Advertiser Disclosure
X

Advertiser Disclosure: The credit card offers that appear on this site are from credit card companies from which MoneyCrashers.com receives compensation. This compensation may impact how and where products appear on this site, including, for example, the order in which they appear on category pages. MoneyCrashers.com does not include all credit card companies or all available credit card offers, although best efforts are made to include a comprehensive list of offers regardless of compensation. Advertiser partners include American Express, Chase, U.S. Bank, and Barclaycard, among others.

  • Date

By

Dig Deeper

23,634FansLike
21,040FollowersFollow
37,829FollowersFollow

Become a Money Crasher!
Join our community.

What Is “Medicare for All” – Features, Costs, Pros & Cons

There’s a lot of buzz right now around the phrase “Medicare for All.” Congress is holding hearings about the proposal. According to The Hill, at least six Democratic presidential candidates have specifically come out in favor of it. Every day, news editorials pop up about the plan – some praising it as the solution to everything that’s wrong with America’s expensive health care system, others attacking it as a socialist plot to destroy the economy.

With all the conflicting opinions about Medicare for All, it’s only natural if you’re feeling a bit confused about it. Here’s what you need to know about this health care plan – what it actually involves, what it would cost, and how it could affect you.

What “Medicare for All” Means

Open a Simple Account by 10/31/19 4:59 PM PT and get up to a $500 bonus and 2.15% APY (with qualified activities).

As the name suggests, Medicare for All expands on the original Medicare program that’s been around since 1965. This program, which provides guaranteed health insurance to older Americans, is consistently popular with voters. According to the American Society on Aging, over 70% of Americans view Medicare favorably, about 75% say it’s important for themselves or their families, and over 95% say it’s important for the country as a whole.

When Medicare was first introduced, it was designed in a way that allowed the program to expand to cover more people. However, the only time that’s happened was in 1972, when the program was broadened to cover people with disabilities. For the next 45 years, the program remained mostly unchanged.

Then, in 2017, Senator Bernie Sanders of Vermont – now a candidate for president – proposed expanding it on a massive scale to cover virtually everyone in the country. Under his plan, an all-inclusive Medicare would replace the existing Medicare and Medicaid programs, as well as all private health insurance. It’s essentially the latest spin on a “single-payer” health care system, in which the government uses tax money to provide health insurance for everyone.

What Medicare for All Would Cover

Sanders’ Medicare for All proposal would do more than merely extend the existing Medicare program to all Americans. It would create a new and much more generous version of Medicare that covers all essential forms of health care.

The current program has two parts: Part A for hospital care and Part B for doctors’ visits, outpatient care, and some forms of medical equipment. Medicare recipients have the option of signing up for Part D, which covers prescription drugs, but that costs extra. Medicare does not cover most costs for long-term care, dental care, vision care (including eye exams and prescription lenses), or hearing exams and hearing aids.

Along with its coverage gaps, Medicare has costs for patients. According to Medicare.gov, most people pay no premium for Part A coverage, but there’s a monthly premium for Part B that ranges from $135.50 to $460.50, depending on patients’ income. There are also deductibles and copayments for both Parts A and B, as well as for the various Part D plans.

A 2017 analysis by Motley Fool found that the average Medicare recipient was paying $7,620 out of pocket for care each year. However, there’s no actual limit on out-of-pocket costs under Medicare Parts A and B. That’s why many Medicare users pay extra for “Medigap” insurance, which covers the cost of copays and other gaps in coverage.

Under Sanders’ plan, the government would pick up the tab for all forms of medical care, including dental and vision care. The plan would also expand coverage for long-term care, even if it doesn’t cover the cost in full. Except for some long-term care costs and a $200 yearly deductible for prescription drugs, consumers would pay nothing at all.


America’s Current Health Insurance System

Medicare for All looks very different from the way we pay for health care in the United States today. Under the current system, people get health insurance from a patchwork of different providers.

Most workers buy into health care plans sponsored by their employers. Other people get insurance through various government programs – such as Medicare, Medicaid, and the Veterans Health Administration – that provide care for specific groups. People who don’t fit into any of these categories, such as freelancers, must buy their own insurance on the private market or go without.

