The features of a single-payer or a Medicare-for-all (M4A) health care system would provide economic benefits for individuals, families, doctors, hospitals and the nation. For most households, M4A saves money and provides more disposable income. Gerald Friedman, PhD and Professor of Economics at the University of Massachusetts—Amherst, has studied M4A for many years. He estimates that a M4A system financed by progressive taxes would cover more and cost less for 95 percent of U.S. households than our current health care system. Further, he estimates that a family of four with an income of $50,000 would save more than $5,800.
Opponents have made the claim that M4A is too expensive. They say that over 10 years we would need to pay $32 trillion in extra taxes, our current expenditure on health care multiplied by 10. This assessment implies that we need to increase taxes and still spend just as much on insurance premiums and deductibles. That claim is disingenuous.
First, insurance is not used in a M4A system, so there are no premiums. Friedman’s data showed that the family of four that had an income of $50,000 would save $6,273 in insurance premiums and deductibles that are no longer collected. The family would pay an extra $466 in taxes for a net gain in disposable income of $5,807. Again, 95 percent of households would save money.
Second, the government already pays a large portion of the nation’s health care bill. When total government outlays are considered including tax-funded health expenditures and outlays for government employees health insurance, the government pays almost two-thirds of our nation’s health care bill, or about 11.5 percent of GDP. This figure is more than all all developed nations spend on health care except one. If we would reduce our health care expenditures to 11.5 percent of GDP, we would save about $1.1 trillion on health care.
These two factors combine to make a M4A system possible with little or no tax increase. By using progressive taxes to fund M4A, it is not only possible, but also reasonable to assume that 95 percent of households save money because the savings from eliminating the premiums and deductibles substantially outweigh any increase in taxes.
In a M4A system, all Americans are covered for medically necessary services. There is one payer, the government, and health care is financed through taxes. While there are variations on how it could be implemented, generally in such a system global budgets are negotiated between medical professionals, hospitals and medical clinics eliminating the fee for service model. Usage is reviewed periodically and appropriate adjustments are made.
Under M4A, people have the freedom to choose any physician or hospital, removing the problems with narrow networks. Patients have procedures done at in-network hospitals only to find that one of the doctors, such as the anesthesiologist, is not in the network, usually leading to unexpected costs. Medical facilities that are far away are another problem with narrow networks causing long commutes in rural areas or fighting traffic in urban areas. M4A saves time and money by avoiding these narrow-network problems.
Another feature of M4A is that more medical procedures are covered. M4A would cover vision and dental care along with physician, hospital, long-term care, mental health, reproductive health care, prescription drug and medical supply costs, again providing more and better access to medical care without financial strain.
There are other benefits that are a function of how M4A works. A study reviewed by Healthcare-Now concluded that M4A would provide people with more freedom to change jobs and be entrepreneurial:
“It [a universal heath care system] would end ‘job lock’ and other economic distortions stemming from our health care financing system that hinder the freedom of individuals to pursue new ventures. Despite common perceptions that the United States is an entrepreneurial bastion, we have among the lowest rates of self-employment and small businesses among industrialized countries, researchers at the Center for Economic and Policy Research reported in 2009.
“The researchers hypothesized that the dismal numbers in the United States were due to the high costs that individuals and small businesses here must pay for health care, which those in countries with universal access to health care do not face. By facilitating more entrepreneurship, a universal health care system here would likely boost economic growth, leaving businesses with a larger pool of potential customers.”
M4A also provides other benefits to businesses. Most businesses would save money. To finance M4A Friedman proposed an additional 6.2 percent payroll tax. As Friedman notes, employer-provided health insurance premiums are often “well over 10% of payroll.”
Business owners would have more time to concentrate on business since they would not worry about health insurance for their employees. Sick time might be reduced since employees are getting regular medical care.
M4A would free up medical professionals to concentrate on patient care. Physicians could decide the best course of treatment based on medical need, instead of whether the insurance companies will pay or whether the patient can afford it. Patients could have confidence that they are getting the best care available. And all of this would be done without financial worries to people, doctors, or hospitals. For example, doctors and hospitals spend an inordinate amount of time on billing. In his 40 years of medical practice as a pediatrician, chief of Pediatric Infectious Diseases at the University of Louisville School of Medicine, and as the medical director of communicable diseases at the Louisville Metro Department of Public Health and Wellness, Garrett Adams, MD, MPH, notes that:
“A dermatologist colleague of mine here asked her billing clerk how many plans were represented in their current bills outstanding. It was 287 plans. That’s where a huge amount of expense and time on the part of the physician could be recouped immediately. … The number of billing clerks at Massachusetts General Hospital is about 300. Toronto General (located in Canada), a hospital of equal size, has three billing clerks.”
In 2015 the U.S. spent $3.2 trillion on health care. We have the most expensive health care in the world by a wide margin. Yet, our health care system often ranks last among other developed countries. Even though we spend much more, we leave millions uninsured, around 28.5 million at last count. A primary driver of the problems with our current health care system is our multi-payer, for-profit health insurance companies. We spend 70 percent more than Canada and 80 percent more than Britain as a percentage of GDP, both which have single-payer.
While the rate of increase has slowed, health care costs still threaten to consume the economy and the federal budget. M4A is the only proposed system that can reduce health care costs while guaranteeing that everyone has access to affordable and accessible health care. We must implement a M4A system because anything else is not affordable.