Ro Khanna’s Case for Medicare for All
Part 1: First Steps
Health care is the number one issue in the minds of Americans, who trust Democrats to handle health care policy at an almost two-to-one advantage over Republicans. Democrats are united in our guiding principles to improve health care through reversing the Trump administration’s sabotage of our health system, reducing costs and complexity, and realizing our party’s long-held goal of securing universal health care coverage. To make good on our moral commitment to provide health care for all, we must pass and implement Medicare for All, as led by Senator Bernie Sanders and Congresswoman Pramila Jayapal. This is how we get there:
Reverse Trump’s Health Care Sabotage Efforts and Shore up the ACA
President Trump’s administration has made clear that their primary health care policy goal is to unravel President Obama’s signature achievement, the Affordable Care Act (ACA), with millions of Americans serving as collateral damage. After failing to repeal the ACA outright in 2017, President Trump has raised premiums, allowed discrimination against those with preexisting conditions and in the LGBTQ community, weakened Medicaid and the health care safety net, and restricted millions of Americans from getting the health care they need and deserve. There are seven million more uninsured Americans since President Trump took office. To end the Trump Administration’s war on health care, the next President must use executive power to immediately:
- Drastically lower insurance costs by massively boosting subsidies and premium tax credits and reinstating cost-sharing reductions;
- Issue competitive licenses to allow competition for exorbitantly priced drugs;
- In 2018, I called for the Department of Health and Human Services to use its existing power to issue public licenses on the patent for vastly overpriced Hepatitis C drugs.
- Allow importation of prescription drugs from Canada;
- For example, in Canada, insulin costs about $33 per vial compared to over $275 in the United States.
- EpiPens in the U.S. cost patients over $600 for a two-pack, while Canadian patients pay about $100 for the same product.
- Rescind all 1115 waivers that have allowed states to implement Medicaid work requirements and other obstacles to enrollment;
- Approve any 1115 waivers from states seeking to expand Medicaid programs above the statutory income limit of 138% of the federal poverty line;
- Incentivize the states that have not yet adopted Medicaid expansion to do so by allowing new expansion states to get the same generous federal matching funds that original expansion states received;
- This action alone could immediately cover up to 2 million Americans.
- End reproductive health care funding cuts and restoring non-discrimination protections;
- Reinvest in sign-up and marketing support for individual exchanges; and
- Reject 1332 waiver applications that undermine preexisting condition protections and steer patients toward “junk” plans.
Part 2: The Case for Medicare for All
Why Medicare for All is the Best Option
- Medicare for All will save the lives of 28,000 Americans in its first year, alone.
- Estimates from teams of experts at Yale University and the University of Massachusetts at Amherst have found that Medicare for All could save Americans half a trillion dollars in its first year, alone.
- Medicare for All will do away with the administrative waste and bureaucratic redundancies of the current health insurance system that waste money, deny patients care, and drive up health care premiums.
- The U.S. health care system wastes $265 billion to $525 billion annually due to administrative complexity, with providers having to negotiate with and manage the red tape of dozens of insurers.
- Currently, private insurers spend at least 12 percent of premium dollars on administration – and often much more – while Medicare spends only 2.3 percent.
- When Taiwan shifted to a Medicare for All system, administrative costs dropped to merely 0.77 percent of the overall health expenditures.
- Medicare for All will encourage provider-innovation by using a global budget system that rewards hospitals who efficiently and effectively care for patients while keeping costs down.
- Similar global budgeting systems in Canada and Scotland have held hospital administrative costs to 12 percent compared to over 25 percent for American hospitals.
- Nearly $1 trillion in waste in the current system comes from the failure of care coordination, low-value care, and failure of care delivery. Careful research has repeatedly documented levels of waste in U.S. health care between 25 percent and 35 percent of the total expenditure from administrative complexity, outrageous pricing, defects in care coordination, overuse of ineffective care, fraud, and abuse.
- Global budgeting will encourage hospitals to maximize the efficiency of processes and reduce readmission through a focus on preventative care.
- A Medicare for All system can tackle all that waste, returning money to taxpayers, businesses, and social services
- Medicare for All will significantly expand access to care for everyone without increasing overall health care spending.
