Isn’t this a “radical transformation” of the US healthcare system?
No. Medicare for All expands the role of public financing in healthcare- 60% of healthcare is already paid for by our taxes. It does so through an existing “single-payer” called the Medicare Trust Fund that already pays virtually every provider in the US but just for seniors. Under Medicare for All it will cover everybody and reimburse providers who remain mostly private. The new financing replaces all premiums, co-pays and deductibles –Medicare for All is the only reform program to do so.
Besides the government, the primary payers in the current system are the commercial insurance companies, funded by employer contributions, taxes, and individuals (those premiums, co-pays, and deductibles). These insurance companies are “middle men.” For prescription drugs, the insurance companies often pay Pharmacy Benefit Managers (PBMs) who set the limits on coverage and pay pharmacies. The Medicare program in part currently uses insurance companies and PBMs. The new Medicare for All will directly pay for prescriptions, services and providers, cutting out all “middle men.”
How can we afford Medicare For All?
- Overall spending to cover everybody with comprehensive benefits goes DOWN by 9.6%;
- Middle-income families save an average 9% of income; for example, a family earning $62,000 today paying $10,000 per year out of pocket would pay $930. (see economic analysis at peri.umass.edu);
- Employers receive an immediate 8% reduction in healthcare costs;
- We can take care of workers affected by the transition, allocating 1% of the annual budget for five years to income maintenance, job retraining for affected insurance and other administrative employees.
How does “Medicare for All” achieve savings over the for-profit private insurance system?
- Everybody in one insurance pool provides economies of scale to negotiate lower prices that along with the budget authority of a public program, contains costs;
- The Medicare Trust Fund is the “single-payer” that pays negotiated payment rates and global budgets to service providers sufficient to sustain their caregiving operations; it finances capital expenditures separately;
- Reduction of waste, bureaucracy, and inefficiency because the single-payer replaces hundreds of payers, often with their own distinct rules and procedures designed to enhance revenues and profits at the expense of prevention, continuity of care and clinicians’ judgment.
Won’t long term care bust the budget?
- The economic analysis done by the UMass Amherst PERI (peri.umass.edu) included these services in their estimates of savings described above;
- A transition to and more coverage of in-home support services for all, including people with disabilities, improves quality of life and provides more cost-effective care;
- Even with a 12% increase in use, and projecting an additional 10% spending based on expanded coverage for these services, the financing from broad-based taxes (e.g. gross receipts or payroll) or a raise in the proposed tax rates on upper income is sufficient.
These numbers blow away the insurance industry-funded smoke screen. Medicare for All works. It’s the pragmatic alternative to the rising insecurity we feel from escalating costs and huge out of pocket spending – today, we don’t know if we’ll get the care we need.
Through Medicare for All we will.
Michael Lighty has organized, advocated and developed policy for Improved Medicare for All nationally and in California for 29 years. Follow him on Twitter: @mlighty60