“Medicare for all who want it”. Part II — The Good, the Bad, and the Ugly

Leonard Kanterman
Nov 3 · 6 min read

In Part I, I discussed and hopefully demonstrated why and how our current system of paying for healthcare is badly broken. I would estimate that about 20% of non-Medicare age people in America like their current health insurance plan, and that almost all of them are people who work for large corporations, unions, or government entities. These people get deals from the health insurance companies that are just not available to rest of us mere mortals, and have most or all of their costs paid for by someone else.

I will refer to my own experience obtaining health insurance as a further example of how our current system is broken. When I retired early (age 60), I knew I had Obamacare as an option. At that time (2013), I had a choice of 6 or 8 companies (big names like Anthem, Cigna, Aetna and Humana) and the cost was about $400 a month, less than keeping on my prior employment-based coverage through COBRA. In August of 2018, before I turned 65, I had 3 options: one had a restricted list of doctors and hospitals that didn’t include mine, one was a plan run by the major state of Ohio Medicaid insurer (and treated their Obamacare customers as if they were on Medicaid), and one Ohio-only plan. All the “big names” had dropped out of offering Obamacare insurance. My coverage now cost $850 a month, had a $5000 deductible for serious illness/hospitalization/surgery, and a boatload of restrictions and requirements.

Now, In September 2018 I turned 65. On Medicare I could see any doctor anywhere, with minimal restrictions. Medicare, which covered 80% of my costs, cost $150 a month and my silver-plated supplement cost another $150. If I couldn’t afford that, I could have joined a Medicare advantage HMO type plan, with restrictions but at $0 above the cost of Medicare.

Now, my anticipated utilization and costs were exactly the same in September at age 65 as they were in August at 64 and 11 months. So why did August cost me $850 and September $300 (and could have been $150 had I been willing to take the restrictions of a Medicare HMO). Because, at age 65, I “magically” joined a group that, because of its size was offered a deal I couldn’t get 1 month earlier.

Now, part of that deal is that Medicare is subsidized by taxpayer dollars. This is partially addressed by charging high-income retirees more for Medicare. But as big a piece is that Medicare can buy care and administer payments much more cheaply than private insurance.

Medicare has an administrative cost of about 2.5%; and it’s not for profit. Private health insurance has an administrative cost of about 12.5%, and that includes profit for the company. And the main function of “administration” is interfering with the doctors’ and hospitals’ provision of care in an attempt to save money. So that is 10% of every healthcare dollar not being spent on doctors, medicine, or treatment, but on insurance company operations to interfere with your care.

Now, the 12.5% figure is an average. It’s less for those big companies and unions, and may be closer to 20% or even higher for small companies.

It is my estimate that, if Medicare for all who want it was available and implemented properly, at least half of the population would leave their current healthcare for that option. Part of the transition would be insuring that companies keep paying what they are currently paying privately into the new government system. To do this, I would propose an employer tax, similar to the employer contribution for social security. A company would get credit towards the tax for money it spends on private insurance. Since it costs the companies the same either way, the employee then gets to make the decision, which is a better deal for me, private or government. And because the government option will have lower administrative costs and doesn’t need to make a profit, and because such a massive plan would get better rates than ANY private insurance could, many if not most would opt into the government plan. Over time, many companies will be paying for more care for more people by paying the same amount as they now pay private companies. Note that under the “Kanterman plan”, NO ONE is forced to give up their private insurance IF THEY WANT TO KEEP IT! Over time, I do believe, Medicare for all who want it will naturally evolve into Medicare for all, as private companies wont be able to compete. But any new system will be imperfect at first, so let the bugs be worked out over time instead of forced on people who don’t want it in the first place.

So the only remaining issue under Medicare for all who want it is, how do we pay for those people who have NO insurance now, who do not have health insurance through their work. Now, as a society we have two choices. We can say to people, as we do now, you have no medical care available if you can’t pay for it unless it’s an emergency, and then we (as a society) will pay the hospital to provide you with care in the most expensive and least efficient manner possible. Or we can offer to pay more care that, per episode, is cheaper and more effective, and may prevent some of the outsize expenses caused by delays in needed treatment. The example I like to use is, we will not as a society pay $50 for an uninsured person to go to an Urgent Care, but we WILL pay $500 for them when they go to the Emergency Room. And some of those people who could have been treated as an outpatient for $10 worth of antibiotics for bronchitis will now need to be admitted to the hospital for an episode of pneumonia that costs $100,000.

And if you DON’T know we are paying for that care now, you SHOULD! Hospitals are reimbursed out of tax money for caring for patients who can’t afford to pay. Urgent Care can turn away a patient who can’t pay, but hospitals MUST treat them if they show up. Yes, the hospital can technically bill the person for the care they are given, but if that person has few assets, they don’t (or can’t) pay and the hospital eats that bill.

Now, I believe in individual responsibility. People who don’t have health insurance through work but CAN afford to pay some or all of the cost should be required by law to buy it. These people will certainly use the facilities available if they have a catastrophic event (like a car accident), so they should pay something towards the cost to insure those facilities are available if and when they need them. This was initially the concept under Obamacare but it failed for 2 reasons. First of all, since there was no government option, private health care was too expensive for people of limited means. Since they felt it would be unlikely they would need it, and if they did have a catastrophe they wouldn’t be paying for it anyway, they voted with their feet and didn’t sign up. And the tax penalty for not signing up was set too low. It was a “bad deal” for low income workers to sign up for “mandatory” health insurance.

This problem can fixed to a certain extent by requiring all employers, including those who currently pay nothing towards their employee health insurance (and use loopholes like hiring part time or contact employees to avoid paying anything), to pay into the social-security like employer contribution. And there also should be a sliding scale payment, based on income, that individuals must pay in, with the penalty for opting out being high enough to discourage it. (For example, the Obamacare penalty was $500; with health insurance costing over $2000 a year for young, healthy people, many opted out. If the penalty was $1000 or more, those people would opt in.)

Not perfect, but it’s a start.