- After Taiwan implemented a Medicare for All system in 1995, health care usage rates increased, but growth in total health spending shrunk.
- Increased utilization did not lead to long lines or waitlists for care, as demand spurred a 39.6 percent increase in the overall number of health care providers, including a 33.5 percent increase in physicians within the first five years of the new system.
- By expanding access and eliminating cost-sharing barriers, Medicare for All will help more Americans achieve timely and preventive health care, rather than waiting for more serious—and more expensive—complications before seeking care.
- Medicare for All will reign in overbilling and pharmaceutical greed through oversight and negotiation.
- Americans spend more on prescription drugs than any other developed nation in the world.
- Today, millions of Americans must ration their medications because of high prices, or make tragic tradeoff decisions, such as between medicines and food or housing. (At least one in four people who depend on insulin use less than they need because they cannot afford it.)
- No deductibles, premiums, copays, or denied claims. Nobody will ever have to pay a dime when they walk into a hospital, doctor’s office, clinic, or pharmacy, and they’ll never get a bill in the mail after the fact.
- Americans are projected to spend over $11 trillion out-of-pocket on health care over the next ten years.
- Premiums rose two times faster than wages from 2010-2020; deductibles increased over four times faster than wages in that same period.
- 53 percent of insured Americans report worrying about being able to meet their health insurance deductible, which can cost thousands of dollars per year.
- Medicare for All will end insurance company profiteering.
- Insurance companies spend 20 percent of premiums on non-health-related expenditures, with much of that money going in the pockets of multi-millionaire executives.
- The country’s largest health insurance company, UnitedHealth, spent $3.2 billion on stock buybacks in 2018 and paid its CEO $18.1 million.
- Insurers do not provide a service, like a roofer or a car mechanic, who charges you for tools and materials, and then also keeps a certain percentage so that they can feed their family and pay their mortgage or rent. They are multinational corporations that take your money that has been earmarked for your health care and pocket a portion of it as profit.
- Of note: Wall Street rates insurers according to their so-called “medical loss ratio,” which means the proportion of premium income that goes toward paying for care. From Wall Street’s perspective, the lower that proportion (that is, the more money they keep for themselves, instead of spending it on care), the better the investment. That is a tragic and inhumane way to view health care premiums. Under Wall Street logic, an insurer that managed to spend nothing at all on providing care to its beneficiaries would be the highest rated. Under Medicare for All, hard-earned money collected for health care will get spent on health care, not on CEO salaries and stock buybacks.
- Medicare for All will directly tackle the waste, fraud, and abuse plaguing the current system, costing Americans almost $100 billion per year.
- Medicare is often a victim of fraud from overbilling and other deceptions. With universal oversight and simplified electronic health records, we will be able to find and crack down on bad actors.
- Moving away from a fee-for-service system and shifting to value-based care will also reduce unnecessary and inefficient care by allowing doctors and hospitals to focus on what matters to patients.
- Medicare for All will drastically bring down the outrageous cost of prescription drugs through consolidated negotiation power.
- Americans currently spend an average of $1,220 per person on prescription drugs, the highest in the world. For comparison, Japan, Germany, Canada, and the U.K. all spend less than $900.
- Estimates of prescription drug savings under Medicare for All range from $660 billion to $1.7 trillion over ten years.
- Medicare for All will stop the rash of rural hospital closures (113 over the past decade) by allocating stabilizing funds meant to keep hospitals open and serving their communities.
- The majority of rural hospital closures in recent years have come in states that did not expand Medicaid under the ACA.
- Medicare for All would improve the reimbursement rates for rural health providers that serve populations primarily on Medicaid or without insurance.
- Medicare for all will eliminate “closed networks” and “narrow networks” created by private insurers, which dictate which doctors and hospitals patients can use and what care they can receive to maximize insurers’ profits.
- Under Medicare for All, you get to pick and keep your doctor. Physicians and hospitals will still be privately owned and operated. The only change will be that your bill will get sent to the government, not to you or some insurance corporation.
