What, exactly, is “Medicare for All”? There’s been a lot of attention in the news lately paid to this very important topic. If you are already enrolled in Medicare, or plan to become a Medicare beneficiary soon, you may be feeling more curious about exactly what Medicare for All really means. You may also have a lot of questions about how Medicare for All may affect the health care costs of people 65 and over.
In order to help people like you make economically smart decisions about your healthcare, we decided to take a deep dive on the topic of Medicare for All. Below, we will discuss exactly what Medicare for All means based on all of the current information available as of this writing. We will discuss how the system is to be paid for, and how people like you can expect to see your costs go up or down based on what happens. Lastly, we’ll discuss the theoretical timeline for when you can expect these changes to occur.
Keep in mind that things can change at any moment because the proposed legislation is still in its infancy. We will do our best to keep this article up-to-date and accurate as the situation develops.
What is “Medicare for All”?
As we’ve touched on already, Medicare for All in the United States is still a largely theoretical concept. As of this writing, there are 10 different “Medicare for All” proposals which have been introduced in the 116th Congress. The three most relevant proposals that we will discuss here in this article are S. 1129, H.R. 1384 (both titled “Medicare for All Act of 2019”), and the H.R. 2452 “Medicare for America Act of 2019”.
Medicare for All (Who Want It; the “Public Option”)
H.R. 2452 has been referred to by some as “Medicare for All (who want it)”. Instead of replacing all private healthcare coverage with a public, single-payer system – that payer being the US government – a bill like H.R. 2452 would replace most private healthcare coverage with a public option, but leave some private insurance companies free to sell duplicate coverage through employer-sponsored health plans and certain other types of coverage.
Some people support this type of Medicare for All instead of a traditional single-payer system because it gives them more freedom of choice. Others support it because it piggybacks on the already popular and largely successful Affordable Care Act. But critics of H.R. 2452 and bills like it argue that it will do little or nothing to curb the administrative expenses which are largely responsible for the exorbitantly high healthcare costs which US citizens pay.
Some highlights of the Medicare for America Act include:
- The option to either choose a private, employer-sponsored health insurance policy or healthcare coverage from the US Department of Health and Human Services
- No premiums or cost-sharing for people making below 200% of the federal poverty line (FPL)
- People making more than 200% FPL each year will have to pay income-based premiums and other cost-sharing charges
- Medicare Advantage will still be an option for qualifying individuals, but will no longer have age restrictions
- Balance billing will be prohibited
- The government will negotiate directly with drug companies to reduce overall prices
- Prohibits broker commissions for Medicare Advantage plans
- No planned changes to Medigap or other Medicare Supplement Insurance policies
- No planned changes to the VA or the Indian Health Service
Medicare for All (No Exceptions; the “Single-Payer” System)
In the version of Medicare for All outlined by bills like S. 1129 and H.R. 1384, private insurance companies will be phased out over a multi-year transition period and usurped/replaced by the US Department of Health and Human Services. Private insurance will still exist, but only to offer whatever supplemental coverage the HHS chooses not to provide (such as cosmetic surgery or other elective procedures, for example). It will be illegal for any insurance company to offer the same benefits and coverage that the HHS offers.
Proponents of a true, single-payer, Medicare for All system want to take profit-driven interests out of the healthcare industry in order to make the whole system simpler, more effective, and more affordable. Supporters use examples like Canada, Great Britain, and Taiwan to illustrate that administrative costs can be significantly reduced if the government and healthcare providers negotiate fair prices and pay one another directly, rather than letting for-profit insurance companies get in the middle and drive up costs.
The biggest critics of a single-payer Medicare for All system claim that it will raise taxes more substantially than what the politicians who currently advocate it are claiming. But the question of whose taxes – and how substantially – is still currently under debate.
Some highlights of the S. 1129/H.R. 1384 plans include:
- Automatic, lifetime enrollment for all qualifying individuals once the program is fully implemented
- No cost-sharing; this means no premiums and no co-insurance (although S. 1129 allows for a maximum $200 out-of-pocket cost per year for prescription drugs and biologics)
- No medical network restrictions (as opposed to a PPO or an HMO)
- Balance billing is prohibited
- The government will negotiate directly with drug companies to reduce overall prices
- Establishes an annual budget for all healthcare expenditures
- Establishes the Office of Beneficiary Ombudsman so that enrollees with grievances can be addressed
- There will be no restrictions on the sale of Medigap or other supplemental health insurance for any non-covered benefits
- 1% of the global budget will be set aside to offset economic dislocation of private health insurance workers
- Retains the VA in the Indian Health Service
How Will Your Health Care Change Under Medicare for All?
