Prof. Robert Pollin and Michael Lighty discuss the findings of a new study by the Political Economy Research Institute at UMass Amherst. The study finds Medicare for All could reduce total healthcare spending by 10 percent, while creating stable access to good care and improving the health of all U.S. residents

Story Transcript

SHARMINI PERIES: It’s The Real News Network. I’m coming to you from Burlington, Vermont, where we are at a Sanders Institute Gathering. We just heard a panel titled Medicare For All: I Like it. How Do You Pay For It? And the two gentleman in conversation on that panel was Bob Pollin and Michael Lighty, and they are joining us now in a little studio we set up at the Sanders Gathering. I thank you, gentlemen, for joining me.

Bob Pollin you have heard from many times on The Real News. But he has done an interesting study on how we can pay for Medicare for All in this country; a very groundbreaking study, I must say. So, Bob, I thought I might ask you just start with just laying the ground of what you were in pursuit of in your study, and what you found.

BOB POLLIN: OK. Thank you for having me on. So we basically looked at the bill that was introduced in the Senate by Bernie Sanders a year ago, roughly a year ago, and said, OK, how do you really make this work? So the features, the core features of this proposal are that everybody, every resident of the United States, gets healthcare coverage. Nobody ever has to worry about not getting covered, about having inadequate coverage, about not being able to make their copays. So everybody gets covered. And you know, there’s no cofinancing, so nobody pays out of pocket. Nobody has to pay a deductible, and so forth.

So everybody gets covered. And so what we estimate is when that happens, people will use the healthcare system more. And that’s actually good, because our healthcare outcomes are inferior to most other countries that are at our income level. So we estimate–and we took this as a high end estimate, looking at the research–a 12 percent overall increase. You set up Medicare for All, people will use the system about 12 percent more than they do now. So, therefore, costs will go up by about 12 percent, if everything else stays the same.

Then we say, well, under Medicare for All we’re going to build in these cost controls that don’t exist now, because in the United States we now spend about 18 percent of GDP on healthdcare. Other advanced economies are spending between 9 and 11 percent. So there is a lot of room for savings. A lot of room. You know, 6 percentage points of GDP, that’s a trillion dollars. So there is a trillion dollars’ worth of savings that we should be able to get at. And we don’t even say we’re going to get at all of that. So what we say is that we can get about 19 percent of savings from the system through transitioning out of our hybrid private health insurance-public health insurance system that we have now, with very high private profits and very high profits for drug companies.

So we say by shifting everything to a single-payer system, with the government being the Medicare equivalent for everybody, we’re going to get about 9 percent savings for the whole system. Then we say, well, in Europe, on average they pay 50 percent less for drugs than we do. And we say, OK, well, we’ll take a more conservative number. We’ll say 40 percent less as opposed to 50 percent less. That gives us 6 percent total savings in the system. Then we say Medicare rates for all providers, all doctors, hospitals, dentists. Everybody gets the Medicare rate. And that saves about 7 percent savings for the system cost. And then finally we have high levels of inefficiency with so-called doctor-induced demand, where there’s too many procedures using high tech when you don’t need it, because they can charge more. And there’s fraud. And so there’s a lot of estimates at very high levels of fraud and excessive costs. We took that service delivery savings as modest, maybe 1 to 2 percent. Add them all up, you get 19 percent savings.

So we have 12 percent increase in utilization, but 19 percent savings. When you add that all up we’ve got a system in which everybody is covered decently, nobody has to worry about healthcare, about facing bankruptcy, about losing their job, then what happens to their–so all of that is gone. Everybody has access to care. And the system ends up costing 10 percent less than our existing system. That’s the core.

And again, is this fantasy world stuff? No. Because even at the end of the day with all of that, we end up with a system that’s still at 16 percent of GDP, not 18 percent. We’re down to 16, whereas the other, the countries in Europe are at 11, 10, 9 percent. So this is still actually a pretty conservative assessment of what we can accomplish through a Medicare for All-type system.

