The term “Medicare for All” (MFA) is currently used to describe political proposals for expanding or replacing both of the now functioning Medicare and Medicaid programs. Even if Medicare for All may never be introduced into legislation, it can be helpful to understand what the conversations are about, and what the pros and cons of the debate are.
An MFA plan would eliminate the need for private health insurance coverage. This plan was proposed in 2017 by Vermont’s Independent Senator, Bernie Sanders and has yet to receive sufficient support from his fellow politicians to become a law. Another MFA bill has been introduced by Washington State’s Democratic Representative Pramila Jayapal that would have the federal government manage the country’s healthcare system. This bill will expand healthcare from the current number of Medicare recipients to everyone in the United States.
Prior Attempts to Enact Medicare for All
The idea of a single-payer, government-managed, healthcare system was first proposed in 1945 by President Harry Truman. That proposal was never enacted. Further attempts to create a single-payer healthcare system that would provide Medicare benefits for everyone were made by both President Richard Nixon and President Bill Clinton. These proposals were met with various forms of opposition from not being inclusive enough to being too costly and hard to manage.
Health Benefits Covered by Medicare for All
The current MFA bills under consideration by both the House and the Senate include more generous Medicare benefits than those now received by Medicare recipients. The language within both MFA bills establishes a government-controlled single healthcare plan. The revised and expanded benefits are listed below.
• Federal government pays for medical care with minimal deductibles for prescription drugs and certain long-term health care costs
• Open to everyone in America
• No copayments
• No deductibles except for an annual $200 prescription drug and some extensive long-term health care costs
• No restrictive networks of care
• Includes vision and dental care
• Dietary and Nutritional care
• Expanded long-term care, services, and support
• Transportation to medical care services for low-income and disabled individuals
Cost of Medicare for All Plans
The potential cost of an MFA plan to the federal government depends on who is doing the estimations. All of the estimates displayed below are from leading financial professionals and economic organizations that are calculated based on a ten-year forecast assuming immediate implementation.
• No estimates available for Representative Jayapal’s proposal
• Senator Sander’s cost is $14 Trillion
• Economist Kenneth Thorpe’s cost is $27.7 Trillion
• Center for a Responsible Federal Budget cost is $28 Trillion
• The Urban Institute cost is $32 is Trillion
• Mercatus Center fellow and former Social Security and Medicare Trustee Chuck Blahous’ cost is $32.1 Trillion
• Center for Health and Economy estimate calculated by the American Action Forum cost is $36 Trillion
Funding Sources to Pay for Medicare for All Plans
Detailed plans for how much an MFA implementation would cost varies amongst the financial professionals and economic organizations that calculated costs. But, these experts did agree on the funding sources for the program listed below.
• Increasing payroll taxes for employers to cover the elimination of employee payroll taxes
• Establishment of an income-related health insurance premium based on household incomes
• Eliminating any employer-related health care tax breaks from federal taxes. All earned income would be taxed at gross income levels
• Increasing income taxes and limiting itemized tax deductions for wealthy Americans
• Increasing taxes on capital gains and dividends
• Lowering federal estate taxes on estate property from $5.45 Million to $3.5 Million and increasing the rate from 40% to 45% or higher depending on the estate values
• Establishing a wealth tax of 1% of every net worth dollar above $21 Million
• Establishing a variety of new taxes on businesses that would include taxing offshore profits
Pros and Cons of Medicare for All
How an MFA program will affect individuals will depend on their current healthcare coverage or lack of coverage.
• Current uninsured individuals will have health coverage and will pay for it through income taxes if working
• Current individuals covered through their employer health insurance plans will no longer pay for the coverage and will pay a premium based income tax
• Current Medicare recipients will no longer pay premiums or copayments and will pay income taxes if working
• Current Medicaid recipients will have low out-of-pocket costs and will pay income taxes if working
• Self-Employed and Self-Insured individuals will pay for coverage through employer taxes
Bottom Line Impact of Medicare for All
How the potential implementation of an MFA program affects individuals will depend on their current healthcare costs, their living conditions, and the sources of their income. While the purpose of the MFA bill is to better the healthcare for everyone, it can be costly for some.
Medicare for All may not ever come to fruition, but it can be helpful to understand different ideas and platforms mentioned in headlines and political debates.