Andrew Yang is running for president as a Democrat in 2020. He is an entrepreneur who has some excellent ideas about Universal Basic Income and Medicare for All. In this blog post, I’m going to focus on his Medicare for All plan (which could also be called single-payer or universal health care).
When I look at Twitter, I see plenty of people who are in favor of Medicare for All. This group understands how beneficial it would be for Americans to be able to access affordable health care. Universal health care works in Australia, Canada, France, Germany, Singapore, Switzerland and the United Kingdom.
I also see a group of people who appear to be uneducated about what Medicare for All is. The most common question I’m seeing is: “How will it be paid for?”
A good place find the answer to that question is on Andrew Yang’s website. The section about Medicare for All says:
…With a shift to single-payer, costs can also be controlled directly by setting prices provided for medical services. The best approach is highlighted by the top-ranked Cleveland Clinic. There, doctors are paid a flat salary instead of a price-for-service model. This shift has led to a hospital where costs are visible and under control. Redundant tests are at a minimum, and physician turnover is much lower than at comparable hospitals.
Doctors also report being more involved with their patients. Since they’re salaried, there’s no need to churn through patient after patient. Instead, they can spend the proper amount of time to ensure that each patient receives their undivided attention and empathy…
How much money do physicians and surgeons make at the Cleveland Clinic? Indeed.com has the answer to that question. They have a list of average salary for physicians and surgeons.
- Anesthesiologist— $301,747
- Hospitalist — $196,024
- Neonatologist — $205,000
- Neurologist — $251,736
- Physician — $101,818
- Psychiatrist — $170,140
- Surgeon — $219,227
- Urgent Care Physician — $307,872
There is more information about The Salary-Based Comp Model at Cleveland Clinic. Some of the benefits of moving to a salary-based system include:
- Easy to Administer
- Easy to Understand
- Not dependent upon reimbursement systems
- Allows for variance in performance based on legitimate situations (i.e., sick, construction, systems)
- Promotes teams
VeryWell Health has an article that explains what healthcare reimbursement is. Healthcare reimbursement describes the payment that your hospital, doctor, diagnostic facility, or other healthcare providers receive for giving you a medical service.
Healthcare providers are paid by insurance or government payers through a system of reimbursement. After you receive a medical service, your provider sends a bill to whoever is responsible for covering your medical costs. The amount that is billed is based on the service, and the agreed upon amount that Medicare or your health insurer has contracted to pay for that particular service.
If you have private health insurance (from your employer, or from an “ObamaCare” marketplace) your healthcare providers are getting paid by the company you purchased health insurance from for the health care they provide you.
There are several big problems with this system. One involves a mechanism called prior authorizations. Health insurance companies may require that a doctor or hospital get permission from the insurer before providing treatment or prescribing medication. Insurers don’t have to be quick about determining whether or not to authorize the care — and this frustrates doctors and patients.
Another problem is that health insurance companies don’t cover all of the health care that a person needs. The insurer might cover part of the cost for a specific treatment or medication — and leave the person to pay for the rest out-of-pocket.
This is frustrating to people who are already paying the health insurance company for premiums and co-pays. It also makes it difficult for that person to find extra money to afford the health care and medication they need.
Some states, like California, have laws that protect people from “surprise bills” — bills that a person receives from a hospital that is in their network because one or more of the physicians who treated them was out of their network.
Other states do not have laws that protect consumers from the “surprise bill” problem. No one likes to be hit with a bill for things that they were led to believe would be covered by their health insurance company.
Take a look at GoFundMe, and you can see plenty of examples of another problem with with our current health care system. People who can’t afford health insurance coverage are expected to pay for all of their care out-of-pocket. Most can’t afford to do that on their own — and they end up delaying, or never receiving, the health care they require.
Medicare, however, is different. It is funded by two trust fund accounts that are held by the U.S. Treasury. Those funds can only be used for Medicare. It is funded by payroll taxes that are paid by most employees, employers, and people who are self-employed.
The funds pay for Medicare Part A (hospital insurance), benefits like inpatient hospital care, skilled nursing facility care, home health care, and hospice care. The funds also pay for Medicare program administration, which includes costs for paying benefits, collecting Medicare taxes, and fighting fraud and abuse.