SHARMINI PERIES: Right. Now, both of you were in conversation, Michael. Michael Lighty, formerly working with the National Nurses United, who actually talked to Bob about doing this study-

BOB POLLIN: He was the one that got me to do it.

SHARMINI PERIES: So tell us, Michael, about the questions you were pursuing, what answers you wanted from Bob, and did he come through for you?

MICHAEL LIGHTY: He certainly did. He certainly did, as he always does.

But no, it’s a great question. Because what I really wanted to get out was this concept of this study is a reality check on what Medicare for All actually does, and how you pay for it, and how you transition to it. Because there’s all this ideological dogma out there against it, around the free market, and choice, competition, innovation, healthcare, which just masks a profit-based system. I mean, so what we wanted to do is expose that and say no, if you go against conventional wisdom and publicly finance healthcare, it’s cheaper and more efficient, covers everybody, and eliminates anxiety. No more cost sharing, no more copays and deductibles, no more commercial insurance premiums.

So you get that reality. That’s really what I was trying to get at. And then also take on the tough questions. And to Bob’s credit, he does this, where you say, look at folks- workers are going to lose their jobs in the health insurance industry. Workers are going to lose their jobs in health service administration. And if you are about justice, then you have to be about just transition. And the study’s strength is that no one else has done that before. Now it’s there, a roadmap for how you take care of those workers, just like we take care of everybody’s health care.

SHARMINI PERIES: Excellent. It was a good endeavor. I’m glad you did it. Now, how do we pay for it was the question you tried to take up in this conversation today. And just so that you know, we will be running the entire conversation between Michael Lighty and Bob Pollin, so it’ll probably be in the form of a link just below this interview. So we will post it. We will also post your study itself, Bob, for those who want to dig further into it. But our main endeavor here is trying to get people to understand it and understand the fact that it is affordable. We can pay for it. And as you said, Bob, so eloquently on that panel, that so many other countries are doing it. And so, you know, why cannot, can we not do it?

So, Michael, let me go back to you. In terms of the questions you had in pursuit of how do we pay for it, what were your main inquiry? And then, Bob, you answer it.

MICHAEL LIGHTY: Sure. So the question was, OK, if you’ve got these arguments out there–oh, it’s going to bust the federal budget, it’s going to undermine Medicare, what’s it going to cost me and my business? What’s it going to cost the system? And that’s what we were trying to get at. And then you say, OK, it costs this. How do you pay for it? How do you correct, really, the present inequities in healthcare financing? Because it’s a highly inequitable system. So how do you create equity and generate enough revenue. And that’s what we have. What are the revenue generators?

SHARMINI PERIES: Bob?

BOB POLLIN: Yeah. So we start out–the Medicare for All system, we estimate, would cost $2.93 trillion, which is less than the $3.34 trillion we’re paying now. That’s the 10 percent reduction, 9.6 percent. So how do we pay for it?

Well, the easy answer is we’re already paying $3.34 trillion, so we can easily come up with $2.93 [trillion]. So that’s the basic answer. It’s cheaper. We’re already paying more. We’re going to pay less. Yes, it is restructuring, because we’re no longer going to be channeling money into the private health insurance industry.

Now, let’s break it down a little bit more. So right now, of the $3.3 trillion, $1.9 trillion is already coming through the public sector. So when we add up Medicare, which of course we pay for through taxes, Medicare, Medicaid, Veterans Administration, Department of Defense, and the tax subsidies that people get through paying health insurance–and those tax subsidies go mainly to rich people–when you add all those up, you’ve already got 60 percent of the money you need in the whole pot to get to $2.93 trillion. So we only have to come up with another 40 percent. And what we say is–and we want to emphasize that it’s cheaper. It’s cheaper, it’s cheaper, it’s cheaper. So we say, how can we convey this in a way that’s clear?