This hodgepodge of a system creates a lot of problems. Many Americans have no coverage, and even those who do pay more for care than people in most developed countries. Yet our expensive care doesn’t make us healthier; in fact, by most measures, Americans have worse health outcomes than people in other developed nations.

Gaps in Coverage

Under the current system, approximately 28.5 million Americans have no health insurance, according to the U.S. Census Bureau. Moreover, a 2017 study by The Commonwealth Fund concluded that another 41 million Americans – about 28% of working-age adults with health insurance – are underinsured, without enough coverage to protect them from devastatingly high medical expenses.

These uninsured and underinsured Americans are likely to put off necessary medical treatment because they can’t afford it. Often, they don’t seek medical care until they have a problem serious enough to land them in the emergency room, the most expensive possible place to receive care. Thus, having large numbers of uninsured and underinsured Americans drives up health care costs for the country as a whole.

Worse still, Americans without insurance are constantly at risk of having their savings wiped out by high medical bills. A study published in the American Journal of Public Health in 2019 found that two-thirds of all bankruptcies in the U.S. are due to medical problems, either high health care bills or time lost from work due to illness. More than half a million families go bankrupt each year on account of medical problems.

High Costs

Even though the American system doesn’t cover everybody, it’s still expensive. A 2019 study by the Johns Hopkins Bloomberg School of Public Health found that the U.S. spends far more per person on health care than any other developed country.

In 2016, the cost of care in the U.S. came to $9,982 per person. That’s about 25% more than Sweden, the country with the second-costliest care at $7,919 per person, and more than twice as much as Canada at $4,753. The average for all developed nations was only $4,033, about 40% of what Americans spent. The U.S. spent a total of 17.6% of its gross domestic product (GDP) on health care, while the average developed country spent only 8.9% of GDP.

The researchers found that health care costs the most in the U.S. not because Americans use more care, but because we pay higher prices for pretty much everything. Another study, published in the Journal of the American Medical Association (JAMA) in March 2018, backs up this conclusion. It found that, compared with 10 other high-income countries – Australia, Canada, Denmark, France, Germany, Great Britain, Japan, the Netherlands, Sweden, and Switzerland — the U.S. spends 1.5 to 3 times as much on prescription drug costs and 1.4 to 2.5 times as much on a generalist physician’s average salary.

One reason health care prices are higher in the U.S. is that most Americans get their coverage from private insurers, and these companies pay much higher rates for the same health care services than public programs such as Medicare. These companies don’t have the same bargaining power as government programs, which cover much larger numbers of people.

If the government thinks that a health care provider, such as a hospital, is charging too much for its services, it can simply threaten to drop that hospital from Medicare. The hospital can’t afford to lose that many patients, so it agrees to lower its prices. In the same way, the government can strong-arm drug companies into offering lower costs for prescription drugs to Medicare patients.

Another factor behind the higher prices Americans pay is administrative costs. According to the JAMA study, 8% of all health care costs in the U.S. went toward administration – that is, planning, regulating, and managing health care services and systems. By contrast, the 10 other countries in the study spent only 1% to 3% of total costs on administration. Our complex system, with its patchwork of different insurers, requires a lot more time, money, and effort to be spent coordinating care and costs, rather than actually providing care.

Poor Outcomes

It might be worth it for Americans to pay twice as much for health care as people in other developed countries if the care we received were twice as good. However, studies indicate that’s not the case. Compared with the rest of the world, America gets low marks for:

  • Access to Care. According to the Johns Hopkins study, Americans have less access to many health care resources than people in other countries. The U.S. has 19% fewer practicing doctors, 25% fewer practicing nurses, and 26% fewer acute care hospital beds per person than the average for developed countries.
  • Health Insurance Coverage. The JAMA study found that 10% of all Americans have no health insurance. In the 10 other countries featured in the study, 99% to 100% of the population is covered.
  • Life Expectancy. According to the JAMA study, Americans don’t live as long as people in the other 10 countries studied. The average life expectancy for Americans is 78.8 years, while in other countries, it ranged from 80.7 to 83.9 years.
  • Infant Mortality. Out of 1,000 babies born in the U.S., 5.8 die in infancy, according to the JAMA study. The average for all 11 countries in the study was only 3.6 deaths per 1,000 live births.
  • Obesity. In the U.S., 70.1% of the adult population is overweight or obese. In the 10 other countries in the JAMA study, this percentage ranged from 23.8% to 63.4%.

