Why Medicare-for-All is Best for America and Why Insurance Companies Hate It

Bernie Sanders and other lawmakers have proposed that America expand Medicare to cover all Americans. This is a very interesting idea. It would lower the cost of healthcare and it would ensure that every American citizen has access to affordable healthcare.

Medicare is a system that pays part of the medical bills for Americans age 65 and older. Medicare enrollees get their medical care from the doctors and hospitals of their choice just like everyone else. 55 million Americans have part of their medical bills paid by Medicare right now.  Medicare-for-all  is a proposal to let Americans of all ages enroll in Medicare. 

 Americans now pay for healthcare four different ways:

1.  A few Americans just pay cash for their medical expenses without assistance from health insurance or a government program.

2. Working Americans are usually enrolled in a private health insurance plan. Private health insurance may be obtained through an employer or it may be purchased by individuals. Obamacare is made up of private insurance plans.

3. Americans 65 and over use Medicare to pay for their healthcare. Medicare enrollees pay a monthly premium and deductibles and co-payments, and Medicare pays the rest of their medical bills. Medicare is funded by payroll taxes of 1.45% on employees and employers. There are now 55 million Americans enrolled in Medicare.

4. Some low income Americans qualify for Medicaid which is a state government program that pays for basic healthcare for those who qualify. Medicaid rules vary from state to state.

 The proposal would not affect how doctors and hospitals perform medical care and it has nothing to do with medical research and developing new medicines and treatments. It is just a better and more efficient way for Americans to get affordable healthcare. 

WHAT IS MEDICARE?

Medicare was enacted by Congress in 1965 to help pay healthcare bills for Americans who are 65 and older. Medicare patients use regular doctors and hospitals.  Most  doctors and hospitals in America accept Medicare.  Medicare is paid for by a combination of monthly premiums, deductibles and copays paid by Medicare enrollees, plus a 1.45% payroll tax. (There are no “Medicare clinics” or “Medicare Doctors”. Senior citizens use the same doctors and hospitals as everyone else.)

 Expanding Medicare to cover more Americans involves expanding a system that has worked for over 50 years that all doctors and hospitals and millions of Americans are familiar with. Medicare works.

No Conflict of Interest

 Under Medicare the actual work of processing claims is performed by private contractors that bid to do the administrative work on competitive contracts. Medicare contractors receive a few pennies for each claim they process. The contractors do not make any extra money if they deny a claim. This eliminates the conflict of interest that private profit-seeking insurance companies have with their customers.

Private Insurance Companies Can Compete For Medicare Business

Medicare includes an option called Medicare Advantage where private insurance companies offer insurance plans to compete with standard Medicare. Basic Medicare Advantage plans cost the same as standard Medicare. Insurers also offer enhanced Medicare Advantage plans that provide richer benefits than standard Medicare for enrollees willing to pay a higher monthly premium. About 30% of Medicare enrollees decide to enroll in a Medicare Advantage plan instead of standard Medicare. Enrollees can change their plan every year.

 

WHAT IS MEDICARE-FOR-ALL?

Medicare-for-all is a proposal to expand Medicare to cover American citizens of all ages. It would replace most of the private individual and group health insurance plans and eliminate all of their different rules, procedures, forms, schemes to deny claims, and the provider networks that limit patients choices of doctors and hospitals. Under expanded Medicare every American that enrolled would be covered by standard Medicare or an optional Medicare Advantage plan to pay their medical bills.  Most doctors and hospitals in America accept Medicare.    

Any change to Medicare must not reduce benefits or increase costs for existing Medicare enrollees. 

  

HOW MUCH WOULD IT COST?

The premiums that individuals and employers now pay to health insurance companies are more than enough to pay for Medicare-for-all to cover those same individuals. Medicare costs less that than private insurance because Medicare does not collect money for profits, executive salaries, and advertising. Medicare administrative costs are only 2%, whereas private insurance administrative costs are 18%.

 Medicare users would most like pay a monthly premium plus deductibles and copays under Medicare-for-all.  The final details of how Medicare-for-all would be implemented need to be discussed and decided in Congress. 

