Economic Argument for Medicare for All

Bernie Sanders has been advocating for a Medicare for All Single-payer system in virtually every speech during his extraordinary campaign for presidency. In fact, he has been advocating for it during his entire political career and even introduced legislation to that effect in 2011. While virtually everyone believes that a Medicare for All would be a good thing in principle, many are concerned that it may not be viable economically. They fear that it would cause the debt to balloon, increase taxes significantly, damage the economy and hurt the quality of healthcare. While these concerns seem troubling, they are simply unfounded. In this article, I will explain these myths and demonstrate why a Medicare for All Single-payer system is not only a viable system, but also is the best option economically.

Ironically, just before I got the chance to finish my article, a Wall Street Journal article surfaced yesterday suggesting that a Medicare for All would cost an additional $15 trillion dollars. Troubling? Not so fast…!

Healthcare expenditure in the US is unsustainable

The United States has spent more than 17% of its GDP on healthcare, significantly higher than any developed country. Most countries that have Medicare for All, spend between 9 to 12% of their GDP on healthcare (See graph below). What might surprise you is that the US government spending on healthcare, not the private sector, is already one of the highest in the world at around 8%, and that’s even before the introduction of the Affordable Care Act (a.k.a. Obamacare).

Total health expenditure as a share of GDP, 2010

But the biggest issue that the United Stated faces is that healthcare expenditure has been rising at an unsustainable level. Health care costs are projected to rise to 25% of GDP in 2025 and 49% in 2082. In Canada which has a national Single-payer Healthcare system, GDP expenditure on healthcare has been very steady, and actually declining! It went down from 11.9% in 2010 to 11.7% in 2011 to 11.6% in 2012.

Strain on Businesses

It costs money for companies to provide healthcare benefits and insurance to their employees. GM reports that healthcare costs add between $1,500 and $2,000 to the sticker price of every automobile it makes. And it’s not like the situation is getting any better. Healthcare premiums are skyrocketing, and ironically, insurance brokers blame Obamacare. This causes a real strain on businesses, leading to more businesses to cut jobs or cruelly cut health benefits.

Competitive Disadvantage

We live in a globalized world where businesses need every competitive advantage to remain successful and competitive. Healthcare costs to businesses put American companies at a competitive disadvantage to their counterparts. Autoweek reports that “Japan’s health care gives Toyota edge [over GM]”. GM could have launched 3 additional new-model programs every year if it didn’t have to pay for its retirees’ health care. Do I need to say more?

Job lock and Loss of Productivity

A job lock is the inability of an employee to voluntarily terminate employment with a particular company because he or she would lose current health care benefits. This leads to reduction in entrepreneurship, and it is estimated that it affects close to 4 million Americans. One study showed that, in California alone, in 2002 job lock affected 179,000 people, with $722 million in foregone productivity.

Is it affordable?

You might agree with me on every point above, but still be skeptical that Medicare for All might not be affordable. After all, didn’t Wall Street Journal just state that it costs $15 trillion?

That article is very misleading. I can’t describe how irritated I got when I saw the journalist present only half-truths. It’s like someone gets a promotion, but he or she is only told that they no longer hold their current position! Is that a lie? Not technically, but it is dishonest.

Annual healthcare spending in the US is $3.8 trillion. Over 10 years, that means that US will most likely spend more than $40 trillion over the next decade. How does that number compare to $15 trillion? I’ll let you decide for yourself. One of the reasons that Medicare for All is much cheaper is because the government would save nearly 30 cents on the dollar which is attributed to administrative costs and profits. Another reason is that you can no longer expect pharmaceutical companies to charge the government obscene prices, like $1,000 per pill for Sovaldo (Hepatitis-C medicine).

But people may still be concerned that for the government to fund this program, it will have to raise taxes. Let us be frank, this is very much true, and Bernie was very honest about this from day one. But before you frown about the idea of more taxes, consider this: The average expenditure per person is about $9,146 per year. That’s a lot of money out of pocket. Don’t you think so? If someone tells you that now you no longer have to pay 9K, but only 6K for example, wouldn’t it be common sense to welcome such an idea?

Final Thought

Ask yourself a very simple question. If you spend more than your friend to buy a car, wouldn’t you expect that your car should be much better than his or hers? Wouldn’t you feel cheated if you paid twice as much for a Hyundai when your friend gets a Cadillac for half the price? The reality of the matter, this is precisely what’s happening in the United States. The US spends much more than any other nation in the world, yet the quality of the healthcare system is ranked 37th in the world. And to add insult to injury, every single country that ranked better than the US has a Medicare for All healthcare system! I’ll let you depart with that thought in mind.

Coming Soon… The Moral and Health Arguments for Medicare for All

Salam Morcos

Salam Morcos is a political activist, especially in areas of economic justice, racial justice and democracy. You can follow him on twitter @salammorcos.