A 2018 Forbes editorial criticizing the JAMA study points out that the problems with Americans’ health aren’t all due to our health care system. America is a huge country with a diverse population, which increases the challenges of providing care for everyone. It also has a larger percentage of people living in poverty, who tend to have worse overall health.

However, our system is clearly part of the problem. For one thing, the relatively high numbers of uninsured and underinsured Americans are less likely to get the care they need. Moreover, those who have insurance are mostly getting it from private companies, whose goal is to make as much money as they can, not to provide the best possible care. That gives them an incentive to refuse to cover people who are older or have existing health problems and to avoid paying for claims as often as they can manage.

Earlier Attempts at Health Care Reform

The problems with the U.S. health care system aren’t new, and there have been many attempts over the years to deal with them. President Harry Truman was the first to propose a single-payer system back in 1945, and presidents Richard Nixon and Bill Clinton also attempted to create systems that would provide coverage for everyone. However, all these plans met with opposition on the grounds that they were either too radical or not comprehensive enough, and none of them made it through Congress.

The only major health care reform since Medicare was the enactment of the Affordable Care Act (ACA), commonly known as Obamacare, under the administration of Barack Obama in 2010. This bill created a marketplace where individuals could buy health insurance and provided subsidies to help lower-income individuals pay for it. It also established penalties for employers who failed to provide insurance and individuals who failed to buy it. However, it didn’t guarantee coverage to all Americans.

Obamacare was a compromise that neither the left nor the right was entirely happy with. Polls from the Kaiser Family Foundation (KFF) show that the program has never enjoyed support from more than 53% of Americans, and Republicans are particularly likely to oppose it. Republicans in Congress have been attempting to repeal it ever since its passage, usually with a promise to replace it with a better plan but no details about what that plan would look like. With no replacement for the ACA, repeal efforts failed, and the program has remained in place.

It’s in this context that the idea of single-payer coverage is coming up again under a new name. Polls from KFF show that Americans react more favorably to the name “Medicare for All” than they do to “single-payer,” probably in part because it’s easier to understand. The term “single-payer” doesn’t make it clear how the program works, but Medicare is a concept most Americans are already familiar with, so the idea of everyone having Medicare is easier for them to grasp.

Naturally, switching over to this single-payer system from the patchwork of individual insurers we have now would be a big change. Sanders’ original 2017 Medicare for All bill proposed phasing the changes in over four years. Over that time, increasingly younger people would be allowed to buy into Medicare, while out-of-pocket costs for Medicare users would gradually drop. For those not using Medicare, the ACA health care exchanges would offer the option of a publicly funded insurance plan that would compete with private plans.


Medicare for All vs. Systems in Other Countries

Supporters of Medicare for All argue that this program would finally bring America in line with the rest of the developed world, where universal health care coverage is the norm. However, no other nation currently has a system quite like the Medicare for All plan with virtually zero out-of-pocket costs for patients. Instead, they take a variety of approaches, ranging from mostly public funding to private insurance with strict regulation. Looking at the pros and cons of these systems can give us an idea of how Medicare for All could work here in the U.S.

Britain: The National Health Service

In Britain, the government not only finances health care, but it also provides it. The publicly funded National Health Service is a network of government-funded doctors and hospitals that provides essential medical care for everyone, regardless of income. Patients pay for National Health through a payroll tax, but they pay nothing when they actually receive care from a doctor or hospital, and the cost of prescription medications is capped at £8.60 (about $11.20). This comprehensive system costs about 10% of Britain’s GDP, according to The New York Times.

The downside is that there are often long wait times for treatment, as detailed in a 2018 New York Times story. At the height of flu season in January 2018, emergency rooms were so overcrowded that patients could wait upwards of 12 hours to see a doctor. Hospitals were delaying non-urgent surgeries until the end of the month to free up more doctors to deal with emergencies.