 

WHY MEDICARE FOR ALL IS BEST FOR AMERICA

Relying on Medicare to pay for medical care rather than the assortment of private insurance plans would improve American citizen’s access to affordable healthcare because it would:

1. Cost less due to the elimination of insurance company profits and executive salaries.
2.  Cover everyone including individuals with preexisting conditions.
3.  Eliminate the conflict of interest that insurance companies have.
4.  Eliminate the insurance company tricks and schemes insurance companies use to not pay claims.

 

AMERICAN HEALTHCARE COSTS

 The United States pays far more per person (and total dollars) for healthcare than any other nation on earth. In 2014 America paid $9,024 per person for healthcare, compared to $4,506 per person for Canada, $3,971 for people in Great Britain, and an average of $3,620 for all developed nations. No nation on earth pays more for healthcare than America.

 Citizens in the United States do not live longer or stay healthier for the extra money they spend on healthcare. Medical practice standards are the same in all developed nations of the world. The procedures, treatments, and medications available to Americans are the same ones available to citizens in Canada, France, Great Britain and all other developed nations.

 The extra money that America pays for healthcare goes for excessive profits. America has more healthcare billionaires than any other nation on earth. America cannot compete in the world if we let healthcare costs keep rising far above what the rest of the world pays. 

  

MEDICARE IS MORE EFFICIENT THAN PRIVATE HEALTH INSURANCE

This may seem impossible but it is true. Medicare pays claims more efficiently than private insurance companies because Medicare does not have to collect money for corporate profits, income taxes, or executive salaries and Medicare does very little advertising compared to private insurance companies. . Insurance companies spend about 18% of revenue on administrative costs. Medicare spends only 2% for these costs.

 Medicare claims are processed by government contractors who bid very competitively for the business. As a result Medicare only pays a few pennies to process every medical claim. The contractors are paid for the number of claims they process and they do not get to keep any extra money when they deny a claim. 

 

MEDICARE LETS YOU CHOOSE YOUR OWN DOCTOR

 “Do you accept my health insurance?”

 Every health insurance plan restricts which doctors and hospitals you can use.  Health insurance only pays the bills for doctors and hospitals in the provider network. They will not pay your medical bills if you use a doctor or hospital that is not in the provider network.  

Medicare is accepted by almost all doctors and hospitals in America. Obviously there are some doctors who do not accept Medicare such as plastic surgeons and others who provide optional medical services that are not covered by Medicare. 

HEALTH INSURANCE CONFLICT OF INTEREST

When a health insurance company refuses to pay a claim the money they save is profit. This means that health insurance companies have a conflict of interest between their duty to maximize profits for investors and their obligation to pay customers’ medical bills. Most American adults have had the experience when their health insurance company denied a medical claim with some insurance company the excuse (“Exceeds reasonable and customary amount”, or “You did not obtain pre-authorization for the treatment.”)

DENIED HEALTH CLAIMS CAN LEAD TO PERSONAL FINANCIAL DISASTER

When the health insurance company denies a medical claim it can have a catastrophic effect on the financial situation of the patient and his family.

 At the time the patient decided to go get medical treatment they believe that the insurance company will pay the bills. When the insurance company denies the claim, the medical treatment has already been provided and the patient is unexpectedly obligated to pay all of the medical bills using their own financial resources. Sometimes denied claims can impose bills on a family that exceed their ability to pay, resulting in the loss of all of their liquid assets. It made matters worse when in 2006 big business lobbied Congress to change bankruptcy laws to make it harder for individuals to dismiss medical bills through bankruptcy. 

INSURANCE COMPANY TRICKS AND SCHEMES

Over the years health insurance companies have engaged in countless schemes and strategies to collect premiums and avoid paying claims. Here are details for some of the worst scheme (where they were caught).

 

The UnitedHealthcare Group Scams (NYSE:UNH)

UnitedHealthcare Group (NYSE: UNH) is the largest health insurance company in America. To understand just how ruthless and unethical some health insurance companies can be you need to know about the illegal things that America’s largest health insurance company was caught doing.