So we say that, to start off, businesses who are covering about half–half of all the population are covered by their employer. And so we’re saying, all of those businesses, you get an 8 percent cut in your premium costs. Day one, Medicare for All, if today you’re paying $100, tomorrow you’ll pay $92. Today $100, tomorrow $92. Try to keep it really clear. And that will cover 60 percent of the costs of the whole additional funding that we need. In addition, we also propose a sales tax of $3.75 percent, but that’s on non-necessities. So it’s progressive in the sense that people’s necessities that are a high proportion of middle and lower-income people, they will be exempt; food, basic housing, and so forth is all exempt. And then for low-income people they’ll get basically the same Medicaid benefits, will get a tax credit. And on top of that we have a wealth tax and a capital gains tax reform.

So that pays for all the money we need, plus we actually build in a surplus. So for anybody who says you’re not coming up with enough, actually, we’re coming up with more than we need. We’re coming up with a 1 percent surplus. And if our proposal were actually enacted, the system would run every year at a 1 percent surplus, which of course is unheard of. The government almost never runs anything in a surplus. So we’re running at a surplus, and people pay less. So the average business that was covering their worker, 8 percent less. Middle income families, if you had to go on the individual market and buy health insurance, what we calculate is that you will get a savings of equal to 14 percent of your income. That’s actually massive. Your living standard goes up by 14 percent through the enactment of Medicare for All.

SHARMINI PERIES: And Michael, did that answer your questions? And the other question to you is when you’re looking for examples around the world in terms of what is the optimal Medicare system, like Canada or the UK, what comes to mind? And did we do some comparisons in the study in terms of what other countries are delivering, and what the United States can? And when you crunch those numbers, do they hold up in terms of the level and standards of delivery?

MICHAEL LIGHTY: Well, I think what’s interesting about that is that if you look at the system that’s most publicly financed and administered, which is the NHS in the United Kingdom, that is consistently rated as the most efficient, least expensive, and highest quality in terms of outcomes of any system in the world.

SHARMINI PERIES: Over the Canadians.

MICHAEL LIGHTY: Over the Canadians, over the Australians, over the French, way over the U.S. Over any other system, it’s consistently rated by the Commonwealth Fund, that does these international comparative studies, as the number one performer as a healthcare system. So that establishes the principle that the study verifies, that if you go to public financing you will create universal healthcare at a more efficient and less expensive way.

So when you look at other countries, that’s where the pharmaceutical prices come in. That example is used–so, they pay 50 percent less. Bob said he estimates we can achieve 40 percent savings. The physicians In other countries, the specialists make less. We compared. Even under this proposal. They’re still going to make more in the U.S., but it’s going to be more equitable. When you look at the financing, this was the key question we wanted to get at. How does the financing change from public to private affect workers’ material condition? Turns out it, as Bob said, hugely benefits workers and actually creates a more egalitarian system, because currently the rich are getting subsidies. Because of the tax subsidies they get, they don’t pay anything for health care. Now they’re going to pay about 4 percent. Workers are going to save money. The wealthy are going to pay more. This is what ,you know, an equitable, just healthcare system looks like.

SHARMINI PERIES: Bob, you said something very interesting earlier, and that is that we have–or in your assumptions you will have to assume that there’s no longer a private insurance model available. We’re moving to a public insured model. Now, they’re not going to walk away easily. This is a multi-billion dollar industry when it comes to insurance. And, I should say, when it comes to pharma and pharmaceuticals, as well. That’s also factored in in your model. So they’re not going to walk away easily from what is now a very profitable model in the United States. How do we deal with that?

