Financing Medicare for All

Here’s how Congress can budget for single-payer Medicare for All.

Doctors for the 99 Percent march from Zuccotti Park to St. Vincent’s Hospital to demand its reopening and health care for all. October 26, 2011. Flickr user: Michael Fleshman

Under M4A, as in Canada, the following comprehensive healthcare would continue to be privately-provided, but would be free of charge: hospital visits, primary care, medical devices, lab services, maternity care, prescription drugs, as well as vision and dental benefits.

Supplemental insurance and additional prescriptions could still be purchased out-of-pocket.

Background: 2020 federal budget: $4.75 trillion in outlays — a 7.7% increase

2019 federal budget: $4.53 trillion in outlays ($3.5 trillion in revenue, $960 billion deficit) — a 7.25% increase

2018 federal budget: $4.12 trillion in outlays ($3.33 trillion in revenue, $779 billion deficit) — a 3.5% increase

2017 federal budget: $3.98 trillion in outlays ($3.316 trillion in revenue, $665 billion deficit).

U.S. federal budgets are generally about 20% of GDP and made up of around 60% mandatory spending and 40% discretionary spending by Congress.

2019 budget’s mandatory spending: $2.777 trillion (includes Medicare: $645 billion, and Medicaid: $419 billion, as well as Social Security at $1.04 trillion)

Discretionary spending: $1.359 trillion (Department of Defense: $716 billion, amounting to at least 52.7% of last year’s spending allocated by Congress)

Nov. 30, 2018 PERI study’s net annual cost of Medicare for All, accounting for Health Consumption Expenditure increases from universal coverage and increased use as well as decreases from greater efficiencies and bargaining power: $2.93 trillion per year, for the gross cost of $29.3 trillion over the 10-year budget projection.

Minus PERI’s total of all actual current public healthcare spending: $1.88 trillion (mostly Medicare and Medicaid).

That leaves revenue to raise for single-payer M4A: $1.05 trillion per year, which as an investment, will save up to $5.1 trillion by 2030 over the costly status quo and is likely to grow the economy while directly reducing harmful poverty.

Options to raise $1.05 trillion per year that will lower healthcare costs for 90–95% of people, basically everyone making less than $250,000 annually:

  1. 4% income tax instead of current healthcare expenses and insurance costs for those making above $25,000 in taxable income ($350 billion)
  2. 7.5% premium on large employers instead of providing healthcare insurance ($390 billion)
  3. Wealth tax on top 0.1% (above $20 million in net worth): $130 billion
  4. Package of four corporate tax reforms detailed by Bernie Sanders’ Senate office in August 2018 five-page financing plan ($124.3 billion),
  5. … for remaining $55.7 billion / year (‘chump change’ in federal budget, which can be forecast to be raised from taxes from a growing economy), one short-term option is more-progressive income taxes on those with income above $250,000 (raising $180 billion).
  6. And/or for any of the above, re-allocating about one-third of the $350 billion in the Moral Budget’s annual savings from cutting the costs of unproductive military spending on foreign wars and wasteful defense contracting.

A typical family making $50,000 might see net gains of $11,000. The PERI study found that regardless of the above financing options for single-payer, households and private businesses will be able to pay into the system an average of 9.6 percent less.

Americans in 2016 already spent $1.7 trillion in private healthcare costs, according to a 2018 CBO study, a number that is set to skyrocket by over half by 2030 as healthcare costs increase for an aging population.

CBO and federal budget statistics cited in Sludge, Oct. 25, 2019. Questions and feedback welcome: david@readsludge.com, @ppolitics.

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Co-founder ReadSludge.com, investigative journalism on money in politics. Previously: OpenCongress, AskThem, Councilmatic.

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David Moore

Co-founder ReadSludge.com, investigative journalism on money in politics. Previously: OpenCongress, AskThem, Councilmatic.