 Back-Dated Stock Option Compensation Scam

 In 2006 the CEO of UnitedHealthcare Group was a man named William W. McGuire. In 2005 Dr. McGuire was paid $125 million as CEO of UnitedHealth Group.  In 2006 the SEC began investigating Dr. McGuire and several other UnitedHealthcare executives and found that they participated in a scheme to back-date stock option compensation awards to steal from investors and fraudulently enrich themselves. Not only did Dr. McGuire created the illegal scheme to cheat and steal millions of dollars, he persuaded UNH director William G. Spears, General Counsel David J. Lubben, and several other UNH senior managers to go along with the scheme and illegally enrich themselves.

 Under pressure from the SEC and prosecutors (that is, the government). McGuire resigned from UnitedHealth Group but he was still paid about $1 billion in severance pay; the UnitedHealth Group board of directors apparently decided that McGuire’s behavior was not bad enough for him to lose his severance pay. McGuire was never prosecuted.

 Think about that:  One crooked senior manager was paid a billion dollars in one year by the UnitedHealthcare corporation. 

 

The “Reasonable and Customary” Scam

Did you ever have the health insurance company deny your medical claim because they said the amount that the doctor charged exceeded the “reasonable and customary” amount?

In February 2008, New York State Attorney General Andrew M. Cuomo announced an industry-wide investigation into a scheme by health insurers to defraud consumers by manipulating reasonable and customary rates. Cuomo found that incorrect health care cost records had been stored in a database maintained by a company named Ingenix (that was created by UnitedHealth Group) so that they could be used by health insurance companies as fake proof to deny medical claims. For example, if your doctor charged $65 for an office visit and that was the normal amount where you live, the insurance company would use the fake Ingenix reportto say that $20 was the reasonable and customary amount for an office visit and they would refuse to pay more than $20, so you would have to pay the remainder of the bill and the insurance company kept the difference as profit. In October 2009 UnitedHealth Group paid a settlement and agreed to shut down its fake medical cost database. 

 

WE NEED TO GET INSURANCE COMPANIES OUT OF THE HEALTHCARE BUSINESS

Now you understand why some the executives of health insurance companies will do anything to stop Americans from adopting a better system to pay for medical care, and how crooked and ruthless they can be in pursuit of their goals.

Many developed nations do not use insurance to fund healthcare because of the inherent conflict of interest and the cost of profits. America needs to get insurance companies out of the healthcare business.

WHY INSURANCE COMPANIES HATE IT

Health insurance companies have things the way they want it right now. They are the middleman in the healthcare business where they make billions of dollars from the healthcare business every year. Healthcare insurance company executives have gotten extremely rich off of healthcare, but their schemes have imposed never ending chaos, confusion, and frauds on the American people.

Medicare-for-all would disrupt this business model and reduce the cost of healthcare for Americans. Plus it would eliminate the insurance company tricks they use to deny claims and keep the premiums as profit. 

 

THE INSURANCE INDUSTRY WILL DO ANYTHING TO STOP MEDICARE-FOR-ALL

 Health insurance company executives are smart, motivated, energetic, ruthless, and they have enormous amounts of money to spend to preserve the current system. They will pay people to lie. The will publish articles full of false information. They will pay off politicians. 

 David Merritt, an executive vice president of America’s Health Insurance Plans, a lobbying group for health insurers, condemned Medicare-for-all saying:

 “Whether it’s called single-payer or Medicare-for-all, government-controlled health care cannot work. It will eliminate choice, undermine quality, put a chill on medical innovation and place an even heavier burden on hard-working taxpayers.”

​In this short statement David Merritt uttered six lies.

1) “government controlled health care” – Medicare is not government controlled healthcare.  Medicare cannot tell any doctor how to do his or her job. Medicare pays medical bills like health insurance but without all the insurance company tricks and schemes to avoid paying claims.

2) “cannot work” – Since 1965 Medicare has paid the medical bills of Americans 65 and older; it works better than private insurance, costs less, and generates fewer complaints. 55 Million elderly Americans are using Medicare right now. If it can work for 55 million elderly Americans who need a lot of healthcare, it can certainly work for the other 200 million younger healthier Americans.

3) “eliminate choice” – Medicare enrollees can use almost any doctor or hospital in America unlike insurance plans that restrict choice with their hundreds of tricky provider networks that limit which doctors and hospitals you can use.

