This article is one of a series of summaries of progressive federal policy ideas written by Think policy fellows. Think does not have a position on any of the proposals mentioned in this summary as we are focused on state-level policy, rather we offer these descriptions as helpful tools for candidates and elected officials who may be interested or face questions on these topics.

Several current bills create a version of Medicare for All. This memo focuses on the two principal plans that stir up the most debate: Senator Sanders’ Medicare for All Act (2019) and Representative’s Jayapal’s Medicare for All Act (2019). Both acts are virtually identical; other bills are watered-down versions of Medicare for All.[1] 

Medicare for All creates a single-payer health insurance program that provides comprehensive health care for everyone who lives in the United States. The government administers the program and negotiates with providers to set reimbursements rates for healthcare services – but it does not own private hospitals or employ providers. It replaces all other forms of insurance, outside of coverage provided through the Department of Veterans Affairs and the Indian Health Service.[2] If signed into law, Medicare for All would be implemented nationwide within two to four years.[3]

Supporters of Medicare for All argue the following benefits:

  • Ensures all Americans have health insurance: 28 million Americans still lack insurance. Medicare for All guarantees everyone is covered.
  • Guarantees comprehensive coverage: Medicare for All covers medical, dental, hearing, prescriptions, vision, and long-term care – as well as preexisting conditions, reproductive needs, and substance abuse/mental health treatments.
  • Lowers and clarifies healthcare costs: Most will pay less for healthcare because Medicare for All eliminates insurance premiums, deductibles, and co-payments– except for some non-preventive drugs and long-term care needs.[4] This means patients will not have to read the fine print to discover the costs (the bill also eliminates surprise billing).
  • Enables one to choose their doctor: The program eliminates network restrictions on which providers you can see because all providers are in one network. 
  • Increases job mobility: Since insurance is provided by the government, employees are not forced to stay in their job because of employer-based insurance, increasing entrepreneurialism and giving workers more employment options.

Opponents of Medicare for All lodge the following attacks, focusing most heavily on its tax increases and the elimination of employer-based/private insurance.

  • Eliminates employer-based and individual private insurance: Though private insurers are not banned outright, they cannot sell policies that cover benefits provided by Medicare for All. They can only cover elective services, like plastic surgery. However, most Americans like their employer-based coverage.
  • Increases taxes on middle-class families: The main candidates championing Medicare for All (Senators Warren and Sanders) primarily tax multinational Fortune 500 companies and the ultra-wealthy to pay for the program, but each uses different taxes. These differences are fleshed out in the bullets below.[5] 
  • Senator Sanders increases income taxes for household incomes over $250,000, returns the estate tax on the wealthy to 2009 levels, creates a 1% wealth tax on households worth over $21 million, imposes new fees on big banks, charges employers a 7.5% payroll tax, and proposes a 4% tax on all households.
  • Senator Warren implements an employer payroll tax for companies with 50 or more employees (calling it an employer Medicare contribution), charges a financial transaction tax of .01%, raises the capital gains tax to equal tax rates on normal income, and adds an additional 2 cent wealth tax on net worth over $50 million and 6 cents over $1 billion.

Opponents claim both plans create indirect and direct taxes that hurt middle-class families. Indirectly, they argue the employer payroll tax/Medicare contribution will be pushed onto employees and the revised financial transaction and capital gain taxes will hurt middle-class investments in the stock market. They use Sander’s proposed 4% tax on all households as proof that Medicare for All will tax all Americans, despite Senator Warren claiming she will not raise taxes on the middle-class to pay for the program.

  • Balloons the federal budget: Cost estimates for the program range from $32 to $52 trillion over ten years. Opponents argue these increases in government spending would destroy the budget and cause tax increases.[6]
  • Covers abortion and undocumented immigrants: Medicare for All repeals the Hyde Amendment that bans federal funding for abortions. Undocumented immigrants are eligible for coverage; Senator Warren’s plan even pushes for immigration to tax newly legal immigrants to pay for the bill.
  • Allows government intrusion and socialism that will increase wait times, hurt business, and reduce choice:Opponents claim providers would not be able to handle the increased number of patients and reduced payments set by the government, increasing wait times, putting doctors/hospitals out of business, and thus, reducing choice.

