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We Can't Afford to Keep Our Failing Healthcare System. But We Absolutely Can Afford Medicare for All

There are some silly arguments against Medicare-for-All, but one that gains a lot of traction: Can we afford it? The short answer is: Yes.

"Leaving aside the very significant economic benefits—not just human health, but economic gains—that will come from improving the national health system," writes Weissman, with Medicare for All "we can eliminate upwards of $500 billion annually in spending wasted on bureaucracy, inefficiency and excessive corporate profits." (Photo: @/Twitter)

America’s healthcare system is a national disgrace.

By almost every relevant metric, our system is the worst or nearly the worst among all rich countries. We are the only wealthy country to permit tens of millions to go uninsured. Far more people in the United States report skipping care because of cost issues than other rich countries. Our infant mortality rate is atrocious, and our life expectancy trails other wealthy nations and is actually dropping.

There’s no excuse for any of this in such a rich nation. We can solve all of these problems—expanding coverage, eliminating underinsurance and co-pays, and improving health care and health outcomes—by improving Medicare and expanding it cover all Americans.

"By almost every relevant metric, our system is the worst or nearly the worst among all rich countries."

The Medicare for All Act of 2019, introduced today by U.S. Reps. Pramila Jayapal (D-Wash.) and Debbie Dingell (D-Mich.), with more than 100 original co-sponsors, does exactly that. It would improve coverage for everyone, including those already on Medicare, by eliminating co-pays and deductibles, providing for dental care and covering long-term care, including care in homes and nursing home care.

There are some silly arguments against Medicare-for-All, but one that gains a lot of traction: Can we afford it?

The short answer is: Yes.

And not just because the nation is so rich. We can expand and improve Medicare at no additional cost compared to what we currently spend.

Leaving aside the very significant economic benefits—not just human health, but economic gains—that will come from improving the national health system, we can eliminate upwards of $500 billion annually in spending wasted on bureaucracy, inefficiency and excessive corporate profits.

Thanks to price gouging exploitation of patent monopolies and other government-granted market exclusivities, the U.S. spends outrageous sums on prescription drugs—almost $500 billion a year—and Medicare Part D spends roughly $100 billion a year (fast rising). Medicare Part D spends 40 percent more on drugs than the Veterans Health Administration, simply because it is prohibited from negotiating prices. With Medicare-for-All, Medicare would be empowered to negotiate prices. If a company refused to offer a reasonable price, Medicare could license generic competitors to enter the market, causing prices to drop steeply. Medicare-for-All also would eliminate the middlemen in the pharmaceutical supply chain who add extra to the price of drugs. Altogether, we could conservatively save $200 billion every year.

Even bigger savings would come from eliminating the wasteful spending by the health care sector on administrative costs. The key would be to move away from per-treatment billing and instead rely on global budgets. Hospitals and other medical providers would receive an overall payment based on the patients they serve and the treatments they provide, and then they could get on with the business of providing care. The arrangement would be no different than the ways police stations or public libraries are funded; libraries don’t send a bill to the city treasurer each time a person checks out a book. The potential available savings are tremendous:

  • Administrative costs consume an astounding 25 percent of U.S. hospital spending, far above most comparable countries, due largely to the costs of billing. If hospital administrative spending were brought in line with more efficient countries, the U.S. could save more than $150 billion each year on hospital spending alone.
  • Researchers have found that American medical practices spent almost four times more money than Canadian doctors on dealing with payment issues – $82,000 per physician annually compared to $20,000. The same study found that U.S. nurses spend more than 10 times as much as their Canadian counterparts interacting with payers. Most of the discrepancy in hours spent was consumed in nurses spending time obtaining prior authorizations from insurance companies.
  • Processing bills, coupled with expenses for collection of unpaid bills, accounts for half or more of medical practice’s administrative costs – between 50 and 60 percent, according to a 2005 study published in Health Affairs.

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A Medicare-for-All system also would be able to rationalize spending on expensive renovations and healthcare technology. With global budgeting, institutions would maintain a separate budget for capital expenditures, such as on medical equipment and expansions of facilities, apart from operating expenditures. Such purchases impose upfront costs on providers. Once purchased, they create incentives to provide unnecessary care to recoup their investments.

By requiring separate budgets for the purchases of expensive medical equipment and other expansions, Medicare-for-All would ensure that such purchases are warranted by a community’s needs and would thus reduce unnecessary spending, both on the capital expenses themselves.

We absolutely can afford Medicare-for-All. What we can’t afford is to continue with our current failed system. The time is now for Medicare-for-All.

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Robert Weissman

Robert Weissman

Robert Weissman is the president of Public Citizen. Weissman was formerly director of Essential Action, editor of Multinational Monitor, a magazine that tracks corporate actions worldwide, and a public interest attorney at the Center for Study of Responsive Law. He was a leader in organizing the 2000 IMF and World Bank protests in D.C. and helped make HIV drugs available to the developing world.

 

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