It is clear from the political dialogue that not all states are interested in providing Medicare for all.
The nature of insurance is to shift the risk from the individual. Therefore, a Medicare for All program covers a large demographic. Premiums and payroll taxes similar to the current Medicare payroll taxes and current Medicare recipients’ premiums are paid by the entire population.
Health insurance is a cash flow model. Premiums are paid in month one, for example, so that claims can be paid in month two.
The holder of the premium cash invests that money for the short term.
There is also a profit margin built into the premium. Therefore, the insurer, or government, makes income on the interest as well as on the premium transactions.
The bulk of the funds, however, go to paying claims. The health of any given individual is somewhat unpredictable. Thus, the insurer or government establishes a reserve that might be thought of as generous in order to take into account for the unpredictability of human health. The reserve itself becomes another source of income as it too is invested.
Therefore there are three revenue streams that could potentially be pledged against the issuance of public bonds if the initial funding of Medical for All would be needed.
Medicare for All is favorable to both the employer and the employee.
Let us look at an example of a person who is making $50,000 per year. Let us assume that there is a 6 percent payroll premium. So at the end of a year and assuming that the employer pays the entire premium, the amount paid would be $3,000. Currently, it costs about $1,000 per month to insure that individual. That amounts to $12,000 per year. If the employer is paying the entire premium, Medicare for All would result in $9,000 per year savings for the employer. If the employer has 10 employers making $50,000 per year, the savings would amount to $90,000. The employer could hire two more people. Medicare for All lowers the employer’s labor costs and, therefore, makes that employer more competitive. Medicare for All also creates jobs!
Assuming that California, Oregon, and Washington established a tri-state Medicare for All, the result would be a large enough demographic that would spread the risk over a large and diverse population. A commission consisting of people from the three states to oversee the tri-state Medicare for All program so as to insure that the coverage remains robust and consistent for the three states. Administration of the program could utilize the current Medicare administrative structure and be contracted back to the current Medicare administration.
Private insurance carriers would be encouraged to offer supplemental insurance as is done now. Individuals could elect to have greater coverage and less exposure. Private insurers would write policies that are following form to Medicare for All.
Rory Miller
Chehalis
