The Case For Single-Payer Healthcare Insurance [Part II]

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We have the greatest health care system in the world. – Senator Richard Shelby (R-AL)

Our current system is the most expensive, bureaucratic, wasteful, and ineffective in the world. – Senator Bernie Sanders (I-VT)

Obviously these senators cannot both be right. In the first of this three-part article we began by considering whether or not our healthcare system needs to be radically changed. In the second part, we’ll look at Senator Sanders’s recent healthcare reform proposal, which calls for extending Medicare to all Americans. Then, in the third part, we shall provide an estimate of the cost of his proposal.


Part 2.  Senator Bernie Sanders’ Medicare for All proposal

It’s easy to criticize our sick healthcare system, but much harder to do anything about it. Senator Bernie Sanders has made perhaps the most far-reaching attempt to make it more effectively meet the needs of all Americans since the introduction of Medicare and Medicaid in the mid-1960s

How Sanders’ plan would work

Let’s examine Sanders’s proposal which calls for replacing the hodge-podge of public and private healthcare insurance with a single payer – Medicare for All. Not only would coverage be expanded to include prescription drugs, eye glasses, hearing aids, and dental care, but it would be extended to every American.

In a New York Times op. ed. piece on September 13th, Senator Bernie Sanders (I-VT) laid out his plan to expand Medicare coverage to all Americans over the next four years. On the same day he introduced a bill in the Senate, which was quickly co-sponsored by sixteen other senators – all Democrats.

Medicare currently provides healthcare insurance coverage primarily to 55 million Americans, 46 million of whom are 65 and older. Nine million others are disabled people under 65. It covers doctor visits, medical tests and procedures, and hospital stays. Beneficiaries pay monthly premiums of no more than $150, and there are no deductibles or copayments.

However, not all medical costs are covered. There is a separate Medicare insurance program for prescription drugs, with benefits much less generous than the basic Medicare program. In addition, Medicare does not provide dental coverage, or pay for eye glasses , hearing aids, or cosmetic surgery.

The Medicare program was created by Congress in 1965 at the behest of President Lyndon Johnson. At the time, nearly 30 percent of Americans over 65 lived in poverty, and few of them received adequate medical care. At the same time, Congress also created the Medicaid program to provide free medical care for poor people less than 65 years of age.

Extending Medicare to all Americans would start off with three major advantages. First, nearly all current beneficiaries are very satisfied with the healthcare they receive. Although enrollment is voluntary, over 90 percent of those over 65 are Medicare recipients.

A second advantage is that the program is a known quantity that is easy to understand. Rather than ask Americans to make a leap of faith, Senator Sanders is offering to extend the benefits enjoyed by 55 million of their fellow citizens.

Finally, rather than have to start from scratch, we can just expand coverage to every American. To ease this transition, Sanders’ plan will be phased in over a four-year period.

Everyone currently enrolled in Medicaid will be switched to Medicare. Medicaid, which is funded mainly by the federal government and administered by the states, has become a political football since the passage of the Affordable Healthcare Act in 2010. Nearly every Republican controlled state has refused to expand its Medicaid program to all its eligible citizens, even though the federal government would have paid the entire cost. But once Medicaid is folded into Medicare, this issue will no longer exist. In addition, the stigma of receiving a means tested benefit will be instantaneously removed.

Medicare posts an easy-to-use schedule of reimbursement payments for healthcare providers. There are no negotiations because virtually all medical treatments are preapproved. Medical assistants employed by healthcare providers submit the bills and Medicare automatically approves reimbursement.

Current Medicare recipients pay monthly premiums of no more than $150 a month. They can visit the doctors of their choice, have a wide range of medical procedures, and have extended hospitals stays. Under Sanders’s plan, the federal government will negotiate with pharmaceutical companies, resulting in drastically lowered prescription drug prices.

Not everyone will enroll in Medicare for All

Medicare for All will be open to every American, but we know that one size does not fit all. Some people already have a better deal. Among the elderly, there are millions of veterans who are eligible for free medical care from the Department of Veterans Affairs. Still, the large majority of veterans over 65 is enrolled in Medicare.

Another group of people, largely drawn from the top one percent, enjoy so-called “Cadillac” healthcare plans paid for by their employers. As long as their employers are willing to pay for them, why switch to Medicare for All?

