Health care policies, particularly Medicare and Medicaid, are aspects that have drawn divergent opinions from legislators and members of the public. The importance of the health sector in promoting the growth of a healthy populace has nudged most empirical researchers to explore strategies that can be adopted to optimize health care delivery, access to health care, and broaden the scope of health insurance in the United States (Oberlander, 2019). For some, Bernie Sanders presented a feasible and effective solution to the ailing United States health care systems (Oberlander, 2019). Although this position remains controversial, this executive summary strives to debunk the benefits of implementing the Medicare for all (MFA) policy, deduce the reliability of the system in solving the health insurance crisis in the United States, and determine the economic feasibility of the MFA plan. Furthermore, this executive summary will present informed recommendations that can be amalgamated into current policies in a bid to improve access to healthcare as well as improve the quality of care at the disposal of the public.
Healthcare access and payments for healthcare coverage have been the two most divisive subjects; this divide has been evidenced by the different positions taken by American presidential candidates in the last electioneering period. The surge in the number of persons who do not have health insurance coverage stems from the rising unemployment rates. The increase in this number was first observed during the economic downturns experienced in the United States in 1982 and later observed in 2009. In 2009, the unemployment rate skyrocketed from 7.7% to 10%. For Nevada, the ramifications of the economic decline were worse as unemployment increased from 9.6% to 13%. According to Pharr, Moonie, and Bungum (2012), an increase in unemployment triggers a surge in the number of people losing medical cover. In this regard, the looming spike in the unemployment rate that has been brought about by the Corona pandemic threatens to shrink further the number of Americans that can afford medical cover. Given that period of economic uncertainty may still occur in the future and the threat of these incidents on access to health, it has become prudent that alternative approaches such as the Medicare for all, are considered.
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The unemployed are unable to pay for medical cover, but they are the most vulnerable subset of the general population. Pharr, Moonie, and Bungum (2012) posit that unemployed individuals are more predisposed to depression, anxiety, chronic disease, severe mental impairments, and premature mortality than their employed counterparts. As a result, unemployed persons need insurance cover even more than people that have stable jobs, most of whom can afford medical cover. The inability to access health services as a result of financial problems has necessitated the endorsement of a health insurance plan that imposes a less financial burden on the unemployed while guarantee access to quality health care. In response to this issue, Bernie Sanders proposed the Medicare for all policy.
The Medicare for all plan seeks to expand the Medicare coverage to accommodate all citizens in the United States indiscriminately. According to Kelly (2020), the Medicare for all plan will eliminate the current notable inequality in the United States healthcare system by promoting equal access to healthcare. Moreover, the policy will mitigate the prevailing adverse selection in care provision, a biased practice that is currently being practiced by non-compulsory private health insurers. In addition, Kelly (2020) claims that the policy will enable the government to enforce and utilize cost-effective technologies that are geared towards improving the quality of patient care dissipated to the general population. The suggested Medicare policy seems ideal; however, Kelly (2020) observed that endeavor would massively increase government spending at the expense of other sectors that are equally important to the growth of the economy.
A study conducted by Kelly (2020), to determine the economic feasibility of implementing the Medicare for all plan presents crucial insight. Kelly (2020) concluded that the ramifications of implementing the Medicare for all plan are double-sided. On the upside, the initiative would massively expand the coverage of Medicare and eliminate inequalities in access to healthcare. The study also elucidated that the Medicare for all plan would streamline the American healthcare system by driving out private health insurance providers and reducing the financial burden borne by the United States populace. Moreover, the eradication of the employer-provided health insurance (EPHI) tax exemptions, which is a cost that is currently being borne by the government, would be redirected to fund the expansion of the Medicare for all plan. The downside of the policy, as determined by the study, is that increasing government expenditure on health care at the expense of other sectors would result in unequal economic growth. Given that the current government expenditure on healthcare is about 20% of the Gross Domestic Product (GDP), expanding Medicare to cover everyone in the economy would prompt raising taxes. The tax increase would trigger a detrimental dominoes effect on the economy. To be precise, areas such as labor supply, savings, and consumption would be severely impacted by these changes. Therefore, all these aspects must be taken into consideration when evaluating the feasibility of the Medicare for all plan. In a bid to determine the exact impact of the Medicare for all program on different facets of the economy, the study employed a novel general equilibrium life-cycle model that took heterogeneous elements, health investment, public and private health insurance, and endogenous longevity into account. The model was subsequently calibrated to match the United States data from 2005 to 2014, and the responsiveness or steady-state response of the model to the introduction of Medicare for all was evaluated. The findings, particularly showing welfare changes, were then compared with how the model would respond after the introduction of a universal health insurance system that is funded primarily through utilization-based health insurance premiums.
The results denoted that the Medicare for all plan would result in a significant improvement in the welfare of unskilled or low-income households at the expense of skilled households because high-income households will be required to pay a 39.59% tax increase to allow the government to pay for the expansion of Medicare. However, should legislators chose to share the tax burden between skilled and unskilled households, the welfare of young skilled household will improve by 1.5%, the welfare of young unskilled household will improve by 2.3%, but the older households regardless of the skill level would be left worse off than before the Medicare for all plan was implemented. Conversely, the adoption of the universal insurance plan would result in a relatively larger welfare gain among households regardless of the household’s skill level, and the welfare gain will be lower for older households. In summary, the Medicare for all plan leaves both skilled and unskilled groups worse off, especially if the tax burden is spread between both skilled and unskilled households, than if a universal health insurance plan was adopted.
According to a study conducted by Fechter (2019) and published by the Wharton University of Pennsylvania utilizing Federal data and exploring findings availed by other researchers shows that the implementation of the Medicare for all plan would result in a $32.6 trillion increase in the national budget within the first ten years. Other studies incorporated into the report generated by Fechter (2019) shows that a $3.89 trillion cost would have been incurred in 2019 should the plan have been implemented. Other than the increase in cost, the report also shows that the elimination of competition in a single-payer system often results in inefficiencies that may result in the dissipation of poor quality of care.
Findings presented by Fechter (2019) and Kell (2020) converge on the impact of the policy on various economic predictors. Firstly, Medicare for all would trigger a surge in government spending on health care, which would mean that the government would spend a substantial portion of the United States GDP on health care. Secondly, the income earned by both skilled and unskilled households would plummet due to the tax increase necessitated by the importance of offsetting the increase in healthcare costs to the government. In case legislators decided to impose the entire tax burden on skill and employed people, the welfare of the unemployed will be improved markedly at the expense of the skilled and employed households, thus, creating inequality. Finally, the creation of a monopolistic single-payer may compromise the quality of patient care available for the United States populace.
As a means to expand Medicare to accommodate all in the economy, I would recommend that the universal health insurance system is implemented instead of the Medicare for all plan. Alternatively, if the Medicare for all plan must be implemented, the tax burden must be spread both skilled and employed and unskilled and unemployed households. Although an initiative would disadvantage older households, the cumulative gain in welfare would be noticeable. Lastly, the increase in the cost of health care incurred by the government can be covered without straining taxpayers if the GDP is improved. This can be achieved by implementing economic policies that would encourage American firms that are operating abroad to bring production back to the United States.
References
Pharr, J. R., Moonie, S., & Bungum, T. J. (2012). The impact of unemployment on mental and physical health, access to health care and health risk behaviors. ISRN Public Health , 2012 .
Kelly, M. (2020). Medicare for all or medicare for none? A macroeconomic analysis of healthcare reform. Journal of Macroeconomics , 63 , 103170.
Oberlander J. (2019). Lessons From the Long and Winding Road to Medicare for All. American journal of public health , 109 (11), 1497–1500. https://doi.org/10.2105/AJPH.2019.305295 .
Fechter, S. (2019). Medicare for all: An economic analysis. Wharton University . Retrieved from https://publicpolicy.wharton.upenn.edu/live/news/3038-medicare-for-all-an-economic-analysis .
