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Medicare for All is a proposed new healthcare system for the United States where instead of people getting health insurance from an insurance company, often provided through their workplace, everyone in America would be on a program provided through the federal government. It has become a favorite of progressives, and was heavily championed by Senator Bernie Sanders (D-Vermont) during his runs for the Democratic presidential nomination in 2016 and 2020. If you are looking for help with medical planning under our current system, consider working with a financial advisor.

Medicare For All: How It Works

Sanders’ bill would replace all other insurance, with limited exceptions, such as cosmetic surgery. Private insurance, employer-provided insurance, Medicaid, and our current version of Medicare, would all be replaced by Medicare for All. The Affordable Care Act, commonly referred to as Obamacare, would also be replaced by Medicare for All.

Medicare for All is actually more generous than your current Medicare program. Right now, Medicare is for Americans 65 and older. They receive care, but they’re also responsible for some of the cost. However, Sanders’ plan would cover medical bills completed, with no financial burden on the patient.

Sanders’ Medicare for All would be a single, national health insurance program that would cover everyone living in the United States. It would pay for every medically necessary service, including dental and vision care, mental health care and prescription drugs. There would be no copays or deductibles, with the exception of prescription drugs, though the cost would be limited to $200 a year. There may also be additional out-of-pocket costs for long-term care.

The government would set payment rates for drugs, services, and medical equipment. Each year, the Secretary of Health and Human Services would come up with a national budget for all covered services and spending would be capped by that national budget. Just 1% of the total health spending budget would be used to provide job dislocation assistance for people working in the insurance industry.

Sanders’ bill includes a four-year phase-in during which increasingly younger people could buy into Medicare. It would work like this: 55-year-olds would be able to buy into Medicare in the first year, 45-year-olds in the second year and 35-year-olds in the third year. Out-of-pocket costs would be reduced for everyone buying into Medicare. There would also be a public option insurance plan offered to people of all ages through the Obamacare marketplaces.

Medicare for All is effectively single-payer healthcare. Single-payer health care is where the government pays for people’s health care. The new name just makes the concept more popular. A Kaiser Family Foundation poll found that 48% of people approved of single-payer healthcare, while 62% of people approved of Medicare for All.

Medicare for All Cost?

If everything stays the same as it is right now, the combined healthcare spending by private and public sectors is projected to reach $45 trillion by 2026.

The libertarian-oriented Mercatus Center at George Mason University estimated that the cost of Medicare for All would be more than $32 trillion over a 10-year period.

Kenneth Thorpe, a health finance expert at Emory University looked at a version of Sanders’ Medicare for All during the 2016 campaign and estimated that the cost would be about $25 trillion over 10 years.

In order to pay for the program, Sanders has suggested redirecting current government spending of about $2 trillion per year into Medicare for All. To do that, he would raise taxes on incomes over $250,000, reaching a 52 percent marginal rate on incomes over $10 million. He also suggested a wealth tax on the top 0.1 % of households.

Medicare for All Pros and Cons

Pros and cons for this program partially depend on your income bracket. If you make less than $250,000, Sanders’ additional tax will not affect you. If you make more than $250,000 a year, or are in the top 0.1 % of household, Sanders’ tax to pay for Medicare for All would be a con for you.

In addition, universal health care requires healthy people to pay for medical care for the sick. However, that is how all health insurance programs work. Everyone buys in and pays the costs of health insurance, but the insurance company only pays when someone needs medical care or coverage. In every insurance plan, healthier people absorb the costs incurred by sicker people.

Pros

• Universal healthcare lowers health care costs for the economy overall, since the government controls the price of medication and medical services through regulation and negotiation.
• It would also eliminate the administrative cost of working with multiple private health insurers. Doctors would only have to deal with one government agency, rather than multiple private insurance companies along with Medicare and Medicaid.
• Companies would not have to hire staff to deal with many different health insurance companies’ rules. Instead, billing procedures and coverage rules would be standardized.
• Hospitals and doctors would be forced to provide the same standard of service at a low cost, instead of targeting wealthy clients and offering expensive services so they can get a higher profit.
• Universal healthcare leads to a healthier population. Studies show that preventive care lowers expensive emergency room usage. Before Obamacare, 46% of emergency room patients were there because they had nowhere else to go. The emergency room became their primary care physician. This type of health care inequality is a major factor in the rising cost of medical care.

