Will Bernie's Medicare For All Plan Really Help Americans?

Ayelet Spertus

The United States is facing a healthcare crisis. Our healthcare costs are some of the highest in the world, millions of Americans struggle to pay their expenses, and thousands die each year because they cannot get urgently needed services out of fear of costs. Senator Bernie Sanders, along with 14 co-sponsors, have introduced the Medicare for All Act of 2019 to mitigate the many problems in America’s healthcare system. The “M4A” bill offers innumerable benefits to Americans (as described in Conor’s article), but, like any plan, it does have its trade-offs. As politically active young adults who contribute to our nation’s political discourse, we have a responsibility to understand these trade-offs before we can make informed decisions. By examining this bill’s drawbacks, I am not prescribing an ultimate solution for the American healthcare crisis, nor am I attempting to smooth over the real problems that exist in our healthcare system. Instead, I will point out the flaws in Sanders’ plan and its political obstacles going forward, some of which may very well prevent the Medicare for All bill from ever becoming law.

Problems with the M4A plan

Like most other liberal Americans, I believe that some form of universal healthcare should be our ultimate goal, as no individual should have to choose between paying for healthcare and putting food on the table. However, in order to achieve this, it is crucial to determine how the costs of these services will be distributed. Healthcare currently costs between $3 and $3.5 trillion a year in the U.S., which is almost as large as the country’s $4 trillion budget. Right now, the majority of healthcare costs are being paid for in the private sector through private insurance plans (excluding Medicare and Medicaid), but under the Medicare for All bill, virtually all of these costs would be transferred onto the government, effectively doubling the US budget. Sanders has offered a relatively simple explanation for how this massive expenditure will be

financed: raising taxes, closing tax loopholes for corporations and the wealthy, and lowering drug and administrative costs. However, the actual projected cost of M4A varies wildly depending on the ability of the government to achieve cost savings, which means that no one will know the true economic impact of M4A on American households until it is already implemented. As such, it is impossible to project the likelihood of Sanders' tax plan fully covering all of its costs. Even if the math does work out, there are still a number of things that need to be noted.

Taxes on every American would go up, and for many they would go up significantly. Proponents of M4A make the argument that the average tax increase will be less than the average savings in healthcare costs. While this seems to be true, there are two often overlooked considerations: First, it is projected that the average American will save more in healthcare than their taxes increase, but no one is the average American. While many tens or hundreds of millions of Americans will become better off, many tens or hundreds of millions of Americans will become worse off. Given the sheer magnitude of people in the losing group, the political implications here are enormous. Even if a majority of voters support a bill (which isn’t the case with M4A in the first place), it is politically untenable to pass anything with such active opposition from such a large group, even if they are in a slight minority.

There is no nation on earth with universal healthcare that doesn’t offer private insurance alongside it in some form.

Representatives are hesitant to vote for bills that threaten their reelection, which would be the case in large swaths of the country.

As for the plan itself, it is unclear in the bill whether individuals will be allowed to purchase supplemental coverage through private contractors, but Sanders has made it clear publicly that he plans to abolish the private insurance industry. Under the current Medicare system, Americans have the option to pay an additional premium to cover co-pays and other fees that may arise, as well as the option to purchase supplemental higher quality coverage through Medicare Advantage plans. More than onethird of all Medicare beneficiaries receive coverage through these plans. These plans have been overwhelmingly popular. In fact, 90% of Medicare Advantage enrollees are happy with their plans, and only 2% think that their traditional Medicare coverage is better. This is hardly surprising, as private insurers virtually always offer higher quality care than government-run programs because “choice increases competition, and competition drives up value”. It follows that abolishing private insurance means Americans will no longer have access to private insurers for these supplemental plans. Freedom of choice matters to Americans, and the polling supports this, as I will show later on.

Additionally, having the option to purchase supplemental insurance especially benefits those with complex or chronic conditions who must frequently see multiple specialists. Because Medicare pays specialists much less than private insurance does (typically around 30 cents on the dollar), most highly specialized doctors often do not take Medicare. Instead, they usually only accept Medicare Advantage Plans.

According to experts at the Healthcare Leadership Council, “Medicare Advantage Plans provide a level of care for special needs patients with chronic health conditions that conventional fee-for-service Medicare can’t match”. If these

plans are no longer offered, most specialists would remain in the private sector, but would become even more unaffordable for most, and those with chronic conditions would suffer from lower quality care as a result.

