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The Math of Medicare for All

(Legislature, U.S. Congress) Permanent link

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This is an excerpt of a post originally published on Sarah Fontenot’s website. The opinions expressed are Ms. Fontenot’s. Texas Medicine Today is sharing them to further the conversation on the future of health care reform.

Support for Medicare for All has swept the nation – or at least Democratic primary voters.

In a September Kaiser poll of likely Democratic voters, 40% said they were in favor of replacing the Affordable Care Act (ACA) with Medicare for All. Of that segment 14% said they would only support a candidate who would bring Medicare for All to America (as opposed to other solutions, such as the Public Option).

With two of the current top Democratic candidates – Sens. Bernie Sanders (I-Vermont) and Elizabeth Warren (D-Massachusetts) – espousing Medicare for All, supporters and detractors alike are asking more in-depth questions about the proposal, particularly how much it will cost.

What do Senators Sanders and Warren mean by “Medicare for All”?

Medicare for All is a concept that has been around since the early 1900s, was an unrealized component of President Franklin Roosevelt’s New Deal, and was in the background of the Medicare law President Lyndon Johnson signed in 1965.

Senator Sanders picked up the banner in 1987 and has run on it ever since – most memorably in the 2016 presidential election.

In April, Senator Sanders updated his Medicare For All plan (the fifth time he has done so) in Senate Bill 1129. Among his 14 co-signers were four senators who were running for president at the time: Elizabeth Warren, Cory Booker, Kamala Harris, and Kirsten Gillibrand.

SB 1129 would create a single-payer health system in America, eradicating private health insurance and current government health care programs over four years.

The insurance described in the Sanders plan would be more comprehensive than any policy currently available on the market, more generous than Medicare as we know it now, and more generous than any government program in the world (including Canada, the United Kingdom, and Norway).

Almost every resident of the United States would be entitled to comprehensive health care through a new government program modeled on Medicare (not included: veterans, who would continue to receive health care through the U.S. Veterans Administration; and Native Americans, who would be served through Indian Health Service).

Under Senator Sanders’ plan, Medicare for All would include:

  • Care in any hospital;
  • Care outside of a hospital (free-standing facilities, labs, etc.);
  • All preventative health care and chronic disease management;
  • Comprehensive reproductive, maternity, and newborn care, including abortion;
  • Emergency health care services and treatments;
  • Primary and specialty health care;
  • Palliative and long-term care (including home-health);
  • Care for vision, hearing, and oral health problems;
  • Mental health and addiction services;
  • Prescription medication (the first $200 a year out of the patient’s pocket);
  • Medical equipment and supplies;
  • Diagnostic tests; and
  • Other services (this list is not all-inclusive) 

All this care would be available at no out-of-pocket cost to the patient, and there no longer would be insurance premiums, copays, or deductibles in America.

It is understandable why the concept of Medicare for All has proven so attractive to many Americans.

It is also apparent why the cost of the plan has remained one of the most consistent arguments against it. What level of investment by the federal government will be necessary to make Medicare for All possible?

What does Senator Sanders say about the cost of his plan?

He has historically been vague about the cost of Medicare for All. The last time he ran for president, the “false charms” of his plan were widely criticized (and that was before he added long-term care to the 2019 version of his proposal). 

Variables make projections of the cost of Medicare for All difficult: How many new patients will enter the system? How many health care services will be requested when insurance companies no longer act as gatekeepers? How low can payments to hospitals and physicians go before the health care community closes and creates access issues for patients? What will it cost to build an administrative agency large enough to manage the health care of the entire country? 

Even so, many economists have attached a specific price to Medicare for All. Senator Warren released her price tag recently. Senator Sanders remains more opaque, and inconsistent. 

For example, in an interview in July with the Washington Post, Senator Sanders quoted the price to the government at $30 trillion to $40 trillion over 10 years. 

However, during the September debate in Houston, Senator Sanders did not refute former Vice President Joe Biden’s assertion that Medicare for All would cost over $30 trillion. Instead he added, "Status quo, over 10 years, will be $50 trillion." 

In another interview in October, it appeared Senator Sanders was frustrated by the cost question: “We’re trying to pay for the damn thing” [through, in part, taxes on the top 1% in income in the country]. He later added, “You’re asking me to come up with an exact detailed plan of how every American – how much you’re going to pay more in taxes, how much I’m going to pay. I don’t think I have to do that right now.”

What does Senator Warren say Medicare for All will cost?

Senator Warren does not have a separate plan for Medicare for All, saying instead, "I'm with Bernie on Medicare for All," as she said in the Democratic candidate debate in June. But the two candidates differ on how to pay for the plan, and how much it will cost.

Senator Warren released her plan for funding Medicare for All in November. Her lack of an explanation on how she could deliver it without a tax increase on the middle class, as has been her promise, was a prominent moment in the last Democratic debate.

