If you haven’t been paying attention, there has been a lot of talk about something called Medicare For All. We here at Why You’re Broke believe in avoiding politics because we don’t want to become one ofthosesites. However, as election season picks up, we’ve noticed more and more people asking about Medicare For All and what they should do in preparation for it. Despite Medicare For All being born from politics here are 4 ways it will impact you financially.
Before we begin, we should have a bit of an introduction to different health insurance terms:
Premium: what you have to pay each month
Out of pocket costs: Any additional costs you have to pay in addition to your premium
Deductible: a type of out of pocket cost that you must pay before your insurance starts paying
Coinsurance: a type of out of pocket cost that you must pay after your deductible (usually a percentage)
Co-pay: a type of out of pocket cost that you must pay when you visit your doctor
Coverage: What your insurance covers. This can speak to the type of procedures and/or how much you pay for your insurance.
Health Savings Account (HSA): This is a health spending account that is usually paired with a high deductible health plan. For more information check out our previous post on HSAs.
Introduction to Medicare For All
If you’ve been living under the rock, the concept of Medicare For All has been around for quite a while. However, Medicare For All in its current form didn’t start picking up speed in 2016 and has become quite a hot topic as seen by Google Trends.
So What Does Medicare For All Do?
To overly generalize: What we do know based on the stances of different candidates is Medicare For All will attempt to provide health insurance to people who don’t currently have health insurance. The problem is we don’t know very much after that. Medicare For All is a political idea and the problem with all political ideas is there isn’t a lot that we can pull out from other than a phrase that the average American will love. Even the person who has been pushing Medicare For All ironically gives very general points on their site under the Details portion.
The differences of Medicare For All and Medicare For All Who Want It
Medicare is given to everyone. This means people who currently have other types of health insurance would lose their health insurance and go on Medicare instead. Everyone pays taxes into the system and there is one insurer (Medicare) This is what people call a single-payer system and is similar to a Canadian health system.
Medicare For All Who Want It
Everyone who likes their current health insurance will get to keep their health insurance. However, for anyone who cannot afford their current health insurance, they are able to enroll into Medicare. Medicaid and the healthcare exchanges would likely be done away with. This type of system would be similar to a Singaporean type of health insurance system.
1. Medicare For All Costs, But How Much More You Will Depends. You Will Likely Pay Higher Taxes, But How Much?
You will likely pay higher taxes if any form of Medicare For All passes, but do we know how much? Unfortunately, we don’t know exactly how much until we know the finer details. However, we can draw comparisons to other countries’ taxes to ours (Medicare For All – Canada; Medicare For All Who Need It – Singapore). In the situation that a Medicare For All type of bill passes Canadians average about twice as much taxes than Americans. That extra tax money for Candian go to paying for their healthcare system. Just for the sake of perspective, a family of four is estimated they pay $11,786 for healthcare. In the situation that a Medicare For All Who Need It is passed, taxes will likely go up some. Based on the Singaporean tax brackets, the increase will likely amount to a small increase. This is likely due to the fact that Americans pay with their taxes on a healthcare system that is somewhat similar to the Singaporean system.
2. You Will Likely Pay More Out Of Pocket Spending with Medicare For All
Whether you hated or loved Obamacare/Affordable Care Act (ACA), a fact is you are paying more for less insurance. The reason why that occurred is 2 reasons: 1. the ACA enrolled more lower-income Americans (using government subsidies) into health insurance. Lower-income Americans usually have more health problems which increases the cost to insurers. 2. The ACA required most people to pay the same price regardless of their health status, which causes everyone to share more the cost of having unhealthy Americans enrolling. Insurers typically attempt to increase deductibles and maximum out of pocket rates before increasing premiums. Similarly, for both versions of Medicare For All, Medicare users will likely see higher deductibles and other out-of-pocket costs. With Medicare For All Who Want It, depending on how Medicare For All Who Want It is implemented, your private insurance might be better since there are fewer sick people.
3. You Will Likely Have Worse Health Insurance Than What You Have Now
For similar reasons (more sicker people joining insurance) you will likely have worse coverage if you have Medicare in either version of the new systems. Similar to raising deductibles and out-of-pocket costs, insurers try to keep premiums low by giving less coverage. Additionally, in most other countries that have a system similar to Medicare For All have a government bureaucracy that determines certain procedures they won’t pay for. More often than not, these procedures are seen as not providing enough use for the amount of money that is paid. Any type of procedure that is not covered you would need to pay by yourself without the help of insurance. With Medicare For All Who Want It, you will likely have the same amount of coverage now.
4. For Medicare For All Only: You Might Spend Less Money On Premiums Overtime.
The one major advantage of Medicare For All (not Medicare For All Who Want It) is the ability to have one entity control all costs. This allows stronger negotiating power by the government for lower costs. This means the government as a whole can negotiate for lower prescription costs. In addition, the government would be able to contain costs. For instance, back surgeries are commonly held up as unnecessary surgeries. This is because most back surgeries provide little pain relief, but more importantly, is usually caused by being too heavy. Under a Medicare For All system, people with back pain would likely be required to lose weight before ever considering back surgery as an option.
The bottom line: Medicare For All Likely Won’t Pass Anytime Soon
For some people Medicare For All sounds like a great option, while for others it sounds absolutely horrendous. Let me let you in on a secret, Medicare For All likely wouldn’t pass anytime soon. Medicare For All Who Want It, might have a good chance of passing, and it will not likely impact you much (other than a slight increase in taxes). The problem with Medicare For All is it requires a lot of political push to make a major change in how health insurance is done. This includes doing away with the entire health insurance industry! The only situation where Medicare For All could possibly pass is in a major economic downturn. At that point you probably have more problems than paying a higher premium.
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