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.