Why Medicare for All Is Not a Practical Solution

Estimated reading time: 7 minutes

The idea behind Medicare for All is appealing in its simplicity: guarantee health care coverage to every American and have the federal government pay the bills. But providing universal coverage and creating a single government-run health insurance system are not the same thing. The practical problems begin when we ask the most important question: How would we pay for it?

You Cannot Pay for Medicare for All Just by Taxing Billionaires

Supporters of large new government programs frequently argue that the necessary revenue can be obtained by making billionaires and corporations “pay their fair share.” That may be an effective political slogan, but it does not solve the arithmetic of Medicare for All. The Congressional Budget Office has examined illustrative single-payer systems based on Medicare. Depending upon how the program was designed, CBO estimated that federal health-care subsidies would increase by approximately $1.5 trillion to $3 trillion in 2030 alone. That is not a one-time expense. It represents the enormous annual transfer of health-care financing from employers, households, insurance companies and state governments to the federal government.

There simply are not enough billionaires to provide trillions of dollars of additional tax revenue every year indefinitely.

Even extremely aggressive taxation of the wealthy cannot turn their accumulated wealth into a permanent annual revenue stream of that magnitude. Wealth is also not the same thing as income. Much billionaire wealth consists of ownership in businesses, stocks and other assets rather than piles of cash sitting in bank accounts. Eventually, the tax base has to become much broader.

That means the middle class.

The Taxes Would Reach Ordinary Americans

A government can raise trillions of dollars every year only by taxing a very large portion of the economy. That could take the form of higher income taxes, payroll taxes, a national consumption or value-added tax, higher business taxes, or some combination of them. Whatever mechanism politicians chose, the economic burden could not realistically be confined to America’s billionaires. Workers could see it in their paychecks through payroll or income taxes. Consumers could encounter it through consumption taxes or higher prices. Businesses facing higher taxes could respond through some combination of lower investment, lower compensation and higher prices.

This is why the debate should not be framed simply as: “Would you like free health care paid for by billionaires?”

That isn’t the real choice.

A more accurate question is: “Would Americans be willing to replace much of what they currently spend on insurance premiums and medical expenses with substantially higher taxes to finance a national health-care system?”

That is a legitimate debate. But voters deserve to know what they are actually being asked to support.

Medicare for All Would Not Make Health Care Free

Health care can never truly be free. Someone has to pay the piper. Doctors must be paid. Nurses must be paid. Hospitals must be built and maintained. Prescription drugs, medical equipment, laboratories, ambulances and long-term care all consume real economic resources. Medicare for All changes who collects the money and who pays the bills. Instead of much of the money flowing through employers, households and private insurers, substantially more of it would flow through the federal government.

There could certainly be savings. A single-payer system could reduce insurance administration and potentially negotiate lower prices. CBO has found that those factors could reduce national health expenditures under some single-payer designs. But there is another side of the equation. When insurance coverage becomes virtually universal and patients face little or no cost at the point of service, people consume more health care. CBO identifies increased utilization as one of the major factors pushing costs upward under single-payer systems.

Costs don’t happen in a vacuum. Nothing is free. Nothing. It takes capital, services, supply chains, personnel, doctors, equipment, just to name a few. Medical money does not grow on trees. It has to be funded from somewhere and if you increase taxes to do so, capital is shifted and drained from one source to another at significant costs. Such costs are spread out and cannot be funded by just “the rich”.

The Provider-Payment Dilemma

Medicare for All also faces a difficult tradeoff involving doctors and hospitals. One way a government system can control spending is by paying health-care providers less. But dramatically lowering payments across the entire health-care system creates another problem. Hospitals, physician practices and other providers still have employees, facilities, equipment and other expenses to pay. If reimbursement rates are too low, providers face financial pressure.

If government raises reimbursement rates sufficiently to protect hospitals and physicians, much of the projected savings disappears and taxpayers must provide additional revenue. There is no magic solution to this tradeoff.

More Coverage Does Not Automatically Create More Health Care

Giving everyone an insurance card does not instantly produce additional doctors, nurses, hospital beds, operating rooms or MRI machines. Medicare for All would increase access to insurance and reduce financial barriers to treatment. Those are genuine benefits and should be acknowledged. But greater access also means greater demand.

If demand increases faster than the supply of medical services, something eventually has to allocate those limited resources. In today’s American system, price, insurance networks and cost sharing perform part of that function. Government-financed systems can instead rely more heavily on budgets, reimbursement limits, covered-service rules and waiting times. Every health-care system ultimately confronts scarcity. Changing who pays the bill does not eliminate it.

Medicare for All Is Not the Same as Universal Coverage

Perhaps the most important distinction in this debate is the one most often overlooked. A country does not need Medicare for All to provide universal health coverage.

Several developed countries have achieved universal or near-universal coverage without eliminating private insurance or putting virtually the entire health-care financing system under one federal program. The United States therefore faces more choices than the political debate sometimes suggests.

We could improve assistance for people who cannot afford insurance. We could reform insurance markets. We could address catastrophic medical expenses. We could improve Medicaid and Medicare. We could encourage greater competition and price transparency. We could consider targeted public options or subsidies.

Those approaches can be debated individually without requiring the federal government to assume responsibility for financing nearly everyone’s medical care.

The Bottom Line

Medicare for All sounds simple because the phrase hides the most difficult part of the proposal: paying for it and administering it.

The wealthy can certainly be taxed more if voters and Congress decide that is appropriate. But “tax the billionaires” cannot by itself finance a permanent government program requiring trillions of dollars in additional federal resources. Eventually, Medicare for All becomes a question for ordinary Americans: How much more are you willing to pay in taxes in exchange for having the government finance your health insurance?

Some Americans might decide that the tradeoff is worthwhile, particularly if higher taxes replace premiums and substantial out-of-pocket expenses. Others may prefer a system that preserves private coverage and consumer choice while providing targeted assistance to Americans who genuinely cannot afford health insurance.

That is the debate we should be having—not whether billionaires can somehow make health care free for everyone else.

Stuart Atkins

About the Author
Stuart Atkins is a retired marketing professional with over 25 years of experience in the high-technology industry and a former adjunct professor of marketing at Cal State Fullerton, where he taught for 17 years while also operating a small digital marketing agency. He holds an MBA and two degrees in theology and has written books on business and theology. He writes on Christian apologetics, history, economics, and worldview issues, drawing on both academic study and decades of professional experience. He is the founder of ChristianProofs.com and recently released a historical time-slip novel, Lion Mountain: A Legacy Across Time: https://christianproofs.com/lion-mountain-a-legacy-across-time/