Watching last week's presidential debate about Medicare-for-all was painful. Two fundamental problems confront Medicare-for-all advocates. Both are too complex to explain in one-minute sound bites at a debate, and it was hard to tell how well the candidates themselves understand them.
The first problem is that Americans have no idea how much the current employment based system is already costing them.
The second problem is that many do not understand how a single-payer system such as Medicare-for-all would save us all a lot of money.
As to the first problem, some current costs borne by the insured — co-pays, deductibles, premiums paid directly by employees — are visible.
But another cost to employees is nearly invisible: the amount their employer remits for their health coverage. Workers never see this money, but it is really coming out of their own pocket. Insurance is additional compensation received by the employee, which could just as well have been extra cash instead.
(If Congress enacts a single-payer system, eliminating employment based insurance, it should require employers to add all of the money they previously were remitting for insurance to each worker's cash pay.)
This money diverted from wages is substantial. The Kaiser Family Foundation says that the average amount remitted by employers for a family plan this year will be about $14,600. For single employees it is probably over $5,000.
To find out how much your employer diverts from your wages, look at line 12 of the annual W-2 form you receive. Line 12 doesn't explain what this number means, but just lists code DD next to the amount. The other side of the W-2 explains that this is the "cost of employer sponsored health coverage."
Most employees think this so-called "employer share" doesn't cost themselves anything, whereas they are paying for all of it with a reduced salary. This creates a political barrier to enacting Medicare-for-all. Voters will be comparing highly visible tax increases that Medicare-for-all would require with a grossly underestimated idea of what the current system is already costing them. The proposed system will look like a terrible deal.
It would actually be a good deal, since a well-managed single-payer system will save money over current arrangements.
Medicare-for-all will be a more efficient as well as inclusive system. The present system, with multiple insurance companies and government programs (Medicare, Medicaid, Veterans Administration, Indian Health Service, CHIP, etc.) confronts doctors and hospitals with an overwhelming number of different billing requirements. Insurance billing costs about $80,000 a year for every doctor, in addition to insurance company and governmental costs for processing these transactions.
Medicare-for-all would eliminate most of this administrative overhead, reducing the total costs of medical care and of the insurance which pays for it.
Although taxes for everyone would have to go up substantially to pay for Medicare-for-all, the additional taxes for most people would be less than their current medical costs, visible and invisible, which would be eliminated.
Bernie Sanders has been honest about the need to increase everyone's taxes, but has been unable to explain how increased taxes would be outweighed by family cost savings. Does he understand the political problem caused by the invisibility of a major part of current family costs?
Elizabeth Warren's unwillingness to admit that middle class taxes would go up undermines her credibility. She correctly says that total family costs would go down, but without explaining further (which the debate format makes impossible) she isn't persuasive.
Joe Biden and Pete Buttigieg are leading critics of Medicare-for-all.
Biden claims that Medicare-for-all would cost too much. He doesn't recognize the savings that its administrative simplification would produce. And he doesn't note that continuing the present system would cost us all even more.
The immensely increased federal budget that Biden correctly says Medicare-for-all would require would be only an accounting change. It wouldn't represent any increase in the cost of governing the country. Money now flowing through channels outside of government (through employers and private insurance companies) would instead be flowing through government. Who could care less about such an "expansion" of the government?
Buttegieg's proposed "Medicare for all who want it" sounds like a nice compromise, accommodating those satisfied (because they think it is free) with their current employer-based insurance. But his proposal wouldn't eliminate the current multiplicity of insurance companies and government programs. It would therefore neither reduce administrative costs nor save anybody any money. Neither would allowing people to "buy in" to the current Medicare program.
Buttegieg and Biden have many good ideas but aren't contributing to public understanding here. The nomination contenders should all stop offering bumper sticker solutions to this complicated problem, and await the recommendations of the study commission which any Democrat victorious in 2020 should appoint.
Paul F. deLespinasse is Professor Emeritus of Political Science and Computer Science at Adrian College. He received his Ph.D. from Johns Hopkins University in 1966, and has been a National Merit Scholar, an NDEA Fellow, a Woodrow Wilson Fellow, and a Fellow in Law and Political Science at the Harvard Law School. His college textbook, "Thinking About Politics: American Government in Associational Perspective," was published in 1981 and his most recent book is "Beyond Capitalism: A Classless Society With (Mostly) Free Markets." His columns have appeared in newspapers in Michigan, Oregon, and a number of other states. To read more of his reports — Click Here Now.
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