Medicare for All

An Economic Rationale

Ken Lefkowitz

• Publisher: Routledge
• Year: 2022
• Print ISBN: 9781032223414
• eBook ISBN: 9781000581485
• Edition: 1
• Topic: Medicine
• Subtopic: Health Care Delivery

Healthcare continues to be one of the defining political issues in the United States. Though many progressives argue for an overhaul of the current system based on ethical or humanitarian principles, this important book offers an economic rationale for providing healthcare for all.

The purpose of Medicare For All: An Economic Rationale is to demonstrate how current runaway healthcare prices can be addressed by implementing the cost-effectiveness of Medicare For All. Written by a former Corporate Director and healthcare consultant, this book illustrates why the current free market model for healthcare is ultimately failing the country by not containing rising healthcare costs, which has a severe economic impact on all Americans, including those covered by employer medical plans. Major factors in that failure such as the lack of transparency, human decision factors, and high administrative costs in the current system are explored. The book demonstrates that implementing Medicare For All, providing comprehensive benefits with no copays, private insurance premiums, deductibles, or other cost-sharing, will not only improve the lives of most Americans, but will be far more cost-effective than the present system.

This is an incisive, important contribution to a topic that continues to shape American political discourse and will be of interest to scholars and professionals engaged in this area as well as politicians and the public in general.

1 A Brief Background and Outline of the Book

DOI: 10.4324/9781003286271-1

Background/Overview

Healthcare has been at the forefront of critical issues in America for the past decade and continues to preoccupy the public conscience. The passage of the Affordable Care Act in 2010 clearly solidified healthcare as a major focus of the national political debate. The loss of coverage associated with the COVID-19 pandemic, media emphasis on surprise billing, and the expansion of the Affordable Care Act as part of the recently passed stimulus bill focuses even more attention on the subject. Additionally, the reintroduction of Medicare For All in the House of Representatives by Congresswoman Pramila Jayapal on March 21, 2021, and similar action expected to follow in the Senate by Bernie Sanders, ensures healthcare will continue to be among the nation’s preeminent issues.

Any consideration of healthcare must, by definition, include the concept of Medicare For All, introduced to the American public by its champion and major sponsor Senator Bernie Sanders, especially during the Democratic Presidential debates leading up to the 2020 presidential election. Senator Sanders’ emphasis on healthcare as a human right, the inequality of our current healthcare system, and the excesses of the insurance industry represent his leading themes in proposing Medicare For All, becoming rallying cries for its progressive and liberal supporters.

These themes were recently echoed again on March 17, 2021, when US Congresswoman Pramila Jayapal, representing Washington State’s 7th District, and Congresswoman Debbie Dingell, representing Michigan’s 12th District in the US House of Representatives, introduced the Medicare For All Act of 2021. This legislation would guarantee healthcare to everyone in America providing comprehensive benefits with no copays, private insurance premiums, deductibles, or other cost-sharing. Many speakers participated during their “town hall” meeting, explaining why they supported Medicare For All, including the heads of organizations championing the bill as well as other prominent members of the Democratic Party. Some emphasis was placed on the pandemic and how unemployment skyrocketed to historic levels, causing millions of Americans to lose their health insurance. However, the speakers’ focus was on Senator Sanders’ themes already repeated numerous times emphasizing social, humanitarian, ethical, and equality issues. Healthcare as a human right, patients over profits, and the plight of uninsured and underinsured Americans were consistently repeated. And that is to be expected since the essence of the system is to expand comprehensive first dollar healthcare coverage to every citizen. Therefore, emphasis has been on healthcare as a human right, eliminating the uninsured and underinsured, while addressing racial and economic inequities.

Although these issues are certainly quite important and highly relevant, they fall short of presenting the entire picture. It is the purpose of this book to complete the key missing piece: current runaway healthcare prices versus the cost-effectiveness of Medicare For All. In order to accomplish this, we will first explore the high cost of our current free market system and its dismal and continuing failure to control healthcare costs. As major factors in that failure, we will explain the lack of transparency and the human decision factors in the current system, as well as its high administrative costs. Then, in contrast to the free market system, we will demonstrate the cost-effectiveness of Medicare For All.

Progressives and Democrats would be better served by shifting their focus to gain additional support among moderates and even some cost-minded conservatives. Emphasizing why our broken free market system has failed dismally in controlling costs, allowing runaway healthcare costs to continue, affecting all Americans, and then demonstrating how these costs can be contained is an approach that should garner broader support. Warren Buffet, the renowned investor and Chief Executive Officer of Berkshire Hathaway, was quoted as saying that ballooning medical costs are, “A hungry tapeworm on the American Economy.”¹ Demonstrating how the American economy overall and every individual’s economic situation is eroded by runaway healthcare costs, using a “follow the money” approach, would surely gain increased and even perhaps strong support for Medicare For All, moving beyond progressive and liberal ranks to many more American citizens of all political persuasions and value systems. That is the purpose of “Medicare For All: An Economic Rationale.”