Medicare for All and Jobs
Critics of Medicare for All often point to large job loss numbers in the health insurance industry under a Medicare for All system, but they’re painting only a small portion of the picture. In reality, marginally increased care utilization and significant existing demand for health providers could lead to a net increase in jobs. A couple of key numbers:
- Under our current health care system, the U.S. needs one million additional nurses. Frictionless access to health care could further heighten that demand (experts predict 11-15 percent increase in utilization under Medicare for All), meaning that there could be 1.1 million nurse jobs available immediately.
- There is also demand for 120,000 new doctors under the status quo. Like nurses, increased care utilization could add another 20,000 physician job openings.The health insurance industry currently employs over 500,000 people. Medicare for All will represent a change for these workers, but it will also provide new opportunities. Adding millions of Americans to Medicare for All will require significant levels of hiring at HHS to achieve, which can absorb a contingent of health insurance company employees. Supplemental insurance that goes above and beyond Medicare for All’s coverage will also provide many job and choice opportunities. Additionally, Medicare for All will increase wages for existing jobs and bring back offshored lower-wage jobs. Since 1960, the share of total annual compensation paid to American employees in the form of health insurance premiums rather than wages and salaries increased by over 750 percent. As premiums have continued to eat up a larger share of labor spending, employers have responded by slowing the rate of wage increases, and outsourcing lower-wage workers. The health care costs of lower-wage workers are far higher as a percentage of their overall compensation. Without the burden of premium contributions, employers will be able to increase employee pay directly and will no longer be disincentivized from hiring lower-wage workers. Sen. Sanders’ Medicare for All bill includes a provision for a “Just Transition” to ensure the move to Medicare for All leaves no worker behind. This provision allocates “1 percent of the budget to programs assisting workers who perform functions in the administration of the health insurance system and who may experience economic dislocation as a result of the implementation” of Medicare for All. The Just Transition fund would include hiring credits for companies that absorb displaced workers and a year’s salary for these workers during their transition to jobs with easily transferrable skills. Specialized insurance workers will easily transfer into similar roles in other siloes of the industry. For those in accounting, finance, marketing, and other administrative capacities, the economic growth spurred by Medicare for All will expand job opportunities in other sectors. Businesses with newly lowered health costs will be able to use those savings to increase hiring. Entrepreneurs formerly constrained by job-lock due to fear of losing health care coverage will be free to strike out on their own and start job-creating businesses.
Why a Standalone Public Option Can’t Be Our Final Goal
Many have called for a standalone public option rather than Medicare for All because they fear the power of the insurance corporations’ lobbyists and political donations. However, a public option doesn’t solve the problems that we’re facing and could be hampered by serious, institutional stumbling blocks. Private insurance companies would try to push the sickest plan-members onto the public plan while keeping healthy plan-members and pocketing the profits. Also, one of the most significant inefficiencies and causes of high cost in our current medical system is administrative waste. Doctors and hospitals spend hours each day dealing with multiple insurance companies, each with its own forms, billing processes, coding rules, and more. Keeping a convoluted and complex insurance system while adding a public option plan would do nothing to bring down this cost. Additionally, a public option would lack the heft of a Medicare for All system in negotiating on behalf of patients and taxpayers for lower prices and easier access. From the patient’s perspective, any health care system that relies on cost-sharing at the point of service accepts that some people will inevitably forgo needed care. In the last year, one in four Americans reported skipping care due to cost. That’s an astonishing 80 million people, more than half of whom were insured. If a standalone public option plan includes copays, coinsurance, and deductibles, then the most vulnerable in our society will still be without access to the care they need. Public option proponents have suggested cost controls on hospitals, but that won’t be enough. As long as care is delivered with costs to patients at the point of service, millions will still avoid it until it’s too late, and excessive drug prices will continue to bankrupt patients. As outlined below, the transition to Medicare for All will include a public option, but only as a temporary waystation to smooth the path to full Medicare for All coverage. Medicare for All is the most effective solution, by far, to our broken health care system.
Medicare for All Myths and Truths
MYTH: Medicare for All will lead to long wait times.
