Kansas Progress Institute

Ad Astra Per Aspera ~ To the Stars Through Difficulties

Transitioning to Medicare For All

Posted on February 22, 2017

By David Burress

Almost everyone knows in their heart that Medicare For All would be far better than what we have.  (For starters it would claw back some 3% of GDP spent on insurance overhead and provider costs of dealing with complex insurance policies.) But how would the shift-over work?

 

Mainly, you need to expand the payroll tax by an amount equaling a little less than average employer plus employee costs of private health insurance.  Companies that want to continue with private insurance would get a 1 to 1 offset against the tax for dollars they spend on private insurance. (It would have to be nonrefundable, meaning the offset can’t exceed the original tax.)

 

Companies that currently provide expensive policies and shifted over would be better off.  Companies that don’t currently provide insurance would be temporarily screwed, as they should be.  However since competitors would face the same cost increase, the tax would soon be almost entirely passed on consumers.

 

We would also need some funding from general revenues to pay for coverage of nonworkers under 65 and for people shifted from Medicaid to Medicare.

 

There would be some increase in health care demand because of newly insured people and because of reductions in copays (possibly as much as 1% of GDP, i.e. possibly 8% of demand), but there should be a phased extension to unemployed people, which would keep the increase gradual enough that the ordinary medical price system would easily handle it.

 

Providers would be free to reject Medicare patients, just as they are now.  However most providers would soon see most of their non-Medicare business dry up.

 

Medicare already has better cost-containment features than private insurance. Therefore the shift would likely save an additional 1-2% of GDP.  Also the greatly increased size of the Medicare budget would likely increase political pressure for new cost containment provisions such as negotiated prices and government retention of patent rights that so far have been resisted by big pharma and other providers.

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