Misleading Myths of Medicare for All--Part 2

As we head into 2026 the one thing I am confident about is that you are going to hear more and more Democrats saying they support "Medicare for All".

This woman is the former Co-Chair of the Bernie Sanders 2020 campaign for President.

Bernie Sanders popularized the concept and name in his Presidential campaigns in 2016 and 2020.

In my last blog post, "The Misleading Myths of Medicare For All" I wrote about how misleading the political rhetoric about the idea is.

Simply stated, those who promote the idea are akin to snake oil salesmen from yesteryear who sold false promises to an unsuspecting audience.

It is no different today when it comes to the promises being made about Medicare for All to the American people.

Let's dismantle another couple of myths about Medicare for All in this blog post.

The biggest claim made is that Medicare for All is going to produce gigantic savings by removing private health insurance companies from the process.

I put this claim in context in my last blog post.

Even if you removed all of the claimed "profits" and administrative costs of the private health insurers it would amount to only about 10% of what is now spent on healthcare in the United States. 

That is equal to just the increase in health care expenditures in the U.S. in the last year.

Advocates of Medicare for All claim that taking the "profit motive" out of healthcare is going to make it less expensive and more efficient.

However, that theory fails when tested against the real world of healthcare.

We already can compare costs between "For-Profit" and "Non-Profit" hospitals.

You would think Non-Profit hospitals would have lower costs. There is no profit that needs to be accounted for in pricing. Taxes don't have to be paid. The total focus should be on providing quality care at the lowest cost.

However, that is not the case.

Here are the latest average costs per inpatient day for hospitals based on ownership according to the Kaiser Family Foundation.

Non-Profit hospitals have higher costs per inpatient day (as do state/local government hospitals) than For-Profit hospitals.

Costs per day in Non-Profit hospitals are actually 30% higher than in For-Profit hospitals

Hospital Expenses per Adjusted Inpatient Day by Ownership Type

Source: https://www.kff.org/health-costs/state-indicator/expenses-per-inpatient-day-by-ownership/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D

Why?

While Liberals love to demean and demonize the "profit motive" and capitalism in general, the reality is that accountability is increased and the chances for fraud, waste and abuse are substantially diminished when someone has "skin in the game."

That is a fundamental problem with all government programs.

There is no real incentive to control costs from people who are not stakeholders.

We have just seen it in spades in Minnesota with the recent disclosure by the U.S. Attorney of a massive "industrial-scale" Medicaid fraud in that state.

Source: https://www.newsweek.com/minnesota-medicaid-fraud-billions-tim-walz-11239997

Some $9 billion in Medicaid claims paid out in Minnesota since 2018 may be fraudulent, First Assistant U.S. Attorney Joe Thompson, a federal prosecutor involved with the probe, said Thursday, calling it "staggering, industrial-scale fraud," per the Associated Press.

Fraud, waste and abuse can be found anywhere but odds are much higher that bad actors will take advantage of government programs where there is less accountability and no one has skin in the game.

There is also less accountability in non-profit organizations than in for-profit entities for the same reason.

The best answer as to why there are higher inpatient costs with non-profit hospitals is this lack of accountability. 

Non-Profits are not accountable to tax collectors, shareholders, and most particularly patients, due to our third party payment system where it is rare that the bill is paid by the person receiving the treatment.

A "profit-motive" is not necessarily the evil it is portrayed as. It is an important foundational element of accountability and protection against waste, fraud and abuse

The comparison of the cost structure of Profit vs, Non-Profit hospitals should not provide much comfort that Medicare for All is going to produce lower costs and a more efficient healthcare delivery system in the United States.

The other big claim of Medicare for All advocates is that it would eliminate out of pocket costs, deductibles, copays and coinsurance for Americans.

This has become a popular talking point as more Americans are now covered by high deductible health plans.

However, the fact is that only 10.4% of all health care expenditures in the United States are out of pocket expenses.

That number was almost 33% in 1970.

For context, out of pocket expenditures were actually slightly more (10.5%) in 2017 than they are currently when there were fewer high deductible plans.

High deductible plans have not resulted in an increased share of total health costs in the United States being borne by individuals despite the popular narrative.

What is also interesting is that despite the fact that Medicare for All advocates argue that such a plan would result in no out of pocket costs for individuals (no deductibles, copays, coinsurance or medical debt) the reality is that the countries that they point to as models for socialized medicine ( such as Australia, Austria, Canada, Israel, Germany, South Korea, Sweden) actually have higher out of pocket costs as a percent of current health expenditures than the United States does.

Compare the amount of out of pocket costs for the citizenry in those selected countries compared to total healthcare expenditures..

How much better can it get on this score? 

Out of pocket expenditures in the United States are already a lower percentage of total national health expenditures than it is in all these countries that are touted as having "free" universal health care.

The situation is even worse for citizens in countries that embrace the socialist ideals most fervently such as in Cuba, China, Russia and Venezuela.

It is even worse in Mexico where the current President is a leftist socialist who is a proponent of a social democrat welfare state.

Is it any wonder millions have crossed the border from Mexico over the years for free emergency department care in the United States?

You can count on Democrats making Medicare for All a big issue heading into the 2026 mid-term elections.

A big reason for this is a recent poll they commissioned that showed 65% support a Medicare for All system for the United States.

Yes, it all sounds great until you start looking at the facts as I have detailed above and in my blog post of last week.

However, doesn't sound quite as good when you find out that the proposed legislation that Bernie Sanders and other Democrats are touting. That legislation would eliminate private health insurance completely, it would require most people to pay more in taxes, it might threaten current Medicare for seniors and would undoubtedly result in delays in getting medical tests and treatments.

What can be done to control healthcare costs?

Attempts to control costs are akin to trying to change course heading into a Category 5 hurricane.

There is no easy answer despite what glib politicians might tell you. In fact, as I have written before in a post from 2017 "Why Is Health Care So Expensive", everything suggests that the problem will get even worse no matter what the policymakers do. 

Every factor today is trending against controlling health care costs.

More and more expensive medical technology becomes available each year. 

Americans have rebelled against every attempt to limit choice in selecting doctors, hospitals, etc.

Americans are getting older and healthcare costs go up with age. 

Americans are not getting any healthier and the United States still has more money to spend on healthcare than any other country. 

How could health care costs take a smaller bite of our economy and household budgets?

There are only three options.

1. Hospitals, doctors and other providers have to make less money.

2. Patients need to see their care rationed or limited in some way.

3. We all need to get a lot healthier.

The bottom line is this.

There will be no gains in controlling healthcare costs without a lot of pain on someone...and most likely, everyone.

Don't let any politician convince you otherwise.

If you want to actually consider a system of healthcare that might work at controlling costs, while serving the American people better, read another blog post I also wrote in 2017  titled "Revolutionary Replacement".

A revolutionary plan along the lines I am describing has some elements that both Republicans and Democrats should like. There are also elements that both would dislike. That tells me that it is probably a sensible replacement approach.

My suggestion for a broad-based tax to finance the cost of the catastrophic coverage would include using tariff revenues or a border tax. If we are going to allow imports access to our market it is reasonable that they should help bear some of our social costs. This also has the advantage of aligning with President Trump's economic policies.