Should Democrats Adopt Medicare-for-All in 2028?

Abstract: Progressives in the Democrat party will likely advocate a Medicare-for-all plan in 2028, similar to the one they favored in in 2020. This approach is not likely to succeed politically, is not the best possible reform, and is not feasible in the United States in 2028. Medicare-for-all abolishes all private health insurance, an outcome that is even more extreme than outcomes in progressive European countries. Medicare-for-all would improve health insurance outcomes for some people but worsen outcomes for others. In particular, wait-times for certain procedures and specialists will increase for some workers with generous employer-based health plans. The Medicare-for-all proposal abruptly outlaws all private health insurance plans and does not allow for a smooth transition for the industry and the economy. Federal control over all aspects of health insurance could lead to increased costs and disruptions to health care service in every annual federal budget debate. Problems would be especially severe during government closures or debates over the debt limit. Medicare-for-all would lead to substantial decreases in access to insurance funds for abortion and reproductive services in periods where conservatives controlled the government.

Introduction:

The Democrat candidates for president in 2028 are likely to return to a discussion of the merits of 2020 health care proposals discussed here. I expect that 2028, will in the famous words of Yogi Berra, be Déjà vu all over again.

The progressives will propose an extremely ambitious Medicare-for-all program. This post describes Medicare-for-all, evaluates its main advantages and disadvantages and assesses its feasibility. The analysis presented here supports the view the Medicare-for-all approach is economically and politically impractical in the United States.

Medicare-for-all (Sanders and Jayapal)

The Medicare-for-All proposal offered by Senator Sanders would replace all current forms of private and public insurance, with a single federally funded plan covering all citizens.

· Tax financed

· Single-payer plan would replace all private health insurance and public plans including Medicaid, Medicare, and CHIP.

· Part of the cost of the new program comes from the tax and spending savings obtained from existing health insurance subsidies and payments. Additional revenue would be realized by additional changes to the tax code.

· No premiums or cost-sharing arrangements aside from $200 in cost sharing for pharmaceuticals,

· Lower compensation levels for providers,

· A four-year transition period,

· Complete coverage of all medically necessary procedures including dental and vision,

· Complete access to reproductive health including access to abortion and repeal of the Hyde amendment.

Potential Advantages:

On paper, this Medicare-for-all plan would result in universal health insurance coverage and low, near zero out-of-pocket health care costs.

Virtually all eligible people would be covered because there is no charge to the individuals for insurance and no reason to not enroll in the plan.

The near zero level of cost sharing would substantially eliminate the number of people foregoing necessary procedures or treatments because of cost considerations.

The Medicare-for-all proposal would eliminate all fluctuations in the level of health coverage caused by recessions. (In the current system, most working-age people get their health insurance through their employer and people who are laid off or move to a new job often experience a loss of coverage.)

The lower level of compensation levels for providers reduce health care costs and the burden on taxpayers but the lower level of provider compensation is detrimental to the nurses, workers, and doctors who provide care and leads to other problems.

The adoption of Medicare-for-all would give the government control of all decisions on whether a procedure is medically necessary. Government control of the medically necessity decision process is arguably a good thing because some insurance firms are abusing the process, and the medical necessity of a procedure should not be impacted by profit considerations. However, this goal could be accomplished by giving a government agency the authority over the determination of whether a procedure is medically necessary and the arbitration of claim disputes,

Problems with the Medicare-for-all proposal

The Sanders plan calls for total government control of the health care system. Progressive need to be much more careful about what they ask for.

Even in northern Europeans countries, like Denmark with comprehensive safety nets, people are allowed to purchase private health insurance. Statista, reveals that around 2.3 million people in Denmark had private insurance in 2023, roughly double the number with private health insurance in 2010.

The Medicare-for-America proposal (Delauro and Shawosky) with limited competitions between a dominant public plan and employer-based plans more closely resembles European systems and is somewhat more realistic than the approach offered by Sanders.

The Medicare-for-all proposal is problematic in several respects.

Some people will receive worse health care outcomes under a Medicare for-all than under the current health insurance arrangement, especially regarding wait times for certain procedures and specialists.

The proposal does not include a practical way to transition to a drastically different system without substantial disruption to health care, existing firms and stakeholders and the overall economy,

The annual federal budget process would lead to changes in or disruptions to all aspects of health insurance and health care.

The single-payer system would reduce provider compensation and discourage some workers from entering health care fields.

The introduction of a federally financed single-payer health insurance company could lead to a reduction in the use of insurance funds for abortion and reproductive health care.

Longer Wait Times for Some Patients:

The proponents of Medicare-for-all made a persuasive case that the public single-payer system would be more equitable than the current system and that many people could be made better off under with a single-payer plan. However, there was ample evidence that some workers with generous employer-based health plans would be made worse off in some way.

