“Medicare for America” is a Catastrophe

Beto O’Rourke’s new Health Care proposal is the worst of both worlds

Slate recently profiled newly announced Presidential candidate Beto O’Rouke’s evolution on health care. Having previously supported Bernie Sanders’ Medicare for all, he now says he supports “Medicare for America,” which Slate pitches as something of a compromise. And it is — if by, “compromise,” you mean taking the worst elements of our private system and combining it with the logistical hurdles involved in setting up Single Payer.

Here’s the basics: Medicare for America would expand Medicare to children and the currently uninsured. But businesses would have the option of paying into the system, or could continue to offer private plans to their employees. Workers could opt into the Medicare plan if the cost of the private plan was too high.

Slate describes this as a plus, saying that many people like their current plans and are reluctant to give them up. They also mention polling that shows people’s support for Medicare for All/Bernie Sanders plan drops when they are told it would eliminate private coverage.

But this misreads the situation and leaves out important context. When asked about keeping private coverage, Bernie said that wouldn’t be needed. What people like about their coverage is keeping their doctor, hospital, network, and prices. Under Medicare for All, all doctors and hospitals would be available. No more networks. And in exchange for a modest tax increase, all premiums, deductibles, and copays would be covered. Who could possibly object?

Rich people, that’s who. Millionaires are the only group who’d be better off in the Medicare for America plan. For most Americans, paying an extra 3.8% in taxes is far lower than the cost of their premiums, deductibles, and copays. But for millionaires, and for employers who hire them, it would be much cheaper to stay with the current system. Thus, Medicare for America would ask the taxpayer to subsidize low-cost healthcare for the wealthy.

But it actually gets worse. Bernie Sanders has mentioned that one aspect of our current system that makes it so expensive and inefficient is the administration. With hundreds of insurers and differing rates, the paperwork alone can consume an entire department of a hospital. Medicare for All would simplify and streamline care, while Medicare for America would add another layer onto the current system. Without these savings, it would also be more expensive for the taxpayers.

Proponents of Medicare for America say it could gradually transition the country towards true single payer and protect the insurance industry, but this “transition” is actually a bad thing for the insurance companies, too. It would create years of uncertainty and false hope for those who work in the industry. Instead, like ripping a band-aid off, the industry should be told in no uncertain terms that it must change or die.

Post Medicare for All, the health insurance industry could still have a role to play, even if it’s no longer selling health insurance. They could help administer the government’s plan, serving as a quality-assurance group to help keep costs down. Alternatively, they could also work with hospitals and pharmaceutical companies to help negotiate rates with the government. The industry should receive a clear signal that it must move in that direction, instead of the slow motion death sentence that Medicare for America would be.

In short, Medicare for America would be more expensive and would be more difficult to administer. It would force the taxpayers to subsidize relatively cheap private insurance for the wealthy. And it would prevent an orderly transformation of the health insurance industry by sending mixed signals about its future. It combines the headaches of setting up a new system without the benefits that the new system was intended to create. It’s really the worst of both worlds.