Outline of Medicare For All

Before we begin the exploration of our current system’s flaws and shortcomings, it is important to outline the definition of Medicare For All so the reader can gain an understanding of the program’s essentials and parameters. Two Medicare For All bills have been introduced in Congress, one originally in the House by Representative Jayapal, HR 1384 in March 2019, and another in the Senate, S1129, by Senator Sanders in April 2019, who humorously said in a discussion about Medicare For All elements during the Democratic Presidential debates, “I wrote the damn bill.” Quite similar in content, both bills present the key elements of a Medicare For All program, defining it as a single-payer universal healthcare coverage plan. Here are their key elements:

• Every resident receives a healthcare coverage card;
• Comprehensive coverage is provided for doctor, hospital, dental, vision, mental health, medical supplies, pharmaceuticals, and long-term care;
• There are no deductibles or copays;
• Private duplicate coverage is banned;
• The plans are exempt from the Hyde Amendment that bans government spending on women’s right to choose.

Under each plan, doctors, hospitals, and other medical providers remain independent and operate freely. Patients are free to choose any doctor or hospital since the delivery of care continues to remain in private hands. Continued free choice of each person to select their own doctors and hospitals is assured. Neither plan is a government takeover of healthcare. Only funding and coverage are addressed.

Reference List

1. “A Good Health Care Deal, But Only for Some,” by Elisabeth Rosenthal, NY Times, Feb 1, 2018, https://www.nytimes.com/2018/02/02/opinion/healthcare-berkshire-amazon-chase.html.

2 America’s Healthcare Costs and Quality

DOI: 10.4324/9781003286271-2

America spent $3.8 trillion on healthcare in 2019. That accounted for 17.7% of gross domestic product (GDP) and has been increasing nearly every year for the past few decades. The amount is alarming and as mentioned in the prior chapter, Warren Buffet, the renowned investor and Chief Executive Officer of Berkshire Hathaway, was quoted as saying that ballooning medical costs are, “A hungry tapeworm on the American Economy.”¹ A most visually disturbing image as can be imagined.

Although in absolute terms the $3.8 billion is a staggering sum, expenditures on healthcare when compared with other countries are even more pronounced and concerning.

Figure 2.1 presents US spending when compared to other highly industrialized advanced countries. The spending data are expressed as dollars per capita per year. The major source of the data is the Organisation for Economic Co-operation and Development, OECD, which is an intergovernmental economic organization with 37 member countries respected for its studies of comparative economic data and evaluations of its member nations.²

Figure 2.1 US Healthcare Spending Per Capita versus Other Nations, 2019

The UK spends the least at about $4,000 followed by Japan, France, Canada, Holland, and Sweden clustered around $5,000. Germany is next at closer to $6,000. For a broader perspective, we calculated the average of the European Union which is very nearly the same as the UK at $4,000. The most striking amount on the chart is the United States that spends in excess of $11,000, more than twice that of all the other countries except one. That country is Germany against whom the United States falls just short of spending double.

It is important to note that many types of healthcare systems are represented in the chart above. For instance, the UK has nationalized health insurance while Canada uses a single-payer system that is funded through the national government and administered by the Provinces, which are roughly equivalent to states in America. The Canadian healthcare system is financed with general revenue raised through federal, provincial, and territorial taxation. Physicians, hospitals, and other healthcare providers are independent and free to practice as they chose. We will be referring to the Canadian single-payer system numerous times throughout this book, and therefore, a more detailed description of the system is provided in the Appendix.

Germany is an example of other healthcare systems. Universal health insurance is mandatory and is a mix of funding systems. First is the statutory health insurance system, or SHI, consisting of sickness funds. These are not-for-profit, competing, non-government health insurance plans. Sickness funds are financed by employers and workers through general wage contributions. Second is private health insurance. The federal government has wide-ranging regulatory power over healthcare but is not directly involved in care delivery. The Federal Joint Committee, supervised by the Federal Ministry of Health, determines the services to be covered by sickness funds. A key point is that the government has the responsibility and control over setting prices. The government plays a strong controlling role in private health insurance. It is regulated by the Ministry of Health and the Federal Financial Supervisory Authority in many ways including premium increases. This is a limited general outline of the German system, and because it is a system that has private health insurance and that is heavily controlled by the government, including pricing, a more detailed description is provided in the Appendix.

The rather dramatic difference in spending between the United States and other countries as shown in Figure 2.1 may easily lead us to believe that the quality and performance of healthcare in the United States is at a level far in advance of other nations. However, most alarming is the fact that despite the high cost, the United States was ranked last of 11 developed countries in performance and quality by the Commonwealth Fund Study of Health Quality.³ Such a contrast is not just disturbing from an overall health perspective, it also indicates quite clearly that our country is failing miserably in getting value for its healthcare dollar. An analogy is a person who paid $1,000 for a service they could purchase elsewhere for $512. We all would consider such a person quite foolish. Yet, that’s the situation facing healthcare in America today.

The charts on the following page...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of figures
• List of tables
• Acknowledgments
• 1 A Brief Background and Outline of the Book
• 2 America’s Healthcare Costs and Quality
• 3 High Prices and the Free Market System
• 4 Overhead and Administrative Costs
• 5 The Burden of High Healthcare Costs
• 6 Savings under Medicare For All
• 7 The ACA and Other Issues
• 8 Summary
• Appendix: The Canadian and German Healthcare Systems
• Index