Supplemental insurance isn’t popular only in the U.S. Other nations with universal healthcare do offer regulated supplemental insurance. Sanders often argues that we should emulate other countries with universal healthcare, but the fact that there is no nation on earth that doesn’t offer some form of private insurance, undermines his requirement that all non-governmental insurance be abolished.

Why political realities make M4A unlikely

I have gone over some of the problems with the M4A plan itself, but an even larger issue exists in the political domain: the bill has no path to law in the near future. Over two-thirds of Democrats in the Senate oppose this bill, and it is safe to assume that it will not garner any Republican support either. As for popular support, polling for Medicare for All as a concept is at 70% nationwide but understanding of the bill’s implications is surprisingly lacking. For example, almost half of Americans wrongly believe they would be able to keep their current plan under Medicare for All. When informed that taxes will be raised under M4A, support plummets to 47%, even though the average American will supposedly end up paying less in the long run. This is because, politically, American voters do not favor delayed gratification; tax increases are tangible, but long-term savings are more abstract. Furthermore, support drops again to merely 37% when voters discover that private insurance will be abolished. The numbers indicate that M4A has neither the popular nor political support to pass, and unfortunately, even the best healthcare policy helps no one unless it becomes law.

Perhaps most troubling of all is what happens when the administration implementing M4A transitions to the next. Let’s assume for now that the following happens: Sanders is elected into office, Congress flips entirely to the Democrats, Medicare for All is passed into law and implemented smoothly, and the costs work out, so the budget is covered. Then what happens the next time congress turns Republican? To quote Ezra Klein with Vox:

As politically active young adults who contribute to our nation’s political discourse, we have a responsibility to be aware of the tradeoffs involved in any plan before we can make an informed decision.

“[Imagine] in 2024, amid a backlash to rising tax rates, Sanders loses reelection to Ohio Sen. Rob Portman. Working with a Republican Congress, Portman restructures Medicare-for-All. Where Sanders included coverage for abortion, Portman bars it totally. Where Sanders designed the program to avoid copays and deductibles, Portman, a believer in health savings accounts, reworks it to frontload the cost-sharing. Where Sanders guaranteed coverage to everyone, including unauthorized immigrants, Portman restricts it to legal residents, and adds a work requirement for able-bodied adults”.

Now, Americans are left pinned to a government plan with restrictive coverage at best, morally degrading at worst, and the inability to switch to any other plan because the private insurance industry has been completely dismantled.

This is a likely scenario. Recall that Republicans were one vote away from repealing Obamacare in 2017, and Wisconsin’s request to add premiums and a work requirement to its Medicaid program was approved by the Trump administration in 2018. As long as there is the potential for alteration at the hands of the opposing party (which is always true given the nature of democracy), the future of Medicare for All has the potential to become disastrous. This is perhaps the greatest reason to leave the private insurance industry in place. Yes, the insurance industry is costly, bloated, and at times morally questionable, but its presence in and of itself eliminates the potential for the government to hold Americans’ healthcare coverage hostage the second Congress turns red.

What is the best next step?

As a more immediate and politically feasible solution, building upon the Affordable Care Act is likely the best way to go forward in the near future. Although the ACA has had rocky results, it provides a strong foundation for building a universal healthcare system. The ACA was once supposed to offer a public option that would allow Americans to opt into a government-run healthcare plan, but ultimately failed in favor of a system of insurance “marketplaces” where private insurance plans can be purchased. Actualizing the public option would be both the most popular option publicly and the most feasible one politically. Support for a government-provided public option offered alongside private insurance is at 73%, including a majority of Republicans.

As such, U.S. representatives are far more willing to support reforming the Affordable Care Act to actualize the public option. If Sanders’ goal was to put Medicare For All into mainstream political discourse, then he has succeeded. His anger at our healthcare system’s faults is well warranted, and his spirited calls for reform have brought these issues to the forefront of the political stage. However, these calls have been misguided. His solution is fundamentally flawed, both in content and in viability. The reason Sanders’ plan is unworkable is that it requires certain conditions to be met, namely that it can be paid for, that there will be popular support, and that there will be political support. But the cost is completely unknowable, and Americans want to keep insurance intact without tax increases. Politically, even most Democrats don’t support M4A when fully informed about its implications, and even if they did, it has no viable path to law. Since evidence shows that none of those conditions are realistic, we have to conclude that the choice is not between enacting M4A or improving the ACA; it’s between having nothing change or improving the ACA, and clearly the latter is the better option.