Patients who want faster treatment have the option of buying private medical insurance. As a 2018 piece in Britain’s Telegraph explains, these policies provide on-demand access to care, more choice of which doctors and hospitals to use, and treatments that aren’t always covered under National Health. About 10% of British citizens have one of these plans.

The downside of private insurance is the cost, which can be anywhere from £700 to £1,800 ($912 to $2,345) per year for a family of four. However, that’s nothing compared with the cost of health insurance in the U.S. According to eHealth, the unsubsidized cost of a U.S. family plan in 2017 averaged $1,168 per month, or $14,016 per year. That’s nearly six times as much as the priciest private plan in Britain.

Canada: Public Funding, Private Care

The single-payer health care system in Canada is probably closer to Medicare for All than any other national system. Under this system, the government provides health insurance coverage, but most of the actual care comes from private doctors and hospitals. As in Britain, patients pay nothing at the time they receive care; they simply show their national insurance cards. That creates much less paperwork for both patients and providers.

However, Canada’s single-payer system doesn’t cover all forms of health care. Many Canadians receive private insurance through their jobs to help cover the costs of dental care, vision care, and prescription drugs. All in all, the government pays for about 70% of Canadians’ health care costs, according to The New York Times. The total cost of the system is similar to Britain’s – about 10% of GDP.

To keep costs down, Canada puts hospitals on strict budgets and limits the number of specialists who can receive training. Both these rules can result in long wait times for care – even longer than in the U.K. A 2017 report from Health Quality Ontario on the province’s health care system says that emergency room patients wait an average of 1.5 hours to see a doctor and over 15 hours to be admitted to the hospital. It’s also common for them to wait weeks or months for non-emergency surgery.

Europe: A Mix of Public & Private

In most European countries, everyone is required to buy health insurance, but that insurance can come from either government-sponsored or private companies. Here are a few examples of how the balance between public and private insurance works in different countries:

  • Switzerland. In Switzerland, health insurers are private companies, but they sell most of their plans on a nonprofit basis. They offer a variety of plans with premiums that vary based on the choice of doctors, the deductible, and the ease of seeing a specialist. About 30% of people get subsidies based on income, much like ACA subsidies in the U.S.
  • France. France has a small selection of nonprofit health insurance companies that are funded mostly with tax dollars. Public insurance covers most health care costs, and about 95% of people get private insurance – either through their jobs or through a voucher system – to cover the rest. The government sets prices for health services and drugs and strictly regulates the number of new doctors and the equipment available in hospitals.
  • Germany. Like the U.K., Germany has two types of health insurance. There’s a national public system with premiums that are based mostly on income – paid partly by employers and partly by employees – and private insurance that patients can choose to add. The government sets limits on how much doctors can earn and what they can charge for services. This system gives patients a lot of choices about which doctors and hospitals to use, and out-of-pocket costs are low.

These public-private blends are a little costlier than the British and Canadian systems, at 11% to 12% of GDP.


Costs of Medicare for All

Under Medicare for All, patients would pay nothing for their own care – at least, not directly. However, the system would be very costly for the government, resulting in higher taxes. The question is whether these new taxes would cost the average American more than the savings on health care.

Sanders’ Medicare for All bill includes some measures to rein in health care costs. For example, the government would set payment rates for all drugs, medical equipment, and services. The Department of Health and Human Services, which would oversee the program, would set a total budget for health care each year, and spending couldn’t go over that amount.

All the same, it’s clear that a program providing full health coverage for every American would be expensive. What’s less clear is just how expensive. Cost estimates from economists vary widely by more than $1 trillion per year. That makes it unclear whether Sanders’ ideas to pay for the Medicare for All program will really be enough to cover the cost.

Varying Cost Estimates

Calculations published in The New York Times show the U.S. government currently spends about $1.57 trillion per year on health care. That includes costs for Medicare, Medicaid, and other health insurance programs. According to Forbes, Sanders claims his Medicare for All plan would cost the government an additional $1.3 trillion per year, nearly doubling its current spending. That assumes that health care spending as a whole will fall because of reduced administrative costs.

