The Perversity of Medicare for All

Another nugget from Jonathan Lipow’s book Public Policy for Progressives.

I’ve posted three times now on Lipow’s book (here, here, and here). One thing I like a lot about Jonathan is that although he’s a progressive, he’s also an economist. And he doesn’t leave his economics at the policy door.

Here’s an interesting insight about Medicare for All as a solution to health care spending.

He writes:

One hint that Medicare is part of the problem and not the solution is that no American below the age of 65 is on Medicare, and the US spends only moderately more per person on healthcare for these people than other OECD countries. Meanwhile, all Americans above the age of 65 are on Medicare, [DRH note: not quite true. My wife and I are on Medicare Part A but not on the rest of Medicare. As a federal retiree, I retained my employer-provided health insurance] and America’s healthcare spending per person for this group far exceeds that [of] other OECD countries. Formally, that doesn’t prove anything, but where there is smoke there just might be a fire–and Medicare is shrouded by a huge plume of dense smoke.

Later he points out:

The first change that the “Medicare for All” proposal would make to traditional Medicare is to eliminate all co-pays, deductibles, and premiums. That would convert Medicare into a program very similar to the extravagant “all expenses paid” FFS [fee for service] insurance policy studied in the RAND experiment. Recall that the experiment found that “free FFS” insurance ran up bills by 30%, while achieving only negligible benefits in terms of health. Would something similar happen if we adopted “Medicare for All?”

 

 

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