4) “undermine quality” – Again, Medicare in no way changes the way doctors and hospitals perform medical care.

5) “chill on medical innovation” – Innovation  (new medications and treatments) are developed from medical research which is performed at universities, pharmaceutical companies, and research institutes, not at insurance companies. Switching to Medicare to pay medical bills will not affect the research institutes. This is just a scare tactic. 

6) “place an even heavier burden on hard-working taxpayers” – Medicare will cost less than private health insurance and it will eliminate the tricky scams that health insurance companies use to collect premiums and deny claims and avoid paying medical bills. In all likelihood, the cost of Medicare-for-all  will be paid in full using the health insurance premiums that employers and individuals now pay to insurance companies.

MORE INSURANCE COMPANY LIES

No insurance company spokesperson can speak up and say that the health insurance business is good for America because the truth is, utilizing profit-seeking insurance companies as middlemen to pay bills in the healthcare business is a terrible system. The fact that every developed country in the world provides healthcare for less than half of what Americans pay proves that we have a problem, and we need to change. 

To fight Medicare-for-all, health insurance companies will spread lies and propaganda to confuse and scare Americans, and they will contribute large amounts of money (bribes) to those Congressional Lawmakers who will take it and protect the insurance company profits. 

Here are some of the lies that the health insurance industry has published.

“Government Healthcare Takeover”

Health insurers use this term to try to make people think that Medicare-for-all means that they will have to go to some dreary understaffed government office on the other side of town and wait in line to see a slow-moving government doctor. It is a complete lie. Medicare-for-all would not make any change to how doctors and hospitals work in America.

“Socialized Medicine”

Medicare-for-all is a system to pay medical bills for Americans without the limitations and denied claims and other schemes health insurers use to collect premiums and avoid paying claims. Medicare enrollees pay a monthly premium, deductibles, and copayments. Government  programs that make America a better place to live are not Socialism. 

“Medicare-for-all will take away your freedom to choose your doctors”

Health insurance companies restrict the doctors and hospitals that you can use with their out-of-network provider restrictions and pre-authorization rules. Medicare is accepted by almost every doctor and hospital in America.

“You must wait 122 days to see a doctor to see if you have cancer!”

Medicare enrollees can make an appointment and see a doctor just as quickly as anyone else in America. There are 55 million retired Americans currently enrolled in Medicare. Do you think they would quietly put up with 122 day wait to see their doctor?

“Medicare is going broke!”

Medicare is paid for with a payroll tax that is 1.45% on employees and another 1.45% on employers, plus the premiums, deductible and co payments that paid by those enrolled in Medicare. There is a Medicare trust fund. Every month money goes in and out of it. 

“We will have healthcare rationing and death panels!”

Medicare has been in effect since 1965 covering only the elderly and there is no rationing and no death panels. Why would these things be added to Medicare just because we let younger, healthier people join in? This is just a lie to scare people.

“Canadians have to wait for years to get bypass surgery.”

Canadians are happy with their national healthcare system but we are not talking about adopting the Canadian system. Medicare-for-all means letting all Americans use the same medical payment system your parents, grandparents and great-grandparents enjoyed in their golden years.

“Only 30% of Doctors Accept Medicare and Medicaid”

Medicare is accepted by most doctors and hospitals in America. Medicaid is accepted by fewer doctors. 

“It Will Cost $32 Trillion Dollars!”

This misleading statement is based on a sentence in a study by the Urban Institute taken out of context. It is the total estimated cost of healthcare for all Americans over the next ten years without considering any premiums, copayments, or deductibles paid for by the patient. Medicare-for-all will cost less than the health insurance premiums Americans now pay to cover the same individuals over the same period of time. 

 

The insurance industry pays a lot of people to speak out and write articles to oppose any proposal to improve access to affordable healthcare and change the current system. Whenever you hear someone say that Medicare-for-all won’t work remember that it has worked great for American senior citizens since 1965.

What doesn’t work well anywhere in the world is using profit-seeking insurance companies to pay medical bills.  America is in last place among  nations of the world with our out-of-control healthcare costs.