One area of concern about the quality of care under a single-payer system involved long wait times for procedures which are substantial in some countries with single-payer health plans.

· This article states that there were over 36,000 patients waiting more than six months for procedures in the UK.

· Go here for a discussion of wait-time for procedures in Canada.

· This article discussed recent growth of wait time for medical procedures in France.

To be fair, wait times for procedures in some regions of the United States for some forms of health insurance are also long.

The switch from the current system to Medicare-for-all would increase wait-time for procedures for many unionized workers with generous health plans while decreasing wait tines for procedures for people with Medicaid or less generous private insurance.

The existence of a significant sector of the population that perceived they could be worse off under a single-payer system was a large enough concern to kill the proposal in 2020, even in a political process inside the Democrat party where support for the single-payer plan was substantial.

The Lack of a Viable Transition Plan:

The proposal for Medicare-for-all is fundamentally different from the creation of single-payer systems decades ago in other countries, when health care and health insurance was a relatively small part of the national economy. The creation of a national health insurance company in the United Kingdom after World War 2 did not disrupt a large existing industry and the national economy. The United States health insurance industry and overall economy would be severely disrupted by a quick conversion to a single federal health insurance company after 2028.

The Medicare-for-all-plan four-year transition period considers the impact of households seeking health insurance but does not consider impacts on providers, insurance firm and shareholders of insurance firms.

· What is the projected reduction in provider compensation for various providers and how would these reductions in income impact financial condition for these households, in both the short and long term?

· Would the shareholders of major private health insurance companies be compensated for the loss of value stemming from a law change making their current business illegal or unprofitable?

· Would the courts find a law that abruptly outlawed a currently legal industry constitutional?

A realistic smooth transition to a new system would involve phased-in gradual changes to existing regulations and tax incentives, including the tax preference for employer-based health insurance and the employer mandate, not an abrupt prohibition of an existing industry.

Problems Associated with the Federal Budget:

The Medicare-for-all approach allows Congress and the Administration to impact health insurance spending through the federal budget every year.

Health insurance outcomes in each annual budget process would depend on the ideology of the people in power.

The political pressure for new or higher premiums, increased cost sharing, or reduced compensation to providers would be intense whenever budget deficits rose.

The single-payer system in the United States would create a lot of financial uncertainty due to the fractious political environment and has been well illustrated by recent political efforts including the DOGE cuts and the proposed Medicaid cuts in the big, beautiful bill.

A debt-limit crisis could curtail all health insurance payments from the government-funded single payer, not just existing public plans.

Problems Associated with Government Control of all Healthcare Compensation:

Compensation levels for providers would be substantially lower than compensation level under the existing system. Other countries pay health care providers less so lower compensation for health care providers should be feasible in the United States. However, changes would be substantial and sudden.

· Some people would be discouraged from entering health care fields because of lower compensation.

· Financial uncertainty for doctors, support staff, hospitals, and the pharmaceutical industry would be higher and would vary with each budget season.

· Reduction in compensation for new drugs could reduce pharmaceutical innovation. (The high cost of medicine needs to be addressed regardless of what happens to health insurance reforms.)

· The existence of a single payer system could lead to national health care strikes. Would Congress and the president have the authority to end health care strikes, an authority that exists for other sectors?

Abortion and Reproductive Rights:

The authors of the proposal envision an outcome where reproductive rights would be protected under a single payer plan. (The Medicare-for-all proposal calls for the elimination of the Hyde amendment restricting the use of federal funds for abortion and for comprehensive benefits for all reproductive services.)

The votes for these provisions do not exist and these provisions if ever enacted would be easily reversed under a more conservative congress.

In general, people who are concerned about access to insurance for abortion and reproductive services should favor incentives for private insurance over public insurance. This was recently demonstrated by a Supreme court ruling allowing states to eliminate Medicaid funding for planned parenthood.

A taxpayer-funded single-payer system is a huge step back for abortion rights because whenever people opposed to abortion take power all insurance payments for abortion could be restricted. At least under the current system, private companies and households are free to contract for abortion coverage if that’s what they want.

Conclusions:

I don’t consider the Medicare-for-all proposal to be a serious proposal for two reasons.

First, the goal of complete elimination of all private insurance seems unrealistic especially since this hasn’t occurred in many countries with extremely progressive health and tax policies.

Second, the lack of a viable transition plan was a huge red flag. A gradual phase out of existing subsidies and rules favoring private health insurance combined with a phase in of a publicly funded alternative would be preferable to a law that quickly outlaws an existing legal industry.

I am extremely concerned that progressives have not learned from the 2020 debate and are doubling down on Medicare-for-all. I am planning to proceed with memos on the other 2020 health care proposals and some new health care arrangements, which I hope will be included in the 2028 discussions.