Medicare-for-All is sure to be the hottest topic of the upcoming Presidential elections. As an agency with tens of thousands of Medicare supplement policyholders, we get lots of questions, like “What is Medicare for All and how would it work?”
There are actually a number of healthcare reform proposals that use Medicare in the name of the legislation and several presidential contenders have named their legislation specifically Medicare for All.
However, let me be clear about one thing: NONE of these proposals are anything like our current Medicare system. Medicare as it stands today – right now in 2019 – is a beloved national program that works beautifully to provide affordable coverage for tens of millions of America. It is not a single-payer system, but does have a considerable amount of federal management, rules and regulations.
The Medicare for All proposals below should really not have the word “Medicare” in them at all because it is misleading. These programs would not extend the current Medicare system to everyone. They would replace it with something very different and everyone currently on Medicare would lose the coverage they have today.
Let’s look at the facts of these single-payer proposals:
Medicare for All under Bernie Sanders (I-VA): S. 1129
Bernie Sanders was the first to name give his proposal for healthcare reform the moniker of Medicare for All. He believes healthcare should be a human right and that the only way to ensure coverage for everyone is to offer universal coverage in the U.S.
The bill establishes a national health insurance program that would be administered by the Department of Health and Human Services.
Bernie’s single-payer plan would cover all United States residents, and individuals would qualify for automatic enrollment upon birth or residency. The federal government would run the program and replace nearly all existing public and private healthcare plans.
Some federal programs would continue, such as the Veterans Health Administration and Indian Health Service.
This plan would cover all essential medical treatment including hospital and outpatient services, prescription drugs, mental health and substance abuse treatment, dental and vision services, and home- and community-based long-term care.
This means it would cover considerably more than the current Medicare program we have in place today. Medicare, as it stands now, does not cover dental, vision, and hearing services, or long-term-care expenses.
In Bernie’s ideal Medicare for All program, everyone gets free healthcare. There would be no premiums, copays, deductibles, or coinsurance for covered services except for prescription drugs.
It would also ban private health insurers and allow employers to offer only coverage that is supplemental to Medicare and not duplicative of any of the benefits provided under the program. Medicare for All would free Americans from employer health coverage that may often prevent them from switching jobs.
The secretary would establish the national drug formulary and would negotiate drug costs annually with the pharmaceutical manufacturers.
Bernie’s proposal would allow for a 4-year transition from today’s healthcare into the new regime. It has 14 original co-sponsors.
What Would Medicare for All Cost
It is estimated the program would cost the United States about $3.5 trillion dollars, which would represent a 2% increase in total healthcare spending today. However, the sources of that coverage would shift from private insurance companies over to the federal government.
This, of course, draws a lot of criticism as the politicians who are backing universal coverage are sometimes vague on how they propose to pay for this plan.
Some of the options to fund the program that have been discussed are:
A Premium Paid by Employers and Broader Self Employment Tax
We would impose a 7.5% income-based premium paid by employers. It would exempt the first $2 million in payroll to protect small businesses. Sanders’ plan would make business owners report more of their company’s income as salaries so that they would pay more self-employment taxes.
A Premium Paid by All Employees Making More Than $29,000
The legislation could create a 4% income-based premium paid by employees. It would exempt the first $29,000 in income for a family of four.
Eliminate Health Tax Expenditures for Businesses
Since Bernie’s Medicare for All would bank employer-based health insurance, it would also get rid of employer’s deductions for the healthcare insurance they currently provide. This leaves more available dollars that can be taxed by the federal government to pay for Medicare for All.
It would also eliminate Health Savings Accounts and medical expense deductions for families.
A More Progressive Federal Income Tax
One proposal is to implement a marginal tax rate that goes up to 70% for those making more than $10 Million. It would also tax earned and unearned income (such as capital gains and dividends) at the same rates and limit the tax deductions available for filers who are in the very top tax bracket.
If Medicare for All is passed with this funding option, the United States would have the highest income tax rate in the entire world.
A More Progressive Estate Tax
This option would increase the top tax rate on inheritances, including a death tax rate of 77% for those with more than $1 billion, essentially preventing the wealthiest of families from passing on most that wealth to their heirs.
A Wealth Tax
In addition to the more progressive income tax, Bernie’s plan would establish an additional wealth tax on people in the top 0.1% of earnings.
Collect Fees on Large Financial Institutions
The law could create and collect additional fees for banks and other large financial institutions. This move is estimated to collect over $800 billion across a ten-year period.
Medicare for All under Elizabeth Warren (D-MA)
Elizabeth Warren’s Medicare for All program would go one better than Bernie’s plan in that it would provide healthcare to absolutely everyone, including illegal immigrants.