That largely depends on which one of the three bills get passed. H. R. 1384 and S. 1129 are the most closely modeled after what Medicare currently offers seniors 65 and older. H. R. 2452, on the other hand, is modeled more closely after the Affordable Care Act. Below is a convenient chart you can use to compare against your Medicare benefits to see which plan would best help you manage your healthcare needs and costs:
|Coverage||H.R. 1384 (Jayapal)||S. 1129 (Sanders)||H.R. 2452 (Public Option)|
|Ambulatory patient services||✓||✓||✓|
|Primary and preventive services including chronic disease management||✓||✓||✓|
|Prescription drugs and medical devices, including outpatient prescription drugs, medical devices, and biologics||✓||✓||✓|
|Mental health and substance abuse treatment services, including inpatient care||✓||✓||✓|
|Laboratory and diagnostic services||✓||✓|
|Comprehensive reproductive, maternity, and newborn care||✓||✓||✓|
|Early and periodic screening, Diagnostic, and treatment services (pediatrics)||✓||✓||✓|
|Rehabilitative and habilitative services and devices (short term)||✓||✓|
|Rehabilitative and habilitative services and devices (long term)||✓|
|Emergency services and transportation||✓||✓|
|Transportation services for disabled or low-income individuals||✓||✓|
|Long-term care services and support||✓||✓||✓|
Who Pays for What Under Medicare for All?
There are obviously many different special interest groups involved in this debate. Most people will be happy to enjoy the benefits of Medicare for All but will also fight tooth-and-nail to make sure that theirs aren’t the taxes and/or private costs which must go up in order to pay for it. That’s just human nature.
The provisions for covering the costs of Medicare for All are complicated (to say the least). In order for any of these plans to work out, robust accountability systems have to be put in place and everyone has to play by the rules. Below, we will do our best to boil things down, help you get a better understanding of who will be expected to pay for what, and how much you might see your costs go down (or up) if a Medicare for All system ever becomes a reality.
Paying for Medicare for All (Who Want It)
One of the biggest selling points for H.R. 2452 is freedom of choice. But that freedom isn’t free. You will have to pay for this choice either by paying insurance premiums and cost-share fees to an employer-sponsored health insurance company, or by paying insurance premiums and coinsurance charges to the US Department of Health and Human Services. You will have to choose one or the other; remaining uninsured will no longer be an option under this (or any other Medicare for All) system.
If you decide to enroll in the public option despite having alternative qualifying coverage, or if you have no alternative qualifying coverage and must participate in the public option, the payment structure is pretty straightforward:
- Anyone making less than 200% of the federal poverty limit per year will not have to pay anything for their healthcare
- Anyone whose annual income falls between 200% and 600% of the federal poverty line will have to pay premiums and coinsurance costs, but it will be on a sliding scale
- Anyone making more than 600% of the federal poverty limit in annual income will pay the lower of either 8% of their income, or a pre-established Medicare premium as determined by the US Department of Health and Human Services.
The table below is based on 2019 federal poverty limit numbers and helps put this information into a clearer perspective:
If you are currently on Medicare, live alone, and your annual income is less then $24,980, you wouldn’t have to pay a dime for your healthcare if H.R. 2452 were to become law tomorrow. That means your healthcare costs would drop substantially because the current Medicare Part A and Medicare Part B premiums you’re paying now would disappear. So would any Medicare Part B coinsurance costs you may currently be paying. Similarly, elderly couples who have an annual income of less than $33,820 would not be required to pay their own healthcare costs. Any qualifying individual who falls within the income brackets outlined above, regardless of age, could visit a hospital for an emergency, see their doctor, or fill a prescription at their pharmacy and the bill would be sent directly to and paid for by the US government.
If your annual household income is more than what is outlined in the 200% column above, you will likely have to incur some out-of-pocket costs. The first cost you can expect to pay is a 20% coinsurance charge with an annual maximum of $3,500 per individual or $5,000 per family. Next is the annual premium. The coinsurance will likely be an upfront cost paid for services rendered; the premium, on the other hand, will more than likely be paid after the fact when you file your taxes.
Let’s look back at the table above for another example. If you and your spouse are currently on Medicare and you are making $110,000 annually in taxable income, your 8% premium payment each year would be $8,800 (or lower, if the DHHS annual premium is less expensive for you). If you are making between 200% and 600% of the federal poverty limit, it is difficult to calculate what your annual premium might be because the numbers for the sliding-scale income-based premium payment have not yet been released. But you can certainly expect to pay less than 8%.