TRUTH: The U.S. health care system has longer wait times for certain specialists and elective surgeries than countries with universal health care systems. One 2019 study found that overall wait times for American patients seeking new appointments were nearly 30 days. Comparatively, Taiwan’s Medicare for All system has “relatively short or negligible” waiting times with often no waiting list. Complaints about Canada’s wait times are limited to specific elective procedures. If patients need care, they will get care. Anecdotes of Canadians crossing the border to get care are rare and often a product of geography, rather than treatment availability.
MYTH: Medicare for All means I won’t be able to choose my doctor.
TRUTH: Medicare for All gives you more choice by eliminating insurance company’s restrictive “provider networks” that tell you what hospitals you can go to and which doctors are covered. Under Medicare for All, every physician and hospital will be “in-network.”
MYTH: Medicare for All bans private health insurance entirely.
TRUTH: Medicare for All allows private insurance companies to sell coverage that goes above and beyond Medicare for All. The prohibition of duplicative insurance means that insurance companies can’t sell coverage for something that’s already covered (with no premiums or copays), so insurance companies can’t trick patients into buying something they don’t need.
MYTH: Medicare for All is a government takeover of health care delivery – “socialized medicine.”
TRUTH: Medicare for All is a way to pay for health care – through national health insurance – not a way to deliver health care. No Medicare for All proposal suggests that the government
should take over health care delivery (beyond maintaining existing governmental care systems like the Veterans Health Administration and military hospitals). Under Medicare for All, the care providers who are now in the private sector stay in the private sector.
Part 3: Introducing, Passing, and Implementing Medicare for All
Introduce and Pass Medicare for All
We have made more than 50 years of progress toward ensuring health care coverage for all Americans. The march to health care justice began with the passage of Medicare and Medicaid in 1965. Most recently, the Affordable Care Act expanded coverage to tens of millions more previously uninsured Americans. But there’s still more work to be done. Nearly 30 million people still lack coverage, and at least another 44 million are underinsured. Americans with employer-sponsored health plans are facing higher premiums, deductibles, and out of pocket costs than ever before. Even those happy with their current employer-sponsored health plans are at risk; they could lose that coverage if they change jobs or if their employer changes plan providers. Additionally, the current health care system is dragging down businesses, both small and large, as employers spend billions on rising insurance premiums. The cost of health care premiums for employers has doubled over the past 15 years and now amounts to 30 percent of payroll costs of full-time employees. Employers now spend over $15,000 per employee with a family of four on health coverage. Premium growth has the dual effect of suppressing workers’ wages and shifting costs onto workers through high-deductible health plans as businesses and private health plans fail to contain the rising costs of health care. Since 2008, the share of covered employees on high deductible health plans has nearly doubled, and employer health spending has increased at twice the rate of wage spending. At the same time, individual health spending has increased by an astounding 67 percent. Rising per-employee coverage costs have also had outsize effects on the working class, as employers are either disincentivized from providing good coverage to lower-wage employees or must offset higher health premium spending with reduced wage expenditures. Between 1970 and 2016, laborers’ wages fell 21 percent, but their total compensation, including health care costs, rose 68 percent. The per-person health care premium system, coupled with rising costs, has had a regressive effect on lower-income workers and their employers.
We must build on President Obama’s work and make passing Medicare for All our number one health care priority. Medicare for All is the only solution that will reduce costs and cover everyone, without exception. It will end the outrageous profiteering by insurance companies, hospital monopolies, and big pharma that are fleecing the American people. It will also end the stranglehold on choice in our current system, where employer-provided health plans can change without consent from employees and patients are limited to “in-network” providers, restricting their choice of their doctor and hospital. Most importantly, it will simplify the lives of care providers and every person who has ever had to wait on hold with their insurance company, pay a surprise medical bill, or haggle with their hospital’s billing department. Presidents Roosevelt, Truman, Kennedy, and even Obama have all supported a universal health care system.
How We Get There:
More than 120 million Americans currently get their health coverage from the government. For the 156 million that are on employer-sponsored coverage, we must create a smooth and trustworthy glide path to Medicare for All to alleviate any concerns with disruption. Sen. Sanders’ Medicare for All bill establishes a four-year transition plan initiated upon passage of Medicare for All, which will ease the country into an equitable, universal system.
- All children under age 18 become eligible for, but not required to enroll in, comprehensive, zero-cost Medicare for All coverage.
