‘Medicare for All’ will save trillions. Just ask the Kochs
Years ago, I was asked to advise one of the country’s most powerful CEOs on his corporation’s health and benefits plan. In a meeting with staffers, he raised one confusing and complicated idea after another. When I asked what he was trying to accomplish for his employees, he said: “I want to give them less, and make them think it’s more.”
That’s our healthcare system in a nutshell. This year, according to the Milliman actuarial firm, healthcare will cost nearly $30,000 for an average American family of four with employerbased insurance. The family will shoulder $12,378 of that cost directly through premium payments, copayments and deductibles. It will also lose income, since these rising costs will prevent employers from paying higher wages. The individual health insurance market is even more expensive, with a baffling maze of options and unpredictable costs.
Fortunately, the political tide is turning. Most Americans now support the concept of “Medicare for All,” a comprehensive, government-managed program that builds and expands on the successes of today’s Medicare. Sixteen Democratic senators have signed on to Sen. Bernie Sanders’ Medicare For All Act, known as M4A.
That’s a threat to billionaires like Charles and David Koch, the fossil-fuel tycoons who have already spent hundreds of millions of dollars undermining support for government at all levels.
The Kochs have a clear challenge: How do you undermine growing support for an idea that will improve the health and finances of most Americans? They’re trying to invert the formula that CEO gave me years ago: Take a plan that gives us more, and make us think it’s less.
That’s where Charles Blahous comes in. Blahous, a longtime Republican aide, is affiliated with the Koch-funded, right-wing Mercatus Center. His attack on M4A has been widely reported as predicting an “astronomical” cost. Blahous is entitled to his conservative ideology, as discredited as I believe it is. My biggest problem is with his math, not his mindset.
Blahous says that M4A will add $32.6 trillion to government spending over a 10-year period. That number is overstated, and ignores the “invisible taxes” Americans currently pay to private corporations every year.
Proposed funding sources for M4A include a 4% income tax, which means a family of four earning $75,000 per year would pay an additional $2,000 in taxes after taking a standard deduction. But that family would no longer pay an invisible tax of $7,674 — the average premium paid to private insurers — for an immediate savings of $5,674. In addition, it would no longer have to pay an average $4,704 in out-ofpocket costs. That’s a savings of more than $10,000 per year.
Who wouldn’t take that deal? Granted, the $10,000 average includes the costs of expensive care that families don’t need every year. But at a time when twothirds of American households say they don’t have $1,000 for an emergency, it’s protection well worth having.
Employers win, too. They are currently paying nearly $16,000 on average for the family in our example. If that’s replaced with a proposed premium based on 7.5% of salary, that figure falls to $5,625. (Sanders has identified other potential funding sources.) Economists have concluded that some of that savings will translate into higher wages.
Blahous argues that M4A’s elimination of out-of-pocket costs and inclusion of hearing, vision and dental care will increase the use of these services. That’s true. But by my interpretation of available data, Blahous overstates this increase. Most Americans aren’t pining to spend more time in the doctor’s or dentist’s office. And he fails to accurately weigh the value of improved productivity and well-being for tens of millions of Americans.
Blahous correctly notes that workers’ wages, and therefore tax revenues, will rise, but that’s a major win for the plan.
Blahous understates drug cost savings under M4A. Prescription costs are expected to reach $360 billion this year, with a current inflation rate of 6%. Unchecked, these costs will significantly exceed $4 trillion over a 10-year period. Pharmaceutical prices in the United States are three times higher than they are in Britain. That means we can reduce these costs by significantly more than Blahous proposes.
Blahous also understates the potential for administrative savings. As a former designer and manager of large-scale bill payment systems, I am certain that much greater savings can be achieved through better fraud detection and improved economies of scale.
Nevertheless, Blahous estimates that M4A will save more than $2 trillion by 2031. I believe that figure will be much higher. Either way, it’s clear: Americans can’t afford not to have Medicare for All.
M4A’s opponents routinely use large, intimidating numbers to make it appear unaffordable. These figures must be counterbalanced by the even larger costs of doing nothing.
The human toll is the greatest cost of all. Matt Bruenig of the Public Policy Project estimates that if M4A is not passed, 320,000 people will die over a 10-year period. We cannot let that happen. Nor can we forget the millions of people who needlessly struggle with illness and disability because they lack adequate care.
We can have more, and better, healthcare if we stop settling for less.