What Does “Medicare for All” Mean?

Health Insurance

May 1, 2017

In an effort to repeal and replace the Affordable Care Act (Obamacare), Republicans have thrown together a number of ideas over the last seven years, the most recent of which failed to garner support even among fellow conservative lawmakers. Now that it’s back to the drawing board for healthcare reform, politicians are looking for answers to the problem of our nation’s healthcare system. Obamacare solved a few problems, namely granting access to health insurance for millions of people who couldn’t get it before. But as it solved some problems, it also created new ones. Health insurance premiums skyrocketed this year, large insurers bailed on the government’s individual marketplace and rising prescription drug costs continue to price people out of the medications that they need.

Presidential hopeful Bernie Sanders (D-Vt.) argued during his campaign that “Medicare-for-all” was the answer to the healthcare problem in America, and millions of his supporters continue to assert that a single-payer system would be better than what we’ve got right now. The idea isn’t new, and it’s growing in popularity.

But what is “Medicare-for-all,” and what would it mean for the country? Is this a workable solution to the growing problems under Obamacare? Health analysts say no. Medicare-for-all, more formally known as a single-payer healthcare system, has failed spectacularly in other countries – and even our own, depending on who you ask. Let’s take a look at what a single-payer system might mean for the U.S. on a national level.

What is “Medicare for All”?

The phrase “Medicare-for-all” refers to the Medicare program, a government-run system that provides low-cost health insurance for seniors (aged 65 or older) and people with certain permanent disabilities. Medicare was created along with Medicaid in 1965, and it’s been fairly successful as well as popular among beneficiaries. Right now, if you work, you’re likely contributing to Social Security and the Medicare program. Once you turn 65, you can start drawing benefits. It’s an entitlement program that is partially funded through work-based taxes. Millions of older Americans depend on Medicare for health insurance since healthcare gets expensive with age.

While it’s called Medicare-for-all, the system that’s being proposed by some Democrats as an alternative to the ACA is actually known as a single-payer healthcare system, and it’s different in structure from Medicare. In fact, Medicaid would be a better example. Under Medicare, private companies sell health insurance products, and seniors have a wide range of choices when signing up for coverage.

That’s not the case with single-payer. Per the Physicians for a National Health Program, “all residents of the U.S. would be covered for all medically necessary services” under a single-payer system. This system would be administered by the federal government from a financing standpoint, but delivery of care would be left to private entities.

That might sound like a simple, direct way to manage healthcare, but the fact is that single-payer systems don’t work well on a practical level. Countries like Canada, Italy and Iceland adopted single-payer systems long ago, and there are plenty of examples of long wait times to see doctors and insufficient care. Our own Veterans Administration offers an indicting look at what a single-payer system might mean for the rest of the country. When you entrust something as complex as health insurance to one governing body, you’re bound to have problems.

Positive Points

Before we talk about the downsides to single-payer healthcare, we should mention that there are some valid positive points to the idea. Advocates for the program argue that single-payer would:

  • Provide every legal citizen in the U.S. with health insurance, no exceptions
  • Reduce the administrative red tape on the part of providers, who would no longer have to deal with different insurers and companies, and could focus more on care instead
  • Lower the cost of prescription drugs because there would only be one buyer (the government)

Advocates also argue that a single-payer system would lower costs, but this is debatable. On one hand, it would cut out a substantial portion of administrative overhead since there would only be one governing authority in charge of the whole system. This would cut out “middlemen” – i.e., health insurance companies, sales reps and others who work in the business of selling consumer products – which would cut costs. On the other hand, healthcare in America would still be expensive since more than 80 percent of our healthcare dollars get spent on actual healthcare.

In addition, a single-payer system might stimulate the economy to some degree since people would no longer be afraid to change jobs, seek out new employment opportunities or leave work temporarily because they had guaranteed coverage. This point, however, is also questionable as it’s not clear how many people really rely on the promise of health insurance to take on new employment opportunities.

Single-Payer in Stark Reality

Like many lofty ideas, single-payer healthcare is impractical at best and downright disastrous at worst. Megan McArdle wrote an op-ed for Bloomberg on why single-payer wouldn’t work in the U.S. from a financial point of view. In short, she argues that:

  • The American healthcare system spends more money on healthcare than European countries with single-payer systems do. We’re accustomed to certain things, like private hospital rooms, that would make converting to single-payer prohibitively expensive.
  • Everyone in the healthcare industry, from high-paid surgeons to middle class nurse aides, would have to take a pay cut to make the math work in a single-payer system.
  • There are direct and indirect political side effects to handing over the healthcare system to the federal government, not least of which is the fact that people tend to side with doctors over politicians, and voting – especially among the elderly – would affect how far we could go with a single-payer system.

McArdle isn’t the only one to point out the impracticality of Medicare-for-all. In a piece for The American Prospect that outlines the history of healthcare expenditures in the U.S. and how a single-payer system would affect them, Paul Starr writes:

That level of costs is reflected in investments in medical technology, the physical infrastructure of hospitals and other facilities, the patterns of medical training and specialization, and the size and structure of the health-care labor force. Adopting a government insurance plan won’t undo a system that’s been built up over decades, though it would certainly alter its future evolution.

Analysts seem to agree, for the most part, that a single-payer system isn’t practical in the United States because our healthcare system, as expensive as it is and for all its flaws, provides better care at the patient level. As a country, the U.S. spends more on private research, develops better and newer technologies and treatment methods, and follows different protocols for taking care of patients. Other negative aspects of a single-payer system include an increased dependence on welfare, potential drug abuse problems as people are given unfettered access to free prescription drugs, and most important for some, fewer benefits than they enjoy right now under a privatized system.

In countries with single-payer systems, stories abound of being unable to see a doctor for regular checkups, let alone meet with a specialist for unexpected health problems. The Veterans Administration, notorious for long wait times and insufficient care, offers a glimpse into how “Medicare for all” would work – or not work – on a tangible level. The stark reality behind single-payer is that it doesn’t (and can’t) work given the system that we have right now.

Healthcare Going Forward

Single-payer may not work for the U.S., but the healthcare system is destined to evolve, not only because we have a new president and a Republican-controlled government, but because it must. Rising premiums, higher drug prices, an increasing and disturbing dependence on opioid drugs, and other problems continue to plague the current setup. How these issues will influence the next attempt to overhaul Obamacare remains to be seen. But going forward, there should be a more practical discussion of how to fix the issues that we have without converting the American healthcare system into an ineffectual and potentially dangerous single-payer structure.