- Maintenance of effort provisions will ensure that there are no gaps in standards or protections for children (and other unique health needs populations) during the transition. Medicare for All will include Medicaid’s Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit, which is considered the gold standard for covering children’s health care needs.
- Existing Traditional Medicare is improved by creating an out-of-pocket cap of $1,805, eliminating deductibles, ending the two-year SSDI waiting period for Medicare, and adding dental, vision, and hearing coverage.
- Americans over age 55 will have the option to enroll in Traditional Medicare.
- A Temporary Public Option will be created that will be available to anyone.
- The Temporary Public Option Plan will have a 90% actuarial value, a premium of 2-5% of income, and will be eligible for ACA subsidies and cost-sharing to reduce costs further.
- It will be available for purchase by employers and offered on the exchanges for individual purchase.
- Americans over 45 will have the option to enroll in Traditional Medicare.
- Americans over 35 will have the option to enroll in Traditional Medicare.
- All Americans are now covered by comprehensive, zero cost-sharing, Medicare for All.
- Doctors and hospitals remain privately operated, and every doctor is now in-network.
- Beneficiaries can still get supplemental private insurance to cover elective procedures if they’d like. Still, the vast majority will find that unnecessary because of the comprehensive array of benefits provided by Medicare for All.
Ensuring Union Members Get Their Due
For decades, unions have fought hard for the wages and benefits their members deserve. This includes good health insurance benefits, sometimes as a trade-off for wage increases. It is crucial that any transition to Medicare for All protects the hard-earned victories of union negotiators and workers. During the four-year transition to Medicare for All, unions with existing contracts that include health insurance will have the option to be grandfathered into the new system, maintaining their negotiated benefits, or they can move their members onto co-pay-, premium-, and deductible-free Medicare for All. Most unions will not need to make this decision, as the average contract is less than four years long, which will allow members to transition naturally. For unions that decide to join the Medicare for All system, the President will issue a special National Labor Relations Board rule. This rule will require contract negotiations to reopen with federal supervision to ensure the majority of health insurance cost savings are passed along to employees through higher wages and other benefits.
Paying for It
Estimates on the overall cost for Medicare for All vary across the board with experts from Harvard, the Urban Institute, RAND, the Mercatus Center, and the University of Massachusetts all disagreeing on precisely what the total number will be. The bottom line is this: any increases in federal spending will be paid for through shifting current public health care revenue streams, plus a combination of taxes on billionaires’ wealth, income from the wealthiest one percent, and corporations. Medicare for All will not raise taxes by a single dime for the working and middle classes.
A “Paying for Medicare for All Taskforce,” composed of staff from the House Ways and Means Committee, Senate Finance Committee, Joint Committee on Taxation, Congressional Budget Office, and outside experts, should be established to make final suggestions on exact program pay-fors. Here are a few (of many) options to pay for Medicare for All without raising taxes on the middle and working classes:
- Making corporations pay their fair share, including foreign profits;
- Treating capital gains like income for the top 1%;
- Taxing wealth over $50 million;
- Increasing the tax rate on estates over $10 million;
- Better enforcing our current tax laws;
- Growing the tax base through increased wages;
- Savings from the $260 billion annual tax break that the government gives to companies that provide employer-sponsored health insurance;
Encouraging States to Lead
As long as the federal government fails to lead, we should give states the ability to implement Medicare for All systems on their own. I introduced the State-Based Universal Health Care Act, which would create a waiver that would allow states (or groups of states) to have access to the federal funding necessary to set up their own Medicare for All systems. In fact, throughout our nation’s history, our states have served as the incubators of democratic ideas. Our neighbors in Canada established their own successful national health program by allowing the province of Saskatchewan to lead with a universal hospital care program in 1947, a decade before the system spread nationwide. My bill would allow a state to channel all the current federal health care dollars being spent on its residents through Medicare, Medicaid, the ACA, and other programs into one single stream to help fund its Medicare for All system. It would also waive the federal ERISA preemption exemption that currently exists. States like California, New York, and Vermont, plus any others that have the political will to take this step now, would have the power to lead and serve as an example and model for the rest of the nation.