Cons

• Some analysts are concerned that the government may not be able to use its bargaining power to drive down costs as steeply and as quickly as Sanders predicts. Thorpe argues that Sanders is overly optimistic on this aspect of the bill.
• Other analysts are concerned that insulating people from costs of care will drive up usage of medical care. Drew Altman, who heads the Kaiser Family Foundation, pointed out that “no other developed nation has zero out of pocket costs.”
• People may not be as careful with their health if they do not have a financial incentive to do so.
• Governments have to limit health care spending to keep costs down. Doctors might have less incentive to provide quality care if they aren’t well paid. They may spend less time per patient in order to keep costs down. They also have less funding for new life-saving technologies.
• Since the government focuses on providing basic and emergency health care, most universal healthcare systems report long wait times for elective procedures. The government may also limit services with a low probability of success, and may not cover drugs for rare conditions. 

Other Medicare and Medicaid Expansion Bills

Lawmakers have introduced other Medicare expansion options, which would be much more limited than Medicare for All.

Senators Debbie Stabenow (D-Michigan), Sherrod Brown (D-Ohio) and Tammy Baldwin (D-Wisconsin) introduced the Medicare at 50 Act in February of 2019. Under the Medicare at 50 Act, people between 50 and 64 could buy into Medicare. Other than expanding the age, the main difference to our current Medicare program would be that coverage would automatically include Medicare Part A (hospital), Part B (physician), and Part D (prescription drug) coverage. In addition, you could choose Medicare offered through private insurers, known as Medicare Advantage. If you qualified for a premium subsidy under the Affordable Care Act, you would still be able to apply that to extended Medicare. This bill would effectively create a new insurance option for those 50 and older.

Senator Michael Bennett (D-Colorado) and Rep. Brian Higgins (D-New York) introduced a bill called Medicare-X Choice. This bill would offer Medicare to people of any age through the Obamacare marketplaces. This bill would not be initially enacted nationwide. Instead, the bill would focus on adding the Medicare option in places with few hospitals and doctors, or areas that only had one insurer offering coverage.

Senator Brian Schatz (D-Hawaii) and Rep. Ray Lujan (D-New Mexico) proposed a bill called the State Public Option Act that would let people buy into Medicaid, rather than Medicare. The details of covered services could vary from state to state, since this would be offered through Medicaid rather than Medicare. However, no plan would be able to offer less than essential health benefits covered under the Affordable Care Act.

Where the Presidential Candidates Stand

Sanders, of course, did not win the Democratic Primary. Joe Biden, widely considered significantly more moderate, won. Biden has an extensive healthcare proposal which expands many parts of the Affordable Care Act, but does not include a single payer Medicare For All program. Instead, it is based around a public option — a government plan only for those who want it, while private insurance companies remain the main driver of healthcare in the US.

President Donald Trump has not offered a comprehensive healthcare plan this time around. Early in his term, he and the Republicans in Congress tried to “repeal and replace” The ACA, but were unsuccessful.

The Bottom Line

Healthcare is certainly a hot topic for the 2020 election process. Though Bernie Sanders’ (D-Vermont) version of Medicare for All would eventually eliminate all other forms of insurance, other Democratic candidates have varying degrees of support and versions of Medicare for All  as a universal healthcare system. Though Medicare for All would likely lower the healthcare costs in the economy overall and increase quality care while also facilitating more preventative care to avoid expensive emergency room visits, you could end up paying more if you make more than $250,000 a year or are in the top 0.1 % of households. What’s more, some experts suggest that if costs are less onerous, patients will overuse the system and make setting up appointments for elective procedures more difficult.

Tips for Keeping Your Finances Healthy

• A health savings account (HSA) may be a good option for younger people who are worried about potential healthcare costs. HSAs can greatly reduce monthly premiums.
• Whatever the outcome on Medicare for All, it is important to keep yourself physically and financially healthy. If you are concerned about budgeting with health care costs, you may want to look into a financial advisor. SmartAsset can help you find your financial advisor match here.

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