Bernie Sanders unveiled his latest version of a Medicare-for-all plan on Wednesday, to a highly unusual level of media attention and support within the Democratic Party. A third of the party's Senate caucus have come out as co-sponsors — although, unsurprisingly, neither Chuck Schumer nor Nancy Pelosi are backing it yet — and it looks likely that more will sign on soon.
The plan is extremely generous — indeed, much more so than many peer countries. But that only makes it great policy and better politics.
So first, the details: The plan would be phased in over a period of four years. In the first year, traditional Medicare would be expanded to cover dental, vision, and hearing aids, as well as people over 55 or under 18, while others would be able to buy in if they wish. In the second year, the age qualification would be lowered to 45, in the third year to 35, and then in the fourth year, everyone remaining would be included.
This upgraded version of Medicare would also be a lot more generous in terms of access. There would be no cost-sharing, except for prescription drugs. It is, as Paul Waldman argues, probably best understood as an opening bid — a symbolic maximal demand rather than the usual pre-compromised Democratic fare.
Sanders later released a sketch of a financing plan, which lays out several options to reduce costs and raise revenue, though it does not decide which is best. A more detailed discussion will inevitably have to be part of any Medicare-for-all bill. But there are some important things to be clear about. When talking about expanded public health programs, writers and analysts tend to mention "costs" in a way that can be rather misleading. Many skeptics cite Vermont, for example, which balked at the tax increases necessary to pay for a single-payer plan in the state.
Imagine a developing country that is just getting wealthy and organized enough to think about setting up a universal health-care system. There, costs would be a very important question, because a lower-income country can easily run into economic constraints. Therefore, one would have to carefully balance the generosity of the program against the country's ability to mobilize real resources — doctors, nurses, drugs, and so forth.
The United States, by contrast, is very rich, and already dedicates way more than enough resources to set up the world's most generous health-care system, and a lot more besides. We spend $3.2 trillion per year — literally twice as much as the OECD average as a share of the economy. We pay enough in health-care taxes alone — that is, the government revenue that goes to Medicare, Medicaid, the VA, and a few other things — to cover a Canada-style Medicare-for-all system for the whole U.S., and then that much again in private money. In other words, if we could simply copy-paste Canada's universal health-care system into America, taxes would actually go down.
All that means is that America doesn't have to worry much about costs; it has to worry about allocating existing spending properly. We already have a gigantic pool of resources dedicated to health care — about half private and half public. We just have to adjust that spending so it can support a single-payer system.
So on total spending, for example, BernieCare would have contradictory effects. No cost sharing would make going to the doctor much easier, which would increase spending, while on the other hand it would bring prices down a lot, cutting outlays. It's impossible to know for sure which effect will predominate until detailed studies can be done (and probably not for sure until it is actually implemented). But the fundamental reality is that we are already putting up way, way, way more than enough to pay for a really excellent universal health-care system. Any resource problems we run into along the way — and there is sure to be quite a lot of disruption during the transition period — can be solved by adjusting the pot of health-care resources around.
For example, Sanders' funding options present several ways you might finance Medicare for all and leave almost everyone money ahead. Administrative savings alone (due to the fact that Medicare is vastly more efficient than private insurance) would run to something like $500 billion per year. Negotiating drug prices might free up another $113 billion. Meanwhile, a 7.5 percent new employer-side payroll tax would raise $3.9 trillion, while cutting health-care expenses per employee by $9,000 on average. A new 4 percent income tax would raise another $3.5 trillion while saving a family of four making the median income about $4,400 after getting rid of premiums.
Some modeling will be needed to know if that all adds up, or if other funding mechanisms would be better. But the basic strategy is clear: cut out waste, get prices down, add a few new taxes, and use the resources thus freed up to cover every single American. Even if those details need to be adjusted, it definitely can work, and it will be a spectacular improvement.
That brings me to the politics. Centrist liberals have long been against Medicare for all, because milquetoast, incremental politics rules out such sweeping changes by definition. Hillary Clinton, for example, does not like Sanders' bill, pointing out that fears of people losing the health insurance they have through their employer helped kill her effort at health-care reform in 1994. President Obama, fretting about this same thing, incautiously promised that "if you like your plan, you can keep your plan" under ObamaCare, which while true for most people was not true for millions of others, simply because you can't make large changes to the health-care system without having that effect. That broken promise enraged people.
The truth is that while employer-sponsored insurance is okay for most people who have it, it is also terrible in many ways. First and most importantly, it means that if you lose your job, you lose your coverage — and perhaps so does your family. That is a huge problem both for people who lose employment — there were 60 million job separations in 2016 alone — and for people who are stuck in terrible jobs for fear of losing coverage (or "job lock"). Second, employer-based coverage has been getting worse over time, with the same increasingly higher co-pays, premiums, and deductibles, plus narrowing networks, that have afflicted the ObamaCare exchanges.
The way to get over people's fears of losing their (increasingly lousy) coverage is to promise them something so good that people can be certain they'll end up better off. The prospect of guaranteed, generous coverage at a reasonable price, that works everywhere and can never be taken away, that would abolish medical bankruptcy and the hell of insurance paperwork, fits that bill. What's more, most people are already very familiar with Medicare, and so will be resistant to scaremongering from conservatives and the insurance industry.
Fear of change and knee-jerk moderation is the thinking that made American health care such a disaster in the first place. But at some point America is going to have to rip off this band-aid. BernieCare is an excellent starting point.