In our blog a few weeks ago, we described the Medicare for All plan being introduced by a number of 2020 Democratic Presidential hopefuls, most vocally Bernie Sanders. We discussed what this plan looks like operationally, but what is the impact on cost? That is typically the first question asked when new plans are introduced. The New York Times interviewed 5 economists and subject matter experts for their opinions and published their findings. All agreed that private spending would decrease and government spending would increase, but they differ on some of the details. We describe some of these below.
Just to recap, the Medicare for All plan removes the need for private insurance organizations and funnels all healthcare through a single payer system, the US Government. The current Medicare system operates this way for those above 65 and is paid for through taxes. CMS offices negotiate rates for all Medicare products and agreed upon rates are typically lower than the average private insurance rate.
Because Medicare rates are typically lower than private insurance, hospitals and physician practices stand to be reimbursed at much lower levels. None of the suggested plans have provided any details to the amounts for reimbursement, and most of the economists polled believe there will be an increase in reimbursement rates (somewhere between 0-9%). That being said, this detail is an important consideration. With an already growing shortage of family medicine and primary care, lower reimbursements and more administrative burden could continue to discourage the younger generation from getting into medicine.
That being said, the Medicare for All plan does offer decreased costs related to both pharmaceuticals and administration. Because the government would be the only negotiator, prescription medication costs should be lower. Similarly, because the government would be the only required administrative body, the overall administrative cost should decrease. All of the economists agreed that the these costs should be lower, but they were unable to provide good estimates for administration and one included an estimate of between 0-6% on pharmacy.
While these findings show some interesting pros and cons, the biggest question is how do we pay for this? Funding is going to have come out of the private sector and into the government system, with some estimates increasing federal spending for healthcare increasing by over 10%. Details on payment are still vague, but it will most likely have to be done through increased taxes. This additional tax amount has been justified by a decrease in patient healthcare spending through reduction and even elimination of copays and high deductibles. Additionally, employers will not longer be required to pay a portion (or all) of their employee’s insurance costs, leading the way to increase salary to compensate for that amount.
Overall, Medicare for All is still just a plan being presented during presidential campaigning, but as we make these healthcare decisions we need to be careful and consider its impact on all aspects. This blog presents differing views, but truly only scratches the surface of the groups impacted. We need to be sure we ask ourselves questions like:
Can our capitalist society accept a government run healthcare system that does not face any external competition?
Should there be some financial participation from patients to encourage accountability?
Are we too invested in the employer provider healthcare to move towards a government system?
Will people have to opt in or should to be forced to opt out?
Are we going to continue to have penalties for those who do not get coverage?
These questions are just a few that need to be answered as we try to solve our healthcare problem. Medicare for All is one of the most drastic plans being proposed currently. We will present another option on our next blog, Medicare at 50 which decreases the age that you can opt into Medicare coverage. This option also faces similar cost issues.- how is our nation gong to pay for this?
For more information on the NY Times Article in this blog, please click the link below: