The debate over expanding Medicare is at the center of the fight for the Democratic presidential nomination. Yet for such a crucial topic, there are still two questions that advocates—especially those championing Medicare for All—have yet to properly answer.
The first is how to take on the medical establishment and pay doctors less. Medicare for All would eliminate greedy and needless insurance companies, which will fight to the bitter end to keep making their fat profits. But even that battle pales in comparison with taking on the doctors, hospitals, and providers who charge private insurance higher prices for medical services. To understand this, consider where Medicare for All would get its savings. Proponents argue that Medicare for All would increase government spending but reduce overall spending on health care. That’s true; over the course of 10 years, Medicare for All could save $2 trillion. But only about 20 percent of those savings would come from eliminating insurance companies, while another 10 percent would come from cost controls on prescription drugs. The remaining 70 percent would come from cutting rates for medical providers. Without those cuts, health-care spending could increase more than $3 trillion under Medicare for All. That’s a $5 trillion swing, all determined by the question of how to tackle the medical establishment.
During a campaign, there’s good reason to focus on the insurance industry first; it’s the thing that most people absolutely hate about our broken health-care system. But if the campaign fails to make the case that the prices charged by medical providers are too high, then the politics could shift against Medicare for All once the doctors start complaining. The medical establishment will insist that hospitals will close, especially in poorer areas, and without a set of responses in place, that argument could imperil the push for health-care reform.
The political instinct will be to buy off the medical establishment, even as that increases the cost of the proposal. When Aneurin Bevan, the architect of Britain’s National Health Service, was asked how he overcame the initial resistance of doctors, he replied that he “stuffed their mouths with gold.” Today, that would involve maintaining the current high rates seen in private-insurance payments. And even then, when President Harry Truman tried to emphasize how much better off American doctors would be under his universal plan in 1945, they waged what was then the most expensive lobbying campaign in history to defeat it.
If the answer to the first question is to keep paying doctors inflated rates, then the answer to the second question—who will bear the new taxes?—becomes even more important. While overall spending on health care would go down if we spent less on doctors, government spending would still go up. If poorly designed, Medicare for All could place the tax burden on Medicaid recipients (by imposing payroll taxes when they already have low-cost government insurance), professional and unionized workers (who would see their high-end health care disappear), and blue states (if what they currently spend on expanded Medicaid is swept into the baseline for Medicare for All). Meanwhile, the plan could most benefit the elderly, who would get even better Medicare while paying nothing extra, and red states that have kept their public health-care spending low. The first group is the base for the left, the second for Trump. That means if we don’t think through this tax question, it could be difficult to hold a political coalition together.
The Bernie Sanders campaign has released a list of potential financing options to start the debate over the tax burden—but this is only a start. The sticker shock of the initial taxes is the thing that will most likely kill public enthusiasm for a single-payer system. If it’s left unanswered, the question of who would bear the brunt of those new taxes will be determined by the proposal’s enemies.
These two questions need to be resolved before we start seeing the path to sweeping reform. Building arguments and analyses along these lines will help us figure out what kind of coalition we can form to expand health care to everyone. The momentum is growing, but with that progress comes the need to answer the $5 trillion questions.