Robert Reich

Medicare-for-All is political jiu-jitsu

Wednesday, July 26, 2017

As Republicans in Congress move to repeal the Affordable Care Act, Democrats are moving toward Medicare for All—a single-payer plan that builds on Medicare and would cover everyone at far lower cost.

Most House Democrats are already supporting a Medicare for All bill.

With health care emerging as the public’s top concern, according to recent polls, the choice between repeal of the Affordable Care Act and Medicare for All is likely to be the major domestic issue in the presidential campaign of 2020 (other than getting Trump out of office, if he lasts that long).

And the better choice is clear. Private for-profit insurers spend a fortune trying to attract healthy people while avoiding the sick and needy, filling out paperwork from hospitals and providers, paying top executives, and rewarding shareholders.

And for-profit insurers are merging like mad, in order to make even more money.

These are among the major reasons why health insurance is becoming so expensive, and why almost every other advanced nation—including our neighbor to the north—has adopted a single-payer system at less cost per person and with better health outcomes.

Most Americans support Medicare for All. According to a Gallup poll conducted in May, a majority would like to see a single-payer system implemented. An April survey from the Economist/YouGov showed 60 percent of Americans in favor of “expanding Medicare to provide health insurance to every American.”

That includes nearly half of people who identify themselves as Republican.

If Republicans gut the Affordable Care Act, the American public will be presented with the real choice ahead: Either expensive health care for the few, or affordable health care for the many.

What should be the Democrats’ response? Over the next weeks or months, Democrats must continue to defend the Affordable Care Act. It’s not perfect, but it’s a major step in the right direction. More than 20 million Americans have gained coverage because of it.

But Democrats also need to go further and offer Americans a positive vision of where the nation should be headed over the long term. That’s toward Medicare for all.

Some background: American spending on healthcare per person is more than twice the average in the world’s 35 advanced economies. Yet Americans are sicker, our lives are shorter, and we have more chronic illnesses than in any other advanced nation.

That’s because medical care is so expensive for the typical American that many put off seeing a doctor until their health has seriously deteriorated.

Why is health care so much cheaper in other nations? Partly because their governments negotiate lower rates with health providers. In France, the average cost of a magnetic resonance imagining exam is $363. In the United States, it’s $1,121. There, an appendectomy costs $4,463. Here, $13,851.

They can get lower rates because they cover everyone—which gives them lots of bargaining power.

Other nations also don’t have to pay the costs of private insurers shelling out billions of dollars a year on advertising and marketing—much of it intended to attract healthier and younger people and avoid the sicker and older.

Nor do other nations have to pay boatloads of money to the shareholders and executives of big for-profit insurance companies.

Finally, they don’t have to bear the high administrative costs of private insurers—requiring endless paperwork to keep track of every procedure by every provider.

According to the Kaiser Family Foundation, Medicare’s administrative costs are only about 2 percent of its operating expenses. That’s less than one-sixth the administrative costs of America’s private insurers

To make matters even worse for Americans, the nation’s private health insurers are merging like mad in order to suck in even more money from consumers and taxpayers by reducing competition.

At the same time, their focus on attracting healthy people and avoiding sick people is creating a vicious cycle. Insurers that take in sicker and costlier patients lose money, which forces them to raise premiums, co-payments and deductibles. This, in turn, makes it harder for people most in need of health insurance to afford it.

This phenomenon has even plagued health exchanges under the Affordable Care Act.  

Medicare for All would avoid all these problems, and get lower prices and better care.

It would be financed the same way Medicare and Social Security are financed, through the payroll tax. Wealthy Americans would pay a higher payroll tax rate and contribute more than lower-income people. But everyone would win because total health care costs would be far lower, and outcomes far better.

If Republicans succeed in gutting the Affordable Care Act or subverting it, the American public will be presented with a particularly stark choice: Expensive health care for the few, or affordable health care for the many.

This political reality is already playing out in Congress, as many Democrats move toward Medicare for All. Most House Democrats are co-sponsoring a Medicare for All bill there. Senator Bernie Sanders is preparing to introduce it in the Senate. New York and California are moving toward statewide versions.

Democrats would be wise to seize the moment. They shouldn’t merely defend the Affordable Care Act. They should also go on the offensive—with Medicare for All.

Robert B. Reich is Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies. He served as Secretary of Labor in the Clinton administration.

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