Paying for a True Single-Payer System
Since the government is paying for everything and out-of-pocket costs will be nearly eliminated for individuals and families under a single-payer system, many believe that bills like S. 1129 and H. R. 1384 will need to raise taxes in order to pay for the costs of insuring everyone. But as it stands right now, both plans anticipate gathering a large portion of their funding from current taxes which are already in place. Tax revenues derived for the purposes of paying for Marketplace subsidies, Medicaid, Medicare, FEHB, Tricare, and other federal health programs will be redirected to a Universal Medicare Trust Fund. There isn’t anything necessarily new or revolutionary about this; as a matter of fact, France uses a similar trust fund system in order to help finance universal healthcare for its own citizens.
Despite the French precedent, critics are still uncertain that current tax revenues will be sufficient to pay for expanding the program to every eligible American citizen. S. 1129 comes with an accompanying white paper which goes into deeper detail about how best to finance its version of the Medicare for All act of 2019. The paper suggests the following:
- A 4% income tax for working employees earning more than $29,000 annually for a family of four
- Income-based premium charges for employers (up to 7.5%) with specific exemptions for small businesses
- Eliminating health tax expenditures
- Imposing a 70% marginal tax rate for people making more than $10 million dollars annually
- Equalizing the tax rate for earned and unearned income
- Limiting tax deductions for outliers in top tax brackets
- Reforming the estate tax
- Imposing an extreme wealth tax
- Closing the Gingrich-Edwards loophole
- Levying fees on major financial institutions such as Bank of America and Chase Bank
H. R. 1384 takes a slightly different approach. Instead of imposing a series of new taxes on the wealthiest Americans, it approaches the issue by creating budgets for participating healthcare providers. Major hospitals, for example, will receive an annual budget and will be paid quarterly from the Universal Medicare Trust Fund. Supporters believe this will put the onus on healthcare providers to trim the fat and streamline the care they give instead of sticking with the current profit-driven, fee-for-service model which drives up costs.
Critics of either approach express concern that the taxes suggested by the white paper will be difficult to implement. They also doubt that hospital budgets and current tax revenue alone will be enough to pay for the healthcare needs of the entire country. Some suggest that the only tax increases which have the potential to pass Congress and the White House are sales taxes, which would have a disproportionately negative economic impact on the poor and people on a fixed income.
Supporters of these Medicare for All bills note that even if taxes have to go up to pay for the program, the vast majority of people will still be paying less in increased taxes than they were paying in out-of-pocket costs for health insurance premiums, coinsurance, co-pays, and prescription drugs. And they’ll be getting free healthcare in exchange. Whether or not this trade-off is financially feasible will vary from one individual to another and will be based on your own personal circumstances.
When Will Medicare for All Begin?
In order for a bill to become a law, it must be voted on and approved by both the House of Representatives and the Senate. After it has passed both chambers of Congress, it must go to the president’s office in the White House to be signed into law. Right now, Medicare for All legislation has strong support in the House of Representatives, but it is strongly opposed by a majority of senators. The current president also opposes it. So it is highly unlikely that any Medicare for All legislation will get voted on, passed, and signed into law before the next election in November of 2020.
The most favorable scenario for Medicare for All being passed into law is if the American people elect more congressional and senatorial representatives who support the legislation during the 2020 election. For the most part, support for Medicare for All legislation is divided down party lines with Democrats in favor and Republicans opposed to Medicare for All. But this doesn’t necessarily mean that more moderate politicians aren’t willing to compromise on the issue. Furthermore, if the current president loses the 2020 general election, the candidate who beats him will likely support Medicare for All, which would give the legislation overwhelming support from at least two out of three branches of government. If all of these things come to pass in November 2020, Medicare for All will almost certainly become law, and soon. If not, then Medicare for All could be delayed indefinitely.
Assuming circumstances become favorable and one of these Medicare for All bills get passed, it could still take a few years before the system is fully implemented. S. 1129 Comes with a four-year rollout plan. In year one, eligible enrollees will include people 55 and over and all children under the age of 18. The age of eligibility for enrollment will drop by a decade every year thereafter until finally everyone will be allowed to enroll by 2025. H.R. 1384 only comes with a two-year implementation period, meaning Medicare for All would be fully implemented by 2023. 2023 is also the intended start date of H. R. 2452, with full implementation culminating in 2026.
- Side-by-Side Comparison of Medicare-for-all Proposals
- H.R. 2452: Medicare for America
- 10 Essential ACA Health Benefits (Medicare for America)
- H.R. 1384: Medicare for All (Jayapal)
- H.R. 1384 Executive Summary
- S. 1129: Medicare for All (Sanders)
- S. 1129 Executive Summary
- S. 1129 White Paper
- Interactive Tool: Comparing Medicare for All Proposals
- Federal Poverty Guidelines
- CNN: What ‘Medicare for All’ Means, Politically and Practically
- The Wall Street Journal: What Is (and Isn’t) Medicare for All (video)
- Vox: Questions about Medicare for All
- American Enterprise Institute: Medicare for All
- The Deductible: Medicare for All Bills