused 2%)
      • B. Eliminate all health insurance premiums and reduce out-of-pocket health care costs for most Americans. (Favor 67%, Oppose 30%, Don’t know/Refused 3%)
      • C. Eliminate private health insurance companies. (Favor 37%, Oppose 58%, Don’t know/Refused 5%)
      • D. Guarantee health insurance as a right for all Americans. (Favor 71%, Oppose 27%, Don’t know/Refused 2%)
      • E. Threaten the current Medicare program. (Favor 32%, Oppose 60%, Don’t know/Refused 8%)
      • F. Lead to delays in people getting some medical tests and treatments. (Favor 26%, Oppose 70%, Don’t know/Refused 4%)

Editor: Alison Hartson

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