BOB POLLIN: Struggle. I mean, of course. It’s hard to fathom–I find it hard to fathom. So if you say we are at roughly 18 percent of GDP, other countries, even if you take the high end, are roughly at 11 percent. That’s 7 percent of GDP. That is–that 7 percentage point difference is a trillion dollars, or a little bit more than a trillion dollars. That is what we are paying for because we have this private insurance driven–and the private pharmaceutical company monopoly pricing powered system. We are we are paying a trillion dollars. They are receiving a trillion dollars. They are not going to give up easily. And therefore, if you say we are faced with a very formidable foe, then you know, you either say we have to organize to defeat him on the basis of truth, on the basis of justice, on the basis of simplicity, on the basis of making people’s lives better, and go with that.

And we have to have courageous labor leaders like Michael and RoseAnn. We have to have courageous political leaders like Bernie. We have to have great news people like yourselves. And then we scratch away, people like ourselves, scratch away at trying to show how this works in technical terms. So it’s all sorts of people that need to come together, because this is really imperative for human wellbeing. And it’s been proven, because as Michael–these countries that are at 10 or 11 percent of GDP, their health outcomes are better. Not–it’s not like, oh, we’re going to go to 11 percent and everyone’s going to be worse off. No, we’re going to go to, you know, we’re not even going to get to 11 percent. But if we build in our Medicare for All system, health outcomes will be significantly better because yes, we have 9 percent uninsured, and we have about 30 percent who are saying they have insurance but they still can’t afford to get the care that they need.

And on top of that you have people that are saying, well, we’re going, but you know, they face the anxiety of getting sick, of going bankrupt, of losing their care if they lose their jobs. All of these things are critical features of how people in the U.S. live today. And we can transform that by going to Medicare for All.

SHARMINI PERIES: And Michael, you’ve been going around the country talking about, selling Medicare for All. And yesterday when Bernie Sanders spoke at the opening of the gathering he said that survey after survey, we’re hearing that most Americans, 75 percent plus, want a public national Medicare system that they can rely on. What are you hearing? And then also, what is the messages that you want to get out there as a result of this desire on the part of the public to have a national Medicare plan? And on, in terms of, you know, where we are now being told it’s affordable, we can do it, by Bob’s study, what is the message you want to get out to them?

MICHAEL LIGHTY: The message, fundamentally, is we can guarantee healthcare for all with no barriers to care. And we can eliminate all the financial barriers to care, cover everybody, and create a more just and equitable system that saves workers money, and eliminates the profit basis in healthcare. And that–it resonates in a number of ways. Because you know, for the right wing healthcare is either a commodity to be made a profit on, or it’s a welfare program to be privatized or minimized. And for us healthcare is a human right. And guaranteed healthcare for all, not just for some, is a justice demand.

And so really what we find is that this demand for Medicare for All is part of this rising tide for justice. And this is what it’s going to take to win it. To overcome the insurance industry opposition is going to take a mass movement that forces congressional Democrats in particular, but also you find in these polls 52 percent of Republicans want Medicare for all. So there are I believe working class Republicans who are fed up and have high anxiety when it comes to healthcare.

So this is a political operation in those districts that are represented by Republicans, as well. And what we do is we force Congress to do something that the donor class and the corporate interests don’t want them to do through mass mobilization. And the beauty of this study is that it provides the material, the ammunition in that struggle. So now we can say, yeah, we know how to pay for it. The rich are going to pay more. Businesses and families are going to pay less. Workers are going to get a raise. And you’re going to get guaranteed healthcare with no copays or deductibles. That sounds like a very good deal.

And so one of the things we had to confront during the conversation was is this too good to be true? And of course, it isn’t. And that’s where the conservative approach that Bob and his team took is so validating for the kind of political organizing we’re doing. Because even when we just give it the most rigorous, detailed examination, we come out far better under Medicare for All. And that’s so powerful.

SHARMINI PERIES: I’ve been speaking with Michael Lighty, fellow at the Sanders Institute here, and Bob Pollin, who is co-director of the Political Economy Research Institute at UMass Amherst. Thank you, gentlemen, for joining me.

And thank you for joining us here on The Real News Network.