Medicare for All: Surprisingly Less Expensive

As the list of Democratic presidential candidates continues to grow, the phrase “Medicare for All” has become a frequently heard rallying cry. The most common responses to that cry tend to be “Socialism!” and/or “We can’t afford it!”

So, this week’s question can be phrased as follows: Would Americans benefit from a national plan that provided Medicare for all its citizens?

Sounds like a job for The Spirited Reasoner.

First, let’s consider how much we are already paying for health care insurance. According to the latest figures (2015) from the U. S. Census Bureau, approximately 49% of Americans are covered by some form of employer-subsidized plan, where the employer pays most of the premium while the employee chips in a smaller fraction. Medicaid handles 21%, Medicare 14%, the U. S. Military and other public agencies handle about 1%, and the rest (15%) either buy their own insurance directly or are uninsured.

If we combine the total percentages for Medicaid, Medicare, and the military, we observe that around 36% of Americans are already receiving health care insurance via a governmental source. For these people, a switch to “Medicare for All” would change very little, and might streamline administrative processes, especially for Medicaid, where each state creates its own form of paperwork.

For those covered by an employer health plan, the following numbers may surprise you. According to the Henry J. Kaiser Family Foundation, the average employee in one of these plans contributed $1,415 per year for single coverage, while the average employer paid $4,953 during calendar year 2017. That means the average cost per employee for health care coverage totaled $6,368, or approximately $531 per month. Important note: this is the average cost of single coverage. The average cost of family coverage was approximately triple that amount.

So, our first observation is that “Medicare for All” would be a less expensive form of health care insurance if it could cover each employee—and, in the case of family coverage, every member of the employee’s family—for less than those amounts.

In other words, most employees never consider the fact that they are already paying a rather stiff “tax” for health care coverage under our current system. This tax is masked, because the employer is paying three-quarters of it. If the average premium for family coverage were paid by the employer to Medicare rather than to an insurance company, most employees wouldn’t notice the difference.

But I’m here to tell you that these monthly premiums would be more likely to drop rather than rise.

How so?

Because drug companies, hospitals, and physicians would be forced to bargain with a single payer, as they do in most of Canada, Europe, Australia, New Zealand, and Japan. (That’s why drug prices, for the very same drug, are so much cheaper in those other places.)  

What about the cries of “Socialism”?

The Spirited Reasoner would simply observe that there is no logical way to pretend that health care can ever exist as a free market.

If you are in an automobile accident, do you really stop and choose which hospital to attend? Or does the ambulance driver make that decision for you?

If you are on vacation and become suddenly ill, do you really stop to make a reasoned judgment about which doctors and hospitals might be most efficient in that region? Or do you go to the nearest place where you can be seen immediately?

Do you really choose what medications to take, all on your own? Or is a licensed physician required to write a prescription for complex drugs that only she or he can understand?

Does your employer’s insurance plan really allow you to choose the physician of your choice? Or are you required to pick from a list approved by the insurance company in advance?

Opponents cried “Socialism” when Social Security was established in 1932 and when Medicare and Medicaid were established in 1965, yet those programs continue to be among our most popular.

Conclusion: Medicare can be offered to all Americans in a manner that will cost about the same as our current system and probably less. The physicians, nurses, and other health care providers would still be wonderful, competent human beings, even though they would be receiving their pay from Medicare, rather than from insurance companies.