There are a sizeable number of Americans who will refuse to enroll in what they believe to be a form of “socialized medicine.” So they will continue to be privately insured, or perhaps not insured at all.

There are many doctors who refuse to accept Medicare patients. And there are a substantial number of individuals over 65 who are not on Medicare. Will anyone be required to join Medicare for All? No! No doctors or patients will be forced to join. Is Medicare for All a government take-over of healthcare? Again, no! Nearly all doctors and other healthcare practitioners will continue to work in the private sector.

A key part of Sanders’s plan would be to no longer allow employers to deduct the business expense of paying for the healthcare insurance of their employees from their taxes. In this case, what the federal government will take away, it will more than give back by relieving employers of this massive expense, since nearly all their employees will now be covered by Medicare for All.

An unfortunate byproduct of employer-paid medical insurance premiums is that they make it much harder for American firms to compete in the global market against foreign companies whose governments provide universal healthcare. The price of nearly every automobile includes about $1,500 to $2,000 that goes to pay for the healthcare insurance premiums of the manufacturer’s current and retired employees. Under Medicare for All, American companies would be relieved of this tremendous competitive disadvantage.

What the Sanders plan is proposing is a massive change in the way we deliver and pay for our health care. And while hundreds of millions of Americans will be much better off — and we will be able to deliver more and better healthcare for a much lower cost — there will be many people who will not like this plan.

Winners and Losers

It would be impossible to create a health care system that everyone loves, or that doesn’t leave some people worse off than before. But we can create one that has far more winners than losers.

The biggest Medicare for All winners are the 28 million Americans who had had no medical insurance. Other big winners are all the people who will be able to secure much better medical care – often at greatly reduced cost. And then too, there are those healthcare providers who will no longer have to employ so many people just to deal with all the insurance companies.

Two more big winners are the state and local governments. Between them, they have had to lay out over $100 billion a year in Medicaid benefits. Now that former Medicaid recipients will be covered by Medicare, the cost of their care will be taken over entirely by the federal government.

Let’s consider how the Sanders plan will affect the firms that are no longer insuring their employees. Today, healthcare insurance premiums account for as much as one third of a business firm’s total employee compensation. Sharing this massive cost cut with their employees, many companies will be able to afford large wage increases. Predictably, there will be a lot less grumbling about a $15 minimum hourly wage.

Still another big winner will be the American economy. Relieved of the burden of our extremely inefficient healthcare system, we will be able to devote more of our resources to such pressing needs such as rebuilding our manufacturing base and our crumbling infrastructure.

Now let’s turn to the losers. By far, the two biggest losers will be the insurance companies and all the employees who will lose their jobs, since their work will no longer be needed. Also big lowers are the legions of medical billers working for healthcare providers. The federal government would be under some obligation to help them find other jobs. In the foreseeable future, it appears likely that our unemployment rate will continue hovering slightly above four percent, which will ease their transition to other jobs.

Many insurance companies will be put out of business. but won’t that in the great capitalist tradition of “creative destruction”?

What to expect

Will people be able to go to any doctor they want? They will be able to see any doctor who accepts Medicare – not just one in a particular network.

Will people have to argue with government officials over the terms of their coverage? No! In fact, they will now be entitled to a vast array of medical treatments without any negotiation whatsoever.

Senator Sanders’s Medicare for All proposal will probably be very strongly opposed by nearly all Congressional Republicans. Their two main objections will be that this program will not only be a large step towards government control of our healthcare system, but that it will impose huge costs on taxpayers.

In Part 3 of this article, we shall talk about how we will pay for Medicare for All. Critics have already begun complaining that it will add trillions to our nation’s healthcare bill and to the federal budget deficit in the coming years. But Sanders and his supporters believe that it will actually bring down our nation’s healthcare bill by hundreds of billions a year, and add little, if anything, to the deficit.

Full disclosure: Bernie Sanders and I ran track together in high school, and were roommates for one semester at Brooklyn College. When he ran for president, I provided the media with information about Bernie’s high school and college days.

About the Author

Steve Slavin has a PhD in economics from NYU, and taught for over thirty years at Brooklyn College, New York Institute of Technology, and New Jersey’s Union County College. He has written sixteen math and economics books including a widely used introductory economics textbook now in its eleventh edition (McGraw-Hill) and The Great American Economy (Prometheus Books) which came out last month.

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