What Medicare for All actually looks like

Yeah, I know, I’m being excessively clever, like the time in my multi-employer pension plan rabbit hole series (to be revisited soon!) that I proclaimed Central States to be fully-funded, because, in addition to the troubled, nearly-insolvent plan by that name, another plan with the same exists, is 108% funded, and offers some instructive comparisons.

And with respect to healthcare, too:  every Democratic presidential candidate and all manner of interest groups have proposals for “Medicare for All,” though, by and large, they don’t actually intend to simply provide the same benefit provisions as Medicare includes (Part A deductibles, Part B coinsurance, Part C Medicare Advantage, Part D drugs) to the under-65 American population, but have concluded that it’s a way of speaking about a public healthcare system/single-payer system that generates more positive polling than the words “public healthcare system” or “single-payer system.”

A recent article that came across my twitter feed purports to be “The Only Guide to ‘Medicare for All’ That You Will Ever Need” and differentiates between what it deems to be the “bad” M4A bills, which allow some sort of buy-in to Medicare or Medicaid or another “public option,” and the “good” M4A bills.  To meet author Timothy Faust’s requirements, such a program must compel all residents to participate, ban any sort of private health insurance, and cover every form of health/medical care, including “medical, dental, mental, vision, reproductive, long-term, and more,” and Faust notes that “long-term” encompasses all forms of elder care, including in-home services; the system’s expenses would be managed by “negotiation” (which the article itself makes pretty clear means dictating prices to providers).

And Faust acknowledges that this exceeds the norm in the rest of the world, but makes the expansive claim that “we are capable of, and should, provide a higher standard of care than any currently-existing single-payer program on the globe.”

But it does matter what happens elsewhere.  It is important to understand what “universal healthcare systems” actually look like in the rest of the world.  In a prior article I shared an OCED chart on health care expenditures in developed countries, split by payor, and made some general comments on a number of countries.

So — getting back to my title — there is a real “Medicare for All” system in the world today, because “Medicare” is the name Australia gives its public healthcare system.

And according to that chart, Medicare covers 67% of healthcare costs.  Who pays the rest?

20% comes from out-of-pocket charges.  10% comes from private health insurance, which nearly half (46%) of Australians elect.  And 2% comes from “other” sources.

Here’s the scoop:

Australian Medicare covers public hospitals and doctor’s visits, as well as x-rays and other diagnostic tests, surgery, eye exams, some dental surgery, at a rate of 100% of the scheduled fee, for general practitioners and 85% of the scheduled fee for specialists.  Doctors may choose to accept these rates as payment in full and bill Medicare directly, or if they charge in excess of these rates, bill patients directly, who then seek reimbursement from Medicare (for instance, through a mobile app) for the covered amounts, and pay the excess themselves.  Medicare does not cover ambulance services, most dental care, most therapy services, glasses, hearing aids, or home nursing.  Drugs are also only covered with a patient cost-share.

Private health insurance is a very popular option to cover these additional charges.  In addition, Medicare-only patients cannot choose their own doctors, but private health insurance provides this option.  Private health insurance also affords patients the ability to have a private room rather than a multi-bed room (shared with as many as five others), and to receive treatment, in general, at a private hospital, with charges equivalent to what public hospitals would cost, covered by Medicare, and the rest paid by the insurance/out of pocket.  Finally, private health insurance allows patients to skip waiting lists.  For example, public patients waiting for knee replacements waited for 203 days on average, but everyone else had a wait of 67 days.  An Australian I know shared his personal experience when I said I was drafting an article:

The private insurance is essentially to get you to the front of the queue for elective or non essential surgery, or to get you a private room in a private or public hospital. It also helps a lot with the stuff that isn’t covered by Medicare.

As an example our son was 18 months old and barely saying a word. We applied through the public system for speech therapy but it was a 3 to 6 month waiting list. So we went to a private speech therapist and got seen within a week. The private health insurance covers part of the cost of speech therapy. In the end he was seeing both speech therapists because one was free on the public system and the other we weren’t out of pocket all that much for.

But as much as private insurance systems are reviled by single-payer promoters in the U.S., in Australia, the government encourages its citizens to purchase private health insurance, through the Medicare Levy Surcharge, an extra tax of 1% of income or more for anyone with over AUD 90,000 (about USD 64,000) in income without a private insurance policy, and through the Private Health Insurance Rebate, a means-tested government subsidy of 26% of the premium, for those with less than AUD 90,000 and younger than age 65, increasing to 36% for the older 70s, and phasing out to 0% at AUD 140,000.

One other noteworthy element of the Medicare system is that the government wholly circumvented any constitutional battles similar to what we’ve faced, by actually amending their constitution in1946, to give their federal government the power to provide hospital and medical services.

(Information on the system can be found at the following links:  PrivateHealth.gov.au, the Australian Government Department of Human Services Medicare website, and Wikipedia. I also referenced two links provided by my Australian friend, “Benefits of Private Health Insurance,” and “Do you really need private health insurance? Here’s what you need to know before deciding,” which spell out some of the practicalities from an Australian perspective.)

This is the primary point I want to drive home:  the dream of having the government pay for all healthcare consumed by its residents simply doesn’t exist.  Markets for private-sector health insurance continue to exist even in “universal health care” countries, for multiple reasons.  To refer back to the OECD chart, even among the most generous countries, government spending seems to top out at 85%, almost as if there’s some sort of economic law that means it’s simply not possible to exceed this.  (And there is likewise not a communist utopia to point to, either, though that’s a subject for another time.)

“Medicare for All” advocates think this is a bad thing. In fact, it’s not.