There is also a Supplementary Medical Insurance Trust Fund. Those funds are authorized by Congress. It is funded by premiums from people who are enrolled in Medicare Part B (medical insurance) and Medicare Part D (prescription drug coverage). It pays for Part B benefits, Part D, and Medicare administration.
In other words, the United States already has a system in place that is similar to Andrew Yang’s plan. The difference is that his plan is for all people — not just the limited group that is eligible for Medicare coverage. It could be paid for just like Medicare is now — through payroll taxes.
To be clear, this is not a new tax. It is a tax that American workers and employers have already been regularly paying for decades.
CNBC reported that Canada has successfully implemented a single-payer system, “even though Canadians pay about the same amount in taxes as Americans”. The performance of Canada’s system ranked ninth in a 2017 study by the Commonwealth Fund comparing 11 health-income countries, where the American health-care system ranked last.
The Conversation has an informative article titled: “‘Medicare for all’ could be cheaper than you think”. It was written by Gerald Friedman, a professor of economics at University of Massachusetts Amherst. The article was posted in 2017. Gerald Friedman wrote:
…I estimate that a full single-payer system would likely save almost 18 percent of current spending, or about $665 billion for 2017. A simple Medicare expansion wouldn’t save quite as much but it’d still be significant.
So where would the savings come from?
To begin with, studies show that medical billing is more expensive in the U.S. than in many other countries.
The U.S. health care system spends twice as much as Canada, for example, because more “payers” means more complexity. Savings from a simple Medicare expansion could reduce this waste by about $89 billion a year.
Another source of savings is on insurance administration. Private insurers spend more than 12 percent of total expenditures on overhead, compared with around 2 percent for Medicare. Savings from moving everyone to Medicare would approach around $75 billion because of economies of scale, lower managerial salaries, and more meager marketing expense.
A third way simple Medicare expansion would yield savings is by reducing the ability of hospital monopolies to overcharge private insurers. Medicare, in contrast, is able to pay 22 percent less for the same services because of its size. If all Americans used Medicare savings on hospital costs could exceed $53 billion.
These three areas would save just under $220 billion, bringing the cost down to $618 billion…
In short, Andrew Yang’s Medicare for All plan will work. It can be paid for the same way we are currently paying for Medicare. Every American would be eligible for Medicare for All. This means young and healthy people, who tend to not need as much health care as older, sicker people, would offset the costs.
UPDATE: On December 16, 2019, Andrew Yang updated his Medicare for All plan. Here are some key parts of the updated plan:
…To be clear, I support the spirit of Medicare for All, and have since the first day of this campaign. I do believe that swiftly reformatting 18% of our economy and eliminating private insurance for millions of Americans is not a realistic strategy, so we need to provide a new way forward on healthcare for all Americans.
As Democrats, we believe in healthcare as a human right. We all want to make sure there is universal affordable coverage. We know we have a broken healthcare system where Americans spend more money on healthcare to worse results. But, we are spending too much time fighting over the differences between Medicare for All, “Medicare for All Who Want It”, and ACA expansion when we should be focusing on the biggest problems that are driving up costs and taking lives…
We need to fix our broken healthcare system by tackling the root problems through a six-pronged approach:
- Control the cost of life-saving prescription drugs, through negotiating drug prices, using international reference pricing, forced licensing, public manufacturing facilities, and importation.
- Invest in technologies to finally make health services function efficiently and reduce waste by utilizing modernized services like telehealth and assistive technology, supported by measures such as multi-state licensing laws.
- Change the incentive structure by offering flexibility to providers, prioritizing patients over paperwork, and increasing the supply of practitioners.
- Shift our focus and educating ourselves in preventative care and end-of-life care options.
- Ensure crucial aspects of wellbeing, including mental health, care for people with disabilities, HIV/AIDS detection and treatment, reproductive health, maternal care, dental, and vision are addressed and integrated into comprehensive care for the 21st century.
- Diminish the influence of lobbyists and special interests in the healthcare industry that makes it nearly impossible to draft and pass meaningful healthcare reform.
Andrew Yang states: My plan is a statement on the critical failings of our system and viable paths to solve them. We cannot find the answers to one of the most serious problems in modern American history unless we are asking the right questions. It’s time we start asking the right questions.
You can find more information about Andrew Yang’s updated health care plan on his website.