However, most economists consider this estimate too low. Several economists have attempted to estimate how much the government would pay for health care under Medicare for All, and their figures vary widely.

  • Gerald Friedman. Sanders took his cost estimates from Friedman, an economist at the University of Massachusetts Amherst with close ties to the Sanders campaign. Friedman argued in a 2016 paper that the program would cost the government an additional $13.7 trillion over a 10-year period. That estimate assumes that prescription drug prices would fall to the average level in other developed countries – a drop of about 31%, according to The New York Times – and that administrative costs would drop to only 2% of spending.
  • RAND. When The New York Times asked the RAND Corporation to estimate how health care costs would change under Medicare for All, it concluded that the program itself would cost the country $3.24 trillion per year. Other government health care programs (such as the Veterans Health Administration, which would remain unchanged) would add another $81 billion, for a total cost of $3.32 trillion – an increase of $1.75 trillion. RAND assumed that payments to doctors and hospitals would go up about 9% from the levels currently set by Medicare, prescription drug prices would fall by about 11%, and Americans’ use of health care services would increase by 8%. It also estimated that total administrative costs under this system would be around 5%.
  • Kenneth Thorpe. In a letter available at Healthcare-NOW, Dr. Kenneth Thorpe of Emory University analyzed the Sanders plan and concluded that it would require roughly $2.5 trillion per year in additional spending. Thorpe’s figures assume that the savings on administrative costs would come to only 4.7% of total health care spending. They also assume that Americans will increase their consumption of health care by about 10% once they’re no longer paying out of pocket.
  • CRFB. The Committee for a Responsible Federal Budget (CRFB) calculates that Medicare for All would add $28 trillion to federal spending over a 10-year period, or $2.8 trillion per year. It also concludes that the new taxes Sanders has proposed to pay for the program (discussed below) would raise only $11.9 trillion over the same period – less than half the amount needed.
  • Urban Institute. A 2016 report from the Urban Institute put the added cost of Medicare for All at roughly $32 trillion over a 10-year period, or $3.2 trillion per year. However, state and local governments would save about $4.1 trillion during that same period as the federal government took over their health care costs. According to The New York Times, the Urban Institute’s figures assume a 7% increase in payments to doctors and hospitals, a 20% drop in prescription drug prices, administrative costs of around 6%, and no change in Americans’ use of health care services.
  • Mercatus Center. The most pessimistic estimate of costs comes from the Mercatus Center at George Mason University. In a 2018 paper, Charles Blahous of the Mercatus Center put the 10-year cost of Medicare for All at about $32.6 trillion over current levels. Blahous assumed that payments to doctors and hospitals would go down under this plan, dropping to the levels offered by the current Medicare system. He thought prescription drug costs would drop by 12%, health care usage would rise by 11%, and administrative costs could be around 6%.

There’s no way around it; these are huge numbers. However, it’s worth bearing in mind that health care costs under our current system are also extremely high; they’re just split between the government and private payers. According to the Centers for Medicare & Medicaid Services, if the system doesn’t change, total health care spending will grow by around 5.5% per year, reaching nearly $6 trillion per year by 2027.

Economists disagree over whether total health care spending would go up or down under Medicare for All. Friedman says it would drop as a result of increased efficiency and better-controlled drug prices, while Thorpe and the Urban Institute both conclude it would rise significantly.

Funding Medicare for All

On his website, Sanders lays out a detailed plan to pay for Medicare for All. His proposals include:

  • Payroll Tax for Employers. Employers would pay a 7.5% payroll tax to cover part of the cost of their employees’ health care. Sanders estimates this would cost $3,750 per employee per year. That would actually be a savings for most businesses, which currently pay an average of $9,000  toward each employee’s health care costs. (Estimated revenues over 10 years: $3.9 trillion)
  • Premiums From Households. Individuals would also pay 4% of their income as a health insurance premium. Sanders estimates this would come to $844 per year for the average family of four – significantly less than the $5,277 the average family currently pays for health insurance. (Estimated revenues over 10 years: $3.5 trillion)
  • Eliminating Health Care Tax Breaks. Under current law, individuals pay no income tax on the money their employers contribute toward their health insurance costs. Taking the cost of health insurance out of employers’ hands would eliminate this and other tax breaks related to health care. (Estimated revenues over 10 years: $4.2 trillion)
  • Changes to Income Tax. Sanders proposes increasing income taxes on Americans making over $250,000 per year, increasing taxes on dividends and capital gains, and setting a limit on itemized tax deductions for the wealthy. (Estimated revenues over 10 years: $1.8 trillion)
  • Raising the Estate Tax. Right now, the 40% federal estate tax applies only to estates worth $5.45 million or more. Sanders would tax all estates over $3.5 million at 45% and increase rates still more for the biggest estates. (Estimated revenues over 10 years: $249 billion)
  • Wealth Tax. Right now, taxes in America are based on income rather than wealth. Sanders proposes creating a new wealth tax on the richest 0.1% of Americans. This tax would be 1% of every dollar of net worth above $21 million. (Estimated revenues over 10 years: $1.3 trillion)
  • Taxes on Businesses. Sanders proposes an assortment of new taxes on businesses and the elimination of existing tax loopholes. He would close a loophole for owners of S corporations, impose a one-time tax on offshore profits, add new fees for big banks, and do away with a common accounting trick used by businesses to lower their taxes. (Estimated revenues over 10 years: $1.2 trillion)

All told, Sanders’ proposals would raise about $16 trillion over 10 years. That would cover the cost of the program if Friedman’s calculations are accurate, but it wouldn’t come close to meeting the cost based on any of the other economists’ figures. Thorpe calculated that based on his cost estimate, paying for the program would require raising the payroll tax to 14.3% and the income-related premium to 5.7%.


Effects of Medicare for All

Policy experts generally agree that some Americans, such as those who are currently uninsured, would definitely be better off under Medicare for All. However, others, such as those who work for or invest in health insurance companies, would definitely be worse off. For most Americans, there would be both advantages and disadvantages, and it’s difficult to calculate whether the pros would outweigh the cons.

How Medicare for All Could Affect You

A 2019 New York Times article analyzed how the Medicare for All plan would affect various groups of Americans, both for better and for worse. Here’s how the plan could affect you if you are:

  • Currently Uninsured. You would have health insurance, even if you don’t think you need it. You would have to pay for it through taxes, but the cost to you would be fairly low. If your income is low enough – for example, if you’re unemployed – you would pay nothing at all. (People affected: 28 million)
  • Currently Insured Through Work. You would no longer have to pay for health insurance through your employer, but you would have a premium based on income. The Sanders campaign argues that for most people, that will cost much less, but Thorpe claims that more than 70% of households will pay more. You would no longer need to worry about rising premiums or changes in coverage. However, if you like your current insurance policy, you would not be able to keep it. (People affected: 156 million)
  • On Medicare. Your Medicare plan would expand to cover dental and vision insurance, hearing aids, some long-term care costs, and all prescription drugs costs over $200 per year. You would no longer have any premiums or copayments for your care, but you would pay taxes if you’re still working. If you currently use a private Medicare Advantage plan, you would have to switch to the government program. (People affected: 156 million)
  • On Medicaid. You would have more choices for doctors and hospitals, and your out-of-pocket costs would stay low. However, if you’re working, you could pay more in taxes. The Sanders campaign claims that a family of four with an income below $29,000 per year would not have to pay any premiums, but that might not work out if the campaign’s cost estimates turn out to be wrong. (People affected: 73 million)
  • Self-Insured. If you buy your own health insurance – for instance, if you’re self-employed – you would now pay for your coverage through taxes instead. Your out-of-pocket costs could be somewhat higher or significantly lower. You could also gain access to a wider range of doctors and hospitals. (People affected: 21 million)
  • A Veteran. If you currently receive health care through the Veterans Health Administration, your care would not change for at least 10 years after the new plan went into effect. You would use the same health care system and pay nothing out of pocket. (People affected: 9 million)
  • Native American. Your health care would also be unchanged for at least 10 years under the new plan. (People affected: 2 million)

How Medicare for All Could Affect the Health Care System

Medicare for All would shake up pretty much every part of our nation’s health care system, from the doctors who provide care to the insurers who pay for it. Here’s how the plan could affect different types of providers:

  • Doctors and Hospitals. They would most likely receive less pay under the new system, since Medicare pays lower rates for all forms of care than private insurers do. On the plus side, they would no longer have to worry about unpaid bills from patients who don’t have insurance or insurers who refuse claims. They would also have to spend less time on paperwork, which would keep their administrative costs down. Still, the lower payment rates could force some hospitals to close if they can no longer meet their expenses.
  • Drug Companies. Once the government takes over the health insurance system, it would be able to negotiate for lower prices on drugs across the board. As a result, the companies that make these drugs would most likely see their profits drop. In the long run, that could discourage them from spending money to develop new medicines.
  • Health Insurers. Private health insurers would most likely go out of business as the new program takes over. Sanders recognizes that many people who work for these companies would lose their jobs if the program goes into effect, and his plan sets aside up to 1% of the government’s total health spending budget to help them find new jobs.

How Medicare for All Could Affect the Economy

Since the health care system currently makes up about one-sixth of the U.S. economy, anything that affects it is bound to affect the economy as a whole. Some of these changes would most likely be beneficial, others would be harmful, and some are hard to predict.

Here’s how the plan could affect different parts of the economy:

  • Health Insurers. Many companies that sell health insurance would survive because they’re also involved in other businesses. However, their stock would take a big hit. According to Bloomberg, just the fact that so many candidates are talking about Medicare for All has already caused health care stocks to fall by more than $28 billion as investors sell off stocks they fear may soon become worthless. And while workers at these companies who lose their jobs would receive some aid under Sanders’ plan, investors who lose money would not.
  • Other Large Businesses. Businesses that aren’t involved in health care could get a boost from Medicare for All because it would reduce the burden of paying for health care. According to Thorpe, most U.S. employers would pay less for health care with the proposed payroll tax than they do today. That would mean higher profits for these companies, which in turn could boost their stock prices and ability to grow.
  • Small Businesses. Small businesses that don’t currently offer health insurance could lose money as a result of the new payroll tax. Under the ACA, companies with 50 or fewer employees aren’t required to provide health insurance for their employees. However, under Medicare for All, these companies would be subject to the payroll tax for all earnings over $2 million. That could lead them to reduce wages, cut benefits, or lay off staff.
  • Workers. Some individual workers would pay less out of pocket for health care under Medicare for All than they do today. With more money in their pockets, these workers would most likely spend more on other consumer goods and services, giving a boost to the companies that provide them. However, some people – particularly those with high incomes – would pay more in new taxes than they save on health care. These people could reduce their spending as a result, slowing the economy.

Alternative Health Care Proposals

Polls conducted by KFF show that a majority of Americans like the idea of a single-payer health care plan. When asked if they favor or oppose “a national healthcare plan, sometimes called Medicare-for-all,” 56% say they either strongly or somewhat favor it. However, they’re much less likely to support the plan when they hear it would eliminate private insurance, require most Americans to pay more in taxes, or create possible treatment delays.

Because of these problems with Medicare for All, several prominent Democrats – though so far no Republicans – have proposed less radical plans that expand access to government-sponsored health care without making it universal. Their ideas include:

