September 14, 2017
The debate about federal vs. state solutions to healthcare reform intensified today when Sen. Bernie Sanders (I-VT) introduced single-payer legislation with 16 Democrat cosponsors that would eventually cover every American through Medicare.
"Today we begin the long and difficult struggle to end the international disgrace of the United States being the only major country on Earth not to guarantee healthcare to all our people," Sanders said at a news conference today.
Sanders repeated his familiar argument that the United States spends almost twice as much per capita on healthcare than any other country, but doesn't get its money's worth. Twenty-eight million Americans still lack health insurance, and millions more are underinsured with high deductibles and copayments, he said.
Sanders' Medicare for All Act of 2017 stands in stark contrast to a Senate Republican bill also introduced today that would largely replace the Affordable Care Act (ACA) by converting the law's expenditures into block grants that states could use to implement reforms of their choosing. In the Republican-controlled Senate, the GOP measure has a shot at a vote. Sanders' bill may never see the light of legislative day.
While Medicare for all may sound revolutionary, payments to clinicians and hospitals in the new system would not be. They would be governed by "Medicare's current payment structures," according to a summary of the law issued by Sanders. Those structures include traditional fee schedules and payment reforms found in the ACA and the Medicare Access and CHIP Reauthorization ACT.
Physicians and other providers would have to sign an agreement to participate in the legislation's Universal Medicare Program (UMP), which they can terminate for any reason. The law would apply Medicare's current provider standards to determine who can participate.
The UMP would be phased in over 4 years. In the first year after the bill's enactment, every child up to 18 years of age could enroll in a revamped version of traditional Medicare that would include dental, vision, and hearing-aid benefits, which are not included now. In addition, Medicare's eligibility age for adults would drop from 65 to 55. That age threshold would fall to 45 in the second year and 35 in the third, with every adult becoming eligible for a UMP card in year 4.
Patients would be able to choose any clinician or hospital they like. And they won't have to worry about affordability, the bill promises. That's because they wouldn't owe any deductible, coinsurance, or copayment for covered services, which would include reproductive, maternity and new-born care, as well as abortions. The bill makes an exception on cost-sharing for prescription drugs, but it can't exceed $200 a year (it's for the sake of encouraging the use of generics).
Sanders' bill does not extend to military veterans or Native Americans, who would continue to receive coverage through the Veterans Health Administration and the Indian Health Service, respectively.
The Medicare for All Act of 2017 would drastically shrink the size of the private health insurance industry, if not abolish it. Beginning in year 4 of the bill's implementation, insurers could no longer sell coverage that duplicates the benefits provided under the UMP, and employers could no longer provide duplicated benefits to past or current employees and their dependents. Insurers could sell policies for benefits not found in the UMP, however.
Anticipating the damage it would cause to private insurers, Sanders' bill states that the UMP budget may provide "transition assistance to health insurance administration workers who may be displayed because of ... this act."
Sanders maintains that Medicare for all would "finally separate health insurance from employment." As a result, employees wouldn't have to worry about losing coverage if they left a job, and employers would be spared the financial burden of providing coverage.
Possible Pots of Money to Pay for Universal Medicare
The Medicare for All Act of 2017 did not come with a cost estimate, but a related document on financing the bill noted that the United States spends more than $3.2 trillion a year on healthcare, with publicly funded programs like Medicare and Medicaid costing more than $2 trillion.
Sanders is confident the nation can afford Medicare for all, despite the trillions of dollars involved. The new system, he argues, could save as much as $500 billion a year in administrative costs because Medicare spends less than one sixth of what private insurers spend on paperwork. The government also could save up to $113 billion a year by negotiating the price of prescription drugs with pharmaceutical companies.
Sanders outlines other possible pots of money for Medicare for all. Here are a few:
- A 7.5% payroll tax on employers, called a premium, would raise $3.9 trillion over 10 years, but cost businesses less than what they pay now in health insurance premiums. In a boon to small businesses, the first $2 million in payroll would be exempt from this tax.
- A 4% tax on household income would raise $3.5 trillion over 10 years. After taking the standard deduction on a federal tax return, a typical family of four making $50,000 would end up paying $844 per year, about $4400 less than what they would pay for private health insurance.
- Employer-paid premiums for insurance are now exempt from payroll and income taxes. Eliminating the tax break would yield $4.2 trillion over 10 years.
- Other possible tax moves include limiting tax deductions for the wealthy, creating a wealth tax for the wealthiest 0.1% of Americans, and imposing a one-time tax on trillions of dollars in corporate profits parked in offshore tax havens.