Now, for the time being, I’m going to sidestep the question of whether any form of “Medicare for All” or “enhanced Obamacare” or whatever you’d like to call it, is a good idea in general.

However, if we take a shift to a more state-paid system as a given, a hybrid system solves many problems with respect to wait lists, rationing, etc., while still providing a base level of care to all.

Yet, at the same time, the demon of path dependency may well prevent it — not only in terms of the existing healthcare infrastructure (e.g., the new hospitals with all-private rooms, and semi-private the norm everywhere) and the untold number of employees who would not stand, politically, for losing their jobs or having their salaries halved, but also because of the expectation we have that, whatever might ail our system, wait lists or determinations that a procedure is not cost-effective are too high a price to pay.

Image: http://www.dodlive.mil/2017/10/03/usns-comfort-how-the-hospital-ship-helps-during-disasters/(U.S. Air Force photo by Staff Sgt. Courtney Richardson).  public domain.

Fun fact: the rest of the world does not have “Medicare for All”

“Medicare for All” is in the news again, with Kamala Harris’s statement yesterday that she backs the proposal, even to the point of eliminating private insurance altogether. And this topic always brings up comments along the lines of, “in every other civilized countries, the government provides healthcare for everyone.” So, because in my old job I worked not only with pensions but also with employee benefits, comparatively across countries, I wanted to dig out an article I wrote at Patheos a couple years ago which I think is still relevant. I called it “Your handy-dandy guide to health care outside the United States.”

The original article referenced a 2012 OECD table on public vs. private healthcare spending. Here’s that table, updated to 2015, from the OECD publication, “Health at a Glance“:

OECD Health at a Glance

Now, to be honest, I’m not certain what’s going on with the differention between “government schemes” and “compulsory health insurance” for the United States, this is the first year that they’ve split these categories out this way, and the U.S.-specific report doesn’t explain further. It is not, however, the case that the 23% refers to exchange-purchased or Obamacare plans, because in the old 2012 chart, pre-Obamacare, the numbers were split in much the same way. My guess is that this may be treating Medicare as its own independent program.

There are also countries showing very small percentages of “voluntary health insurance” where this doesn’t seem right relative to my understanding and I’m wondering if some of this is classified as “out of pocket.”

But here are some other noteworthy countries (text cribbed from my prior article and updated):

The U.K.

Yeah, 20% non-public spending isn’t huge, but it’s not nothing:  middle-management and higher-level employees are provided private health insurance by their employers.  Not for them the NHS horror stories!  They have access to private clinics and treatments, and “upgraded” spots at public hospitals, whenever NHS is insufficient, has too long a wait list, doesn’t cover a treatment, or is just generally icky.


They’re actually the most Obamacare-ish country:  a standardized basic level of private insurance is mandatory, with subsidies for the poor.  No practice of employer provision — you just buy it on your own.  The catch?  They’re the second-highest-spending country, and are struggling with growing costs.


Health insurance is managed through regional quasi-public entities, which set (very low) reimbursement rates.  How low?  When we lived there, there was a protest march by doctors upset at their low pay.  But hey — medical school was free.  It’s paid for by a payroll tax.  But if you make over a given income level (I think about 50K-ish), you have the option to opt out of the payroll tax and buy your own insurance, with the stipulation that you’re then obliged to continue buying private insurance, rather than switching back and forth.  In addition to potentially cheaper coverage, private insurance gives you such benefits as top-tier doctors and the ability to select a private, rather than three-bed room at the hospital.


Employer-provided health insurance is customary (and I think not just for management but in general); it picks up the not-trivial copays.  In addition, the reimbursement levels provided by the national health insurance are low enough that providers often have a surcharge which the private insurance covers.  This system of surcharges at the “good doctors” and private clinics, paid for by private health insurance, is, it seems to me, fairly common, say, in Italy, as well.


Historically, insurance was not permitted to pay for any service that the national healthcare system covered, so that you couldn’t use it to get coverage at a private provider to skip waiting lists.  It seems to me that I read recently that this has changed.  In any case, what private health insurance does do is cover everything that the national healthcare system doesn’t:  prescription drugs primarily, and upgrades from ward to semi-private or private rooms, and various sorts of therapists and other providers that aren’t covered otherwise.  In addition, private insurance covers out-of-country treatment, and policies specify either all out-of-country treatment or only in cases of emergencies.


Again, single payer, but with a policy of encouraging upper-income folk to buy private insurance — it doesn’t allow you to opt out of payroll tax contributions, but does give you a modest rebate.


Yeah, they’ve got a large percentage of private spending; it seems to me that this is because the State healthcare provision has a lot of holes, copays, etc., which private insurance, routinely a part of employee benefits, covers.


Strictly speaking, there’s comprehensive medical coverage.  But in practice, well, it’s like being obliged to use Cook County hospital for everything.  Again, salaried employees expect to have insurance provided by their employer, to get them access to private, first-world hospitals.  Same with Brazil, which is a huge health insurance market for white collar employees,  and I think even blue collar employees at large employers, in order to escape the poor quality and wait times of the “free” national healthcare system.

One more, also not on the table — Singapore

Singapore’s system gets frequent mention by supporters of “market-based” systems, because one component is a “savings account” similar to the HSA savings accounts that accompany high-deductible plans in the U.S.  See this older post, for instance.  The reality is that “universal” coverage has a lot of copays and employer-provided insurance fills these gaps.

So there you have it:  a world tour of health insurance.

http://www.dodlive.mil/2017/10/03/usns-comfort-how-the-hospital-ship-helps-during-disasters/(U.S. Air Force photo by Staff Sgt. Courtney Richardson)