And here is her number: $26.6 trillion. (I know the headlines said “$20.5 trillion, but that was ignoring the $6.1 trillion she expects the states to chip in to support the program.)

As reported by the New York Times:

Ms. Warren would pay for the new federal spending, $20.5 trillion over 10 years, through a mix of sources, including:

  • Requiring employers to pay the government a similar amount to what they are currently spending on their employees’ health care, totaling $8.8 trillion over a decade.
  • Changing how investment gains are taxed for the top 1% of households, raising $2 trillion, and ramping up her signature wealth tax proposal to be steeper on billionaires, raising another $1 trillion.
  • Creating a tax on financial transactions like stock trades, bringing in $800 billion.
  • Beyond the $20.5 trillion total, she is also counting on states and local governments to contribute an additional $6.1 trillion to help pay for the system. 

Senator Warren explained more details on her plan in November, but for our purposes, here is the crucial line: “We don’t need to raise taxes on the middle class by one penny to finance Medicare for All.”

Senator Warren’s announcement immediately prompted criticism from Republicans as well as fellow Democrats. Saturday Night Live parodied her talking about her plan on the Cold Open the following night.

In the meantime, Senator Sanders retorted that his plan is “far more progressive” than Senator Warren’s. Recognizing his proposal includes raising taxes on the middle class, Senator Sanders predicts those taxes would balance with lower health care costs, while Senator Warren’s plan “might have a ‘very negative impact’ on job creation because of funds it could take from employers.”

(Vox.com has more details on the differences between the Sanders and Warren plans.)

What do economists say?

The Congressional Budget Office (CBO) provides Congress with financial estimates on proposed legislation, including Senator Sanders’ SB 1129. In May, the office released a detailed report on the primary features of establishing Medicare for All in America, explaining that the magnitude “is difficult to predict because the existing evidence is based on previous changes that were much smaller in scale.”

The CBO refrained from providing a specific, detailed cost estimate (as it would usually do), noting “that such a system would be so different from the country’s current situation that any hard estimates would be difficult, even with all the specifics laid out.”

However, economists outside of the government have been willing to derive specific numbers for the cost of Senator Sanders’ plan.

For my money (pun intended), the best guide to the Medicare for All cost estimates from economists (as opposed to politicians) is an interactive article in the New York Times.

I like this resource because it has dynamic, interactive visuals for each estimate, and compares figures from very conservative sources (such as the Mercatus Center) to very liberal ones (such as the Urban Institute).

I encourage you to access the resource yourself, but here are the bottom-line projections for the total costs of Medicare for All from that publication:

  • Gerald Friedman, a professor of economics at the University of Massachusetts, Amherst, whose estimates were frequently cited by the Sanders campaign in 2016: $2.76 trillion
  • Charles Blahous, a senior research strategist at the Mercatus Center at George Mason University, and a former trustee of Medicare and Social Security: $3.46 trillion
  • Analysts at the RAND Corporation, a global policy research group that has estimated the effects of several single-payer health care proposals: $3.24 trillion (plus $506 billion*)
  • Kenneth E. Thorpe, the chairman of the health policy department at Emory University, who helped Vermont estimate the costs of a single-payer proposal there in 2006: $3.20 trillion (plus $706 billion*)
  • Analysts at the Urban Institute, a Washington policy research group that frequently estimates the effects of health policy changes. $3.87 trillion (plus $514 billion*)

(*Some estimates of the Medicare for All price tag are not inclusive of all health care costs.)

What will voters say?

This is, of course, the most important question of all.

We will get the voters’ answer in November.

Sarah Fontenot is both a nurse and an attorney. Today, as a professional speaker, she travels the country, helping people understand how health care is changing and what it means for them as consumers.

Why I am Hopeful for Health Care (And You Should Be, Too)

(Public Health) Permanent link

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This story was originally published on Sarah Fontenot’s blog, Fontenotes.

As the visiting associate professor for health law in the Health Care Administration program at Trinity University, I am responsible for teaching our students about multiple legal issues – from criminal liability associated with billing and kickbacks to patient rights regarding consent, end-of-life choices, and privacy; medical malpractice to Medicare/Medicaid; state regulation v. federal initiatives such as the Affordable Care Act and beyond. It is a chock-full semester.

As we approach the end of our time together, I assign a brief memo so the students can each describe their vision of the future of the field they are entering.

Every year, their enthusiasm is inspiring in equal measure to the difficulty of the field they have chosen.

The role of a hospital administrator

To understand why the positivity of my students impresses me, I must explain the role of a hospital administrator for those of you who might not know.

Being a health care executive is a career of stress and change.

A hospital represents the worst fears and the highest hopes of your community. You need to be ready every day to face the intolerable tragedy of the death of a car-crash victim on one floor while celebrating small steps (literally) on the stroke unit, or another day lived in your oncology clinic.

