Presidential hopeful, Kamala Harris, has reopened a can of worms that most people hoped had been buried for good with the failure of Bernie Sanders’s 2016 presidential bid. “Medicare for all” is back on the agenda, and a lot of people on the political left are saying it’s time the government provided health care for every American. Of course the people who’re saying this usually aren’t the ones who’d end up paying for it. Never mind whether Medicare for all is something we want; is it even something we could afford?
- Right now, Medicare runs as a government-subsidized health insurance program for Americans aged 65 and over, as well as some younger people who have certain types of disabilities. In 2017, it covered over 58 million people, 49 million of them 65 plus.
- Medicare isn’t free. To be covered you either need to have made the qualifying level of Medicare taxes or pay a monthly premium. The scheme itself generally covers about half the cost of treatment, with the rest paid for by additional insurance or out of pocket.
- In 2017, total Medicare benefit payments came to $702 billion – about 15 percent of all federal spending. In return it covered just under 18 percent of the US population.
- The math is already looking bad for Medicare for all. Scale it up proportionately and you end up with the program costing 83 percent of current federal spending if you want to cover the whole population. In fact it isn’t that bad, because economies of scale will start to kick in.
- It’s still going to cost a huge amount of money though. An independent study by George Mason University estimated it would cost average $3.26 trillion a year for the first ten years. The 2019 federal budget is $4.4 trillion, so Medicare for all would eat about 75 percent of it.
- To fund such an ambitious program, the federal budget would need to increase to about $7.7 trillion. There’s no way the government could borrow enough to make up the difference, so that would need to be paid for by massive tax increases – the steepest in US history.
- Some individuals might find that even with the tax increases, lower insurance costs mean they’re paying less overall. However, taking that amount of extra money in taxes would devastate the economy by reducing the amount of money people had to spend. Demand would fall, companies would go broke, jobs would be lost.
- This question has a simple answer. No, we can’t afford Medicare for all. It’s just far too expensive. If we’re going to have universal health care, we need to find a different way to deliver it.