 


Definitions of programs, options and terms related to the federal health care debate.

Single-payer: This is a health care system where the government provides insurance to everyone. Under the single-payer model, there's just one payer: the government. Medicare for All is a version of a single-payer system. 

Government-Run Health Care: Government-run healthcare programs like in the U.K. not only control insurance coverage but also own hospitals and employ doctors and other providers. The single-payer system underlying Medicare for All is not this. It only gives the U.S. government power over insurance coverage. 

Multi-payer: This is our current healthcare system. A variety of payers can pay for and provide health coverage: Medicaid programs, Medicare, or a private insurance company. In this system, each entity can charge different rates and provide different services, though all have minimum requirements given the Affordable Care Act and other federal legislation.

Affordable Care Act: Dubbed Obamacare, this landmark 2010 law created the individual insurance market exchanges; expanded Medicaid to cover more lower-income Americans; allowed children to stay on their parents’ plan until the age of 26; barred insurers from denying or charging more for preexisting conditions; mandated insurers cover preventive services, prescription drugs, and maternity and mental health; and requires employers with more than 50 full-time employees provide affordable coverage or face a per-employee penalty fee.

Medicare: This federal program run by the U.S. Centers for Medicare & Medicaid Services provides health insurance for elderly and disabled Americans, covering hospitalization, rehabilitation, and doctor visits, but not vision, hearing, dental or long-term care. Medicare enrollees pay premiums, have deductibles, and typically pay 20% of many medical services. There is also no out-of-pocket spending limit for hospitalization or outpatient services, unlike the Affordable Care Act and employer plans.

To offset these costs, some buy supplemental Medigap plans from insurers, have retiree health plans from their employers, or enroll in Medicare Advantage plans offered by private insurers. The latter limits enrollees' out-of-pocket costs to $6,700 and can provide supplemental benefits, such as vision and dental; but, not all doctors and hospitals accept Medicare Advantage plans.

Medicare Part D offers drug coverage for these populations.

Medicaid: Medicaid is a joint state-federal public health insurance programs for low-income U.S. citizens and qualified non-citizens. Both the state and federal government fund the program but states have significant power over eligibility requirements. The U.S. Centers for Medicare & Medicaid Services oversee the program.

Public Option: The “public option” is a government insurance plan (normally, conceived of as Medicare) that competes with private insurers. Private insurance would still exist, but people could choose/buy a government insurance plan instead. The theory is private insurance would have to compete with this more-affordable option, driving down costs. The public alternative provides the same essential health benefits as those currently available through the Affordable Care Act. 

All Democratic presidential candidates, at minimum, support creating a public option to expand health care, but there are various public option proposals, like lowering the age for Medicare access or creating a new program non-Medicare or Medicaid that people could buy into. Some plans have automatic enrollment for eligible individuals while others use existing enrollment mechanisms. Some candidates want to use the public option to transition to a single-payer system; others, do not.

One estimate put the costs for a public option at $1.5 trillion over 10 years.


 [1] The Medicare for America bill in the House is the most similar to the two principal Medicare for All bills, but it allows Americans to get insurance through work and keeps premiums. Four other bills are Medicare buy-in bills, which do not increase taxes or give all Americans coverage; however, people can keep their employer insurance. They also keep premiums. The last bill lowers Medicare enrollment to 50.

[2] State Medicaid programs would cover certain institutional long-term care services for a period of time.

[3] The Senate bill lowers the eligibility age for enrollment by 10 years every year for four years to ensure all residents are covered (those under 18 may enroll immediately, and newborns are automatically enrolled). The House version allows 55+ and 18- individuals to enroll in the first year; everyone else enrolls the following year.

[4] Regardless, out-of-pocket-costs are limited to $200 a year for these drugs, and long-term care is still more affordable than current options.  

[5] Both candidates also close loopholes and cut back spending in other areas to pay for the program. These changes are largely not controversial, except potentially Senator Warren’s push to reduce the military budget and naturalize immigrants to get more tax revenue. The following white paper outlines all the mechanisms Senator Warren would use to fund Medicare for All; this summary  is for Senator Sanders:

[6] Despite government spending increases, total national spending on healthcare would decrease by $27 trillion. Regardless, this increases healthcare costs by $7 trillion (projected).