Opinion: Explaining the financial fallacy of 'Medicare for All'

By George Schurman, El Prado
Posted 4/11/19

By George Schurman Do the math: 1. As it stands now, the U.S. government spends $700 billion per year on Medicare and $400 billion on Medicaid. It receives $120 billion in payroll contributions (for …

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Opinion: Explaining the financial fallacy of 'Medicare for All'

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1. As it stands now, the U.S. government spends $700 billion per year on Medicare and $400 billion on Medicaid. It receives $120 billion in payroll contributions (for the most part) and so the federal government loses about $980 billion per year on these two programs. (U.S. Dept. of Treasury figures).

The annual federal deficit stands presently at $900 billion, an $80 billion difference.

2. The total medical expenses in the United States are over $3 trillion per year (Centers for Disease Control figures), which works out to almost $10,000/year for every man, woman and child if you figure there are approximately 325 million people in the country.

3. Basic Medicare (Part B) has an annual $184 deductible with a 20 percent co-pay before you purchase supplemental insurance. Part A has a $135/ month premium. The average worker also pays into the Medicare program for about 45 years before they are eligible for Medicare.

4. There are approximately 75 million Americans on Medicaid. If a "Medicare for All" plan were initiated then it would have to cover 250 million Americans (325 million less 75 million).

4. 250 million (people) times $184 deductible equals a $46 billion deductible in a Medicare for All program. A 20 percent co-pay on top of that would equal about $489 billion deductible ($3 trillion less $46 billion times 20 percent).

Crunching the numbers for Medicare for All:

$3 trillion (annual total medical expenses in the U.S.)

- $46 billion (deductible, Part B)

- $590.8 billion (20 percent co-pay, Part B)

- $405 billion (premiums Part A @ $135/month/person times 250 million people)

- $120 billion (payroll contributions)

$1,838,200,000,000 = Total loss for Medicare for All

Conclusion: The present federal deficit stands at $900 billion. In the overall budget, $700 million is presently spent on Medicare. These numbers do not include Medicaid costs for those people who cannot afford Medicare premiums, which add another $400 billion. Medicare for All would cost not only the $1.8382 trillion shown above (after payroll contributions) but the government would still have to pay out the $400 billion in addition for Medicaid, for a total of $2.2382 trillion for medical expenses. Even deducting the $80 billion difference between present Medicare costs and the federal deficit, the total deficit would still stand at $2.230 trillion, about $1.3 trillion more than it is now.

The national debt stands presently at approximately $22 trillion. Economists figure the point of no return when the national debt spirals out of control with no chance of recovery is maybe $50 trillion – estimates vary from maybe $40-60 trillion. The government also cannot declare bankruptcy because it is the lender of last resort. If $2.230 trillion is added and compounded to the national debt each year, this point of no return will be reached in about 10-plus years according to these figures.

At this point, Treasuries become junk bonds and the dollar is not worth anywhere near the paper it is printed on. This point is called hyperinflation. What is worse is that economists figure the Republican tax cuts of 2017 will result in much higher deficits than they are now even without switching Medicare/Medicaid. The $2.230 trillion deficits from above would soon become $2.5-3.0 trillion in a couple of years.

Medicare for All sounds great; it is a marketer’s dream slogan. Obamacare is having problems and being slowly but surely whittled away by Congress. It is still very costly to the individual and the country is still losing $900 billion per year to Medicare/Medicaid. So what should we do and think in regards to health care?

Two years ago I proposed a health care plan (S.H.O.P.) in these pages and I have since expanded on it.

It is too long to print here but one can go to the Facebook Group, S.H.O.P. Healthcare Plan (and, more specifically, the New Mexico Healthcare Plan, since any plan will probably have to originate at the state level), to read about it. It is profitable, all-inclusive (no problems with pre-existing conditions) and (God forbid) even healthy. And how do I know it would work? Because everybody would hate it.

If someone has a better idea concerning health care, I would be glad to hear about it. Just remember one thing:

Do the math, first.

George Schurman lives in El Prado.

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