An administrator must manage the non-technology/homey ambiance in labor and delivery favored by young parents, while also supporting the cockpit-like machinery of the ICU next door.

You are the face associated with the entire enterprise – especially in a smaller community where you embody all of these intensely human moments every time you are seen in a restaurant or are addressing your local civic organization.

As a health care executive, you are a huge employer – in rural America, second only to the public-school system. You must care for your caregivers: from your professional staff to those who maintain your physical plant at the highest standard of cleanliness and safety.

As a hospital executive you are running a city. Issues regarding power (keeping the respirators alive if the electric grid fails), transportation (how to safely and compassionately roll patients through miles of hallways), traffic and access (can you take more ambulances in your ER or do you need to divert trauma to other hospitals?), public health (controlling infectious diseases), communication (continually updating and protecting digital records that allow all members of the team to understand each patient’s needs), and law enforcement (are you ready for the combative patient in drug withdrawal or an active shooter in your ER?).

Increasingly the public expects you to do all this while maintaining a facility with delicious food options and a lobby plucked from a high-end hotel.

You invest in technology that is quickly made obsolete in an environment where the physicians you depend on to care for your patients can be lured away by a shiny new toy at another radiology or surgical suite. And you can’t fight back with offers of any financial benefit to those same physicians – that would be illegal.

Speaking of which, the number of laws on both the state and federal level that dictate how you perform most of your processes would shock other business executives. Compliance with all is critical. Many of those you employ will never touch a patient: They exist to keep your facility within legal bounds to avoid all the penalties, both civil and criminal.

Those penalties could close your doors permanently because you are running your enterprise with a trajectory of decreasing revenue and tighter profit margins (I use the term “profit” lightly when referring to publicly owned and community hospitals).

To be a leader of a hospital requires inordinate skill in managing finances and budget.

What you charge is never what you are paid. Government programs and private insurance companies are continually changing your payment (always lower) without the negotiation standard in other industries.

And in this world, health care executives face each day’s list of priorities knowing that invariably there will be a crisis waiting to sabotage all other essential duties – loss of internet service because a road repair team nearby cut your cable, a sheriff serving your hospital with a medical malpractice complaint, a surprise visit from an auditor or Medicare-required compliance review (the unscheduled accreditation team from The Joint Commission will be on-site at least three days).

Then, of course, there is always the possibility of mass casualties streaming in from the explosion of a nearby plant, responding to an environmental hazard from a chemical spill at a local train crash, or transporting your patients from an incoming weather disaster such as a hurricane or tornado.

And all this time, 46% of surveyed physicians don’t trust you, you must address accusations that you don’t sufficiently appreciate your nursing staff (nurses are increasingly joining unions in the U.S.), and the majority of the public has no idea what you actually do.

This is the career my students have decided to enter.

What my students say

Understanding all of what I have said about being a health care executive, these are samples of what my students say when asked about the future of American health care:

1) They are excited about technology that can make health care more humane – not less so:

“Health care in the U.S. is notorious for being clunky and confusing … The only way that these problems can truly be solved is through utilizing data in a thoughtful manner and pairing it with technology that works for patients, rather than for administrators.”

“The expansion of technology in medicine has created more access to health care and, therefore, to information … as our consumers become more informed, our care delivery will have to adapt to become more patient-centered.” 

2) They view their role as administrators as facilitators for the greater good:

“To stay relevant, health systems will need to adapt to fit the patient’s experience and convenience, rather than the provider’s schedule.” 

“Health care in the U.S. may be fragmented and siloed, but now is the time to fix it. I believe aligning incentives and controlling costs are the key components to solving this problem.”

3) They demonstrate compassion for the patients who are the reason why:

“We need to move back to a time where physicians, patients, and their families were responsible for making important medical decisions, not the individuals taking and giving money for that care to be administered.”

“I believe that quality of life and conversations about what patients value are going to be more common … I see people being more comfortable with having these conversations and more forward in asking for them. I think it will be a shift in both physician training and patient culture that will help move us forward in this area.”

4) They see themselves as guardians of the future:

“For me personally, beginning my career at this time in the scheme of health care in America, I am excited and anxious to be a part of the changes we will experience over the next 10-20 years … How will we, as new [master’s in health administration] students, be able to affect such a large complex system? I believe it will come through the support we offer to new ideas, and the new ideas we will bring to our companies during residency.”

“I believe that health care will have vast changes midway through our careers in 2040 and towards the end of our careers in 2060. The way we mine and utilize data, improvements to technology, and changes to patient and provider behaviors will drive the outlook of our health care delivery system over the next 50 years.”

The positivity, professionalism, and commitment demonstrated by my class at large (and each student therein) leave me every December with a smile on my face and a confident outlook for American medicine.

Sarah Fontenot is both a nurse and an attorney. Today, as a professional speaker, she travels the country, helping people understand how health care is changing and what it means for them as consumers.