How Elizabeth Warren Would Pay for Medicare for All
Warren claims her funding plan would not increase any middle-income class taxes, although Bernie disagrees. Her plan calls for various savings by way of reducing spending, such as redirecting taxpayer-funded health spending, stemming the growth of medical costs, reining in prescription drug costs, minimizing defense spending, and reducing insurer administrative costs.
Raise Taxes on the Largest Corporations
Currently, companies can deduct the cost of certain types of investments that they make into assets that depreciate. Warren’s plan would slow the schedule of that depreciation.
Tax the Top Financial Institutions
Implement a fee that would apply to roughly the top 40 banks in the nation to collect an additional $100 billion over 10 years.
Tax Financial Transactions
Warren would also create a tax on financial transactions such as the sale of stocks and bonds to generate about $800 billion for the Medicare for All program
Raise Taxes on the Top 1%
Warren’s plan would include a wealth tax of 6% on people with more than $1 billion.
Redirect Current Medicare/Medicaid Spending
Warren claims that some of the financing for Medicare for All would come from using existing federal spending that is spent on the current Medicare and Medicaid programs.
Since employers already pay for health insurance, they would continue to do that but it would be in the form of contributions to Medicare.
Taxing the Increases in Employee Pay
Since employees would no longer be paying their small share of employer group coverage via payroll deductions, Warren claims there will be more tax-home pay for these employees. They would then pay tax on more dollars each year which theoretically would create additional tax revenue.
Increase Funding for the IRS
Warren believes the system is rigged to benefit the wealthy by under funding the IRS, which then cannot do its job to audit the wealthy and collect more taxes from them. By substantially increasing the funding for the IRS’ Criminal Investigation Division, she expects to collect more tax dollars that would go toward paying for Medicare for All.
Medicare for All under Kamala Harris (D-CA)
Medicare-for-All as envisioned by Kamala Harris differs from the other plans in a few key ways. Although her proposal would create a healthcare system run by the federal government, she would allow private insurers to still compete in it.
Private insurance companies would continue to offer health plans, but they would be regulated more strictly, similar to how Medicare Advantage plans are now regulated by the current Medicare system. This allows the government to better control costs and benefits.
These changes would be phased in over a ten-year period, so far slower than Bernie’s proposal would do so. This approach is likely to appeal more to individuals who are concerned about the sweeping disruption to American healthcare that Bernie’s plan would enact.
Newborn infants, uninsured individuals and anyone else who is interested could buy into Medicare immediately. The plan would provide a path for employers, employees and underinsured individuals to make their way into the program as well.
How Kamala Harris Would Pay for Medicare for All
Harris approves of many of the options that Bernie proposes to pay for Medicare for All and would implement similar measures.
However, Harris’s tax plan for middle-class families differs from Bernie’s significantly. Whereas he would impose a 4% tax on households making over 29,000, Harris would not impose this tax unless households reach $100,000 in income.
To account for the different, Senator Harris would tax Wall street transactions on stocks, bonds, and derivatives.
Medicare for All under Pramila Jayapal (D-WA): H.R.1384
Considered the most ambitious Medicare for All plan, Representative Pramila Jayapal proposes a rapid transition to universal healthcare over just two years. Her program, like Bernie’s, would eliminate private health insurance.
It is also more generous in that it would fund nursing services for long-term-care. Like Bernie’s newest version of his plan, it would also fund abortion.
It’s worth noting that this would be a plan even more generous than the Canadian healthcare system, which does not cover dental, vision, medications, rehab services, or home health care.
This program would pay all providers at Medicare rates. Global budgeting would likely create significant waiting times that Americans are not used to. This will outlaws private coverage for any covered item or service, so Americans would have no option for supplemental coverage like residents in Canada and Britain have. Unlike Canada, where residents who are tired of waiting can come across the border and pay for quicker healthcare, there would be nowhere else to go.
Jayapal has not yet committed to how she would pay for Medicare for All, saying that funding options will come later once she has significantly advanced the cause of improving healthcare for all Americans.
Though healthcare reform in America is a very important topic and a national conversation that we absolutely should be having, we shouldn’t be using the word Medicare in any of the proposals listed here. It’s a misnomer and misleads the public into thinking that everyone would get to access the very successful Medicare program we have today.
As a broker who has worked with Medicare for nearly 15 years, I have seen what an amazing national program it truly is and how it offers affordable options so that individuals can customize their care. I would sooner support a true expansion of this – our actual Medicare program – allowing all Americans the opportunity to join it.
I say this because I know the quality of the care that our policyholders get today under Medicare. As a nation, we should make every effort not to compromise the quality of our healthcare delivery system today.
It’s important to also recognize that these are just four of roughly a dozen Medicare reform proposals in Congress. It’s anybody’s guess whether one of them will actually make it into law, but these proposals are sure to the topic of much discussion as we draw nearer to the 2020 elections. Stay tuned, and be sure you know the facts.