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WHAT EVERY AMERICAN SHOULD DO

1. Contact Your U.S. Senators and Your Representative

Whenever the issue of health care is being discussed in the U.S. Congress every citizen should contact their representative and each senator once every week to tell them what you want. You can call their office, mail a letter, send an email, or fax a letter. I suggest you do all of these things.

You need to contact your representative and each of your senators regardless of their political party. 

 The power of democracy is that American citizens can vote representatives and senators out and replace them.

When you contact your representative or senators, tell him or her:

• “I am a registered voter and I vote in every election. I want you to support Medicare for All. Can I count on you to support expansion of Medicare to cover all Americans who can pay the premiums?”

Every American has one Representative and two Senators in Congress. There is a Representative for every 500,000 citizens, and there are two Senators for every state.

The Representative is elected every two years so they are very sensitive to the opinions of the people in their district.

Senators are reelected every six years and they become most sensitive as their time to be reelected approaches.

• You can find out the name and contact information for your U.S. Representative by going to Find Your U.S. Representative.
• You can find out the name and contact information for your two U.S. senators by going to Find Your U.S. Senator.

( You also have representatives and senators that serve in your state legislature but they are not the involved in passing healthcare reform.)

2. Vote In Every Primary And General Election

You must vote in every primary election .  Here is why.

Insurance companies are allowed to give unlimited amounts of money to U.S. lawmakers. This has allowed insurance companies to buy politicians in both parties who are dedicated to serving their interests.

Most voters never vote in primary elections. Because of this,  corporations have often been able to give big money to corporate-friendly primary candidates in both parties to overwhelm all of the other candidates in the primary election.

If you do not vote in the primary elections, the only candidates on the ballot in the general election are candidates that are owned by corporations.

We must all vote in every primary election for the candidate that promises to support access to affordable healthcare for all Americans. I switch my party affiliation as needed so I can vote in the Republican or the Democratic primary to help the candidate I want to help.

3. Register To Vote

If you do not vote, you do not count. You do not matter.

A long time ago when you registered to vote you would often be called to serve on a jury. That is not done anymore because it discouraged people from registering to vote. If you are not registered to vote, get registered now, before the end of the next week.

A Good Economy

A point of universal agreement during every election year is that we need a good economy. Voters are offered an assortment of propaganda about why each particular candidate’s agenda is best for the economy. Obviously the United States and the world have major problems with the economy. Europe and Japan are trying negative interest rates, an economic poultice that has never been tried before. And so far it is not working.

We need to first think about what it means to have a good economy, and then we can correctly evaluate how each candidate might get us where we want to be.

For Whom?

For working Americans

Those who work for a company or in their own business producing valuable goods and services for customers, a Good Economy is when working Americans have a full time job matched to their skills and abilities and they are receiving middle class wages. When everyone has middle class wages they purchase homes and lots of things for them, automobiles, travel and entertainment – things that make life enjoyable. All of these purchases generate economic activity that allows other Americans to earn middle class wages. This is the consumer economy and it makes up about 70% of all economic activity in the United States.

For professional investors

For the pros, a Good Economy is when things are set up to make the stock market go up. As the stock market goes up, stock investors get richer. Stocks go up for a lot of reasons, some financial and some emotional. Improving financial performance of publicly traded companies causes their stock price to rise. Reduction in interest rates increases the value of future cash flows which also tends to cause stock prices to rise. Emotional feelings also move the stock market; optimism about future economic conditions fuels stock price increases, whereas concerns about the future may trigger a sell-off.

For Corporations

A Good Economy is when things are set up to allow profits to increase. Profits can increase through higher prices, lower costs, or increased volume of business. Corporate profits also benefit from lower taxes.

For Billionaires

For individual billionaires, a Good Economy can mean several different conditions. Billionaires often have a large stake in a single enterprise, such as Bill Gate’s ownership of a large chunk of Microsoft, or Larry Ellison’s ownership of Oracle. Policies that help Microsoft or Oracle stock to go up are good for those particular billionaires. Billionaires are investors. Billionaires like policies that make stocks go up. The income tax bill for a billionaire can be staggeringly large, so it is not surprising billionaires may focus on policies that reduce taxes as being good for the economy.

