Journalists often use the analogy of a horse race to describe presidential primaries and it’s an apt description of the 2020 Democratic primary. As I publish this in early March, half the candidates have dropped out and a number of the remaining contenders are flagging. Whether Bernie Sanders will continue his lead remains to be seen, but after years and years of advocating for Medicare-for-All (MFA), it’s finally resonating with voters.
Because Sanders’ plan is based on single-payer, it is easy to explain. Instead of multiple private insurance companies, there will just be an expanded Medicare program. In addition to private insurers MFA will also replace Medicaid and the State Children’s Health Insurance Program (SCHIP). Sanders doesn’t explain it on his website, but MFA also has the potential for replacing Tricare (for active military personnel and their families) and the Veterans Administration’s medical programs.
As I noted in earlier articles, single-payer has the advantage of reducing administrative costs and doing away with out-of-network bills, as there is only one network. Another key element of Sanders’ plan is the ability to negotiate drug prices with pharmaceutical companies to bring down drug costs. And even with that, Sanders would cap the amount any one American would pay to $200 a year (this appears to be an individual and not family limit; i.e. a family of four would pay a maximum of $800 a year for medications). Finally, under Sanders’ proposal there are no out-of-pocket expenses, such as copays and deductibles.
There are two very important aspects of Sanders’ plan that need to be clarified. First, this is not socialized medicine. Health providers, such as doctors, hospitals, pharmacists, psychologists, and physical therapists continue to work as independent practitioners; they are not government employees. The government is assuming responsibility for administering health insurance, but not the provision of medical care.
Second, this is not free health care. Free is when you are six years old and Santa leaves you gifts under the Christmas tree. And even that isn’t free. Sanders and his team now estimate that MFA will cost $47 trillion over the next decade. That’s based on: (1) expanding coverage to about 30 million Americans who currently don’t have health insurance, (2) reimbursing at a slightly higher rate than Medicaid currently pays, and (3) finding savings of about $450 billion a year by cutting administrative costs and reducing the cost of pharmaceuticals.
Sanders and his team believe they need to come up with $17 trillion in new funding over the next ten years. That’s because the other $30 trillion is already in the pipeline in the form of private health insurance, such as premiums being paid to Anthem, Cigna, United Healthcare, etc. as well as federal and state funds already going to Medicare, Medicaid, and SCHIP.
Sanders has several ways he would pay for MFA including an income-based premium of 4% on income over $29,000 for individuals and families and a 7.5% payroll tax for employers. This will cost both employees and employers far less than what they currently pay for health insurance. These taxes will raise about $9.2 trillion in revenues over ten years. Revenues to cover the remaining $17 trillion needed over the next decade will come from multiple sources including, but not limited to: (1) placing a cap of $50,000 for a married couple for itemized deductions, (2) taxing capital gains at the same rates as income from wages, (3) reducing the estate tax exemption, (4) raising the top marginal income tax rate to 52% on income over $10 million, and (5) closing tax loopholes to ensure that corporations pay their fair share of taxes.
Like I said, because it is single-payer, this is a simple plan, without all of the legislation that’s needed to create a public option and address myriad problems in the health care system on a piece-by-piece basis. During recent debates and town hall meetings, Sanders has indicated that he would phase in MFA over a four year period.
There are two significant differences between Sanders MFA and my UHC proposals. First, Sanders plan is primarily focused on single-payer. The Centers for Medicare and Medicaid Services (CMMS) will assume responsibility for administering the program and paying health providers.
However, unlike Sanders proposal, I take a holistic approach to improving the nation’s health care system. Like CMMS, under my plan the National Health Insurance Program (NHIP) is responsible for administering single-payer. However this is just one agency within a larger Department of Health Services (DHS), which will coordinate a multitude of programs including the FDA and CDC as well as new agencies such as the Division of Health Professions (DHP). One of the DHP’s functions is oversight of medical practice, including creating a system for mediation and arbitration when malpractice complaints are made. The DHP will also administer a single-payer malpractice insurance program, which should bring down the cost of malpractice premiums for health providers. So that medical providers are not overburdened by educational debt, the DHP will administer grants and scholarships to help pay those costs. And the DHP will conduct utilization review activities to reduce inefficiency and enhance quality clinical outcomes.
The second major difference between our plans is how we would fund the programs. Both proposals assume savings from reducing administrative costs and reducing the cost of prescription drugs. However, my plan is based on a sales tax, financial transaction taxes, and excise taxes. Consequently, funding does not fall on the back of employers as employer funded health care was never meant to provide the financial revenues to fund universal coverage. And by spreading the costs across the national economy, these taxes aren’t burdensome to individuals or employers.
Regardless of these differences, the key takeaway is that
Senator Sanders has advocated this approach for decades and if elected, would
certainly move forward, even in the face of strong industry and political
opposition, to bring MFA to fruition.
 Employers and employees now pay about $1.25 trillion for private health insurance a year. This is just for the insurance. Annual out-of-pocket expenditures for copays and deductibles cost consumers another $375 billion according to the Centers for Medicare and Medicaid Services:
 Medicaid and SCHIP are jointly funded with state and federal revenues.
 Don’t shed too many tears for the rich. Forty years ago, the top marginal rate was 92%.