  • Medicare at 50. The Medicare at 50 Act, proposed by Senator Debbie Stabenow of Michigan, would allow people between the ages of 50 and 64 to pay for Medicare coverage. They would get a package that includes Medicare Parts A, B, and D, with the option of choosing a Medicare Advantage plan through a private insurer. If they qualify for a premium subsidy under Obamacare, they could apply that subsidy to their Medicare plan.
  • Choose Medicare Act. Introduced by Senators Jeff Merkley of Oregon and Chris Murphy of Connecticut, the Choose Medicare Act would create a new type of Medicare plan, called Medicare Part E, that would meet all the requirements for a gold-level plan under the ACA. This plan would then be sold on the ACA health care exchanges and would be eligible for subsidies. Employers would also have the option of offering their employees Medicare Part E coverage rather than private insurance.
  • Medicare-X Choice. Senators Michael Bennet of Colorado, Brian Higgins of New York, and Tim Kaine of Virginia are the sponsors of the Medicare-X Choice Act. Like the Choose Medicare Act, this bill would create a new Medicare plan, called Medicare-X, which would compete with other plans in the ACA marketplaces. This plan would become available first in places with only one available insurer and places with few doctors and hospitals, then gradually expand to cover the rest of the country.
  • Medicare for America. The Medicare for America Act, sponsored by Representatives Rosa DeLauro of Connecticut and Jan Schakowsky of Illinois, would expand Medicare to cover people who currently receive Medicaid or the Children’s Health Insurance Program (CHIP), buy their own health insurance through ACA exchanges, or are uninsured. Premiums for the plan would be no higher than 9.69% of income. Large employers would be required to either provide gold-level coverage for their employees or enroll them in the new plan and contribute 8% of their payroll toward the Medicare Trust Fund.
  • CHOICE Act. Introduced by Schakowsky in the House and Sheldon Whitehouse of Rhode Island in the Senate, the Consumer Health Options and Insurance Competition Enhancement (CHOICE) Act would create new public health insurance options to be offered on health care exchanges. These public health options would have to include bronze-, silver-, and gold-level plans for consumers to choose from, and these plans would be eligible for subsidies. Small employers would also have the option of choosing these plans for coverage, but large employers would not.
  • Medicaid Buy-In. Representative Ben Ray Luján and Senator Brian Schatz have both introduced bills to allow Americans to buy into Medicaid rather than Medicare. Because Medicaid is administered by the states rather than the federal government, the details of what this plan would cover might vary from state to state. However, any form of the plan would have to meet the ACA requirements for essential coverage. Several states are also considering plans like this on their own.

The KFF polls show that some of these ideas enjoy much broader support than Medicare for All. Around 75% of respondents say they would support an “optional Medicare-for-all” plan that allows people to buy into the program. Roughly the same percentage would support a Medicaid buy-in program or a Medicare buy-in for people ages 50 and up.


Final Word

It’s too early to say whether Medicare for All has any reasonable chance of actually becoming a law. So far, the latest version of Sanders’ bill has attracted 14 cosponsors in the Senate, and a corresponding bill in the House of Representatives has 108. However, neither bill has any support at all among Republicans, and it won’t be possible to get it through Congress without them.

Nonetheless, with so many presidential candidates in favor of the proposal, it’s certain that you’ll be hearing more about Medicare for All during the upcoming election. And depending on the outcome of that election – for both the White House and Congress – the idea could gain some traction after 2020.

But even if the proposal ultimately goes nowhere, having a debate about it is still useful. It calls attention to what’s wrong with our current health care system and encourages both political leaders and the public to think about all possible options for fixing it. Simply putting this plan on the table could increase the chances that this time, Republicans and Democrats in Congress will be able to meet in the middle with a compromise that provides universal coverage.

How do you feel about Medicare for All? Do you support the plan, or do you think its drawbacks outweigh its benefits?

Amy Livingston
Amy Livingston is a freelance writer who can actually answer yes to the question, "And from that you make a living?" She has written about personal finance and shopping strategies for a variety of publications, including ConsumerSearch.com, ShopSmart.com, and the Dollar Stretcher newsletter. She also maintains a personal blog, Ecofrugal Living, on ways to save money and live green at the same time.

Next Up on
Money Crashers

Best Credit Card Bonus Offers

9 Best Rewards Credit Card Sign-Up Bonus Offers, Deals & Promotions

Few credit card rewards and perks are more valuable than sign-up bonuses - also known as welcome offers, early spend bonuses, or new cardmember bonuses, depending...
Transition Summer Wardrobe Fall Clothing Fashion

7 Tips to Transition Your Summer Wardrobe to Fall Clothing Fashion

Ah, autumn. It comes with pumpkin spice lattes, cooler temperatures, and the onset of the holiday season, so what's not to love? Well, if...

Latest on
Money Crashers

Sign Up For Our Newsletter

See why 218,388 people subscribe to our newsletter.

What Do You Want To Do
With Your Money?

Make
Money

Explore

Manage
Money

Explore

Save
Money

Explore

Borrow
Money

Explore

Protect
Money

Explore

Invest
Money

Explore