However Steve Forbes and Warren Buffet both said that it doesn’t much matter who is in Washington because they will do all right no matter who is running the country. Or to put it another way, the smartest billionaires are rich because they know how to prosper in any environment.

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These goals are often in conflict. Reduced costs for a corporation mean lower wages for American workers. Reduced taxes for the rich mean higher taxes for the not rich.

These different (and conflicting) definitions of a Good Economy are the reason that politicians use a lot of vague promises to get elected. A Republican candidate can stand in front of any group of voters and promise to enact policies to promote a Good Economy, allowing the voters to fill in their own definition of what he or she means.

Since the Great Recession America has experienced an unprecedented economic phenomenon. The Gross Domestic Product and corporate profits have recovered from 2009 levels, driving the stock market to new highs, but wages for working Americans have not risen. This is the fundamental problem with the economy today. The consumer economy that is supported by the purchases of ordinary Americans is anemic because Americans do not have as much money to spend, relative to the economy as a whole, as they had in previous eras. Fed action to lower short term interest rates to 0% had very little effect on the economy. Many economists with vision firmly planted in the rear view mirror predicted that the zero percent interest rates would spawn runaway inflation, but the dreaded inflation never materialized. Fed minutes are now littered with arguments to justify raising (normalizing) interest rates on the grounds that the members believe that the economy can probably tolerate a rate increase, rather than to to throttle an overheated economy that the hawks predicted would occur about five years ago.

The healthiest economic period in modern American history is the period from the end of World War II in 1945 until the early 1980’s. During that time, wages and the standard of living for ordinary working Americans consistently rose and fueled the American consumer economy which was the envy of the world. The biggest gold mine on the planet was the American consumers. If a company developed a product that American consumers wanted,  the economic rewards were enormous.

The prosperity of the 1945 – 1985 period was based on an economic measure called Wage Share. Wage Share is the proportion of Gross Domestic Product that is paid out in wages to American workers and other developed nations every year.

The graph above illustrates Wage Share as a percent of GDP for the United States and other nations for the period from 1960 to 2012. As indicated by the red line, Wage Share in the United States peaked at 73% in 1969, declined slightly to 72% in the early 1970s, and then declined continuously to less than 65% at the lowest point on the chart in 2012.  Over the same period of time, corporate earnings, earnings of the richest people in the world, and the stock markets have all grown to new records highs.

The fact of the concentration of wealth in the hand of very few individuals has been documented in the last few years by many credible sources. A neutral summary of the situation is available in Wikipedia in the article Income Inequality in the United States. Citing data from several sources, the article reports that the proportion of the wealth produced in American that is paid to the top 1% has risen from about 10% in 1970 to almost 25% today.

There are several fundamental facts to keep in mind when discussing the economy.

First, the wealth of the nation is valuable goods and services that are produced by all economically active producers. Monetary amounts are used to measure the wealth, but the measurement only has meaning when it is conceived in terms of the desirable things that the money can buy.  Every valuable good or service is produced by a person who is doing productive work. This is an economic fact that many would like to suppress. Because if you acknowledge this inescapable truth, then it follows that the people who do the work and produce the valuable goods and services have a legitimate claim to receive a fair share of the wealth they produce.

But there is another argument in favor of a more fair distribution of wealth between workers and the one-percenters that doesn’t rely on idealism and fair play; almost everyone’s good economy needs consumers with money to spend.

Suppose you imagine a future where technology has advanced and a handful of Silicon Valley geniuses have created a huge sophisticated computerized company that can create any product completely automatically without the need for labor. Pipelines bring in raw materials from near and far. Computers control 3D printers and automated fabrication machines that can make clothes, automobiles, food, medicine, even complete homes. Products are delivered by a fleet of computerized trucks that drive themselves and automatically load and unload the goods. Online animated characters interact with humans over the Internet to provide personal services like health care. Over twenty years the geniuses enhance and refine the automatons until they can produce almost everything that the nation needs. In this futureworld, the Silicon Valley titans end up owning virtually the entire GDP of the nation.

But there is a problem. The customers have no money.

Billionaire genius Elon Musk as expressed some interesting thoughts about the future effects of technology advances.