Medicare for All: Requiem for a Dream

Benjamin M. Studebaker

25 October 2024

Nobody seems to care about Medicare-for-All anymore. The remnants of the millennial left have largely abandoned the issue, focusing instead on COVID-19, Black Lives Matter, trans rights, abortion, and the crisis in Palestine. They say we can walk and chew gum, but the energy around M4A has collapsed. Politicians in both parties no longer feel they need to even pretend to be interested in it. These days, they actively guard against any such association. Kamala Harris has backed firmly away from M4A. She is clearly ashamed to have been associated with it ever so briefly in 2019. Donald Trump openly makes fun of “inferior socialist government run healthcare systems.” Alexandria Ocasio-Cortez suggested M4A might ultimately be little more than a negotiating tactic for adding a public option onto the Affordable Care Act. There’s little reason to think the handful of sitting members of congress endorsed by the Democratic Socialists of America or the Justice Democrats still consider it a priority or even a goal.

As an aging, decrepit Millennial leftist who sincerely believes M4A is necessary to make socialism possible in the United States, this grieves me. Before this election, I’d like to remind you, one last time, why M4A matters. If, after reading this piece, you want to vote for Harris or Trump or any of these other people who are never, ever, going to move us even half a step in the direction of M4A, go right ahead. I know nothing I can say will stop you. But as for me? To tell you the truth, I don’t care who wins. It’s clear to me that we’ve lost. That’s all that really matters.

Why M4A?

The simplest reason M4A matters is that millions of Americans have no access to healthcare. Still, in 2024, there are 27 million Americans who have no insurance at all. But beyond that, we have a two-tier system in this country. Many of the most successful doctors refuse to see patients who are on affordable plans, as those insurers don’t reimburse at the highest rate. Nearly 30% of physicians don’t accept Medicaid patients and many Obamacare plans have extraordinarily small networks. There are 72 million Americans on Medicaid and around 45 million on Obamacare. These Americans have insurance, but their insurance is not equal to that of an American on Medicare or on employer-based schemes. These three categories – uninsured, Medicaid, and Obamacare – include 144 million people. That’s a little less than half the US population.

There are 67 million Americans on Medicare. The remaining 134 million Americans are insured through employers. This other half, the half that’s on ostensibly “good” plans, faces other problems. As the cost of quality health insurance rises, employers face ever higher healthcare costs for their employees. The rise in healthcare costs eats wage growth. Instead of expanding the paycheck, employers maintain the level of healthcare provision. In some cases, they pay more even as the quality of the coverage gradually declines. But any increase in the cost of health insurance still registers, statistically, as an increase in employee compensation. Employee compensation technically rises as healthcare costs go up and take-home pay stagnates. That means that rising healthcare costs slowly undermine the ability of employees to buy houses or pay for children. And yet, if you look at compensation statistics, they will appear to be improving all the while!

If the employees quit or try to start their own businesses, they have to relinquish this high-quality insurance. It creates a relationship of dependence. It reduces their leverage, making it harder for them to change jobs or unionize or go out on their own. This makes the employees weak and easy to dominate.

So, for the 144 million Americans who have no insurance or are poorly insured, M4A improves access to healthcare. And, for the 134 million Americans who have relatively strong insurance, M4A increases their autonomy at work and allows for wage growth. By removing this source of stress and anxiety, M4A increases the capacity of Americans in both groups to focus their energy on other issues in their lives, both political and social. Americans will be able to think better about a wider variety of things if they don’t have to worry about healthcare. They will be more able to organize, and they will be less reactive. All of this would improve the quality of public debate. It would strengthen society.

But this is just one part of what makes M4A so important. The private healthcare system puts patients in a difficult situation. If you don’t purchase healthcare, you die. You don’t really have the option to say no. In other areas of the economy, if someone offers you a bad deal, you can buy something else. If apples are too expensive this week, you can buy oranges instead. But if you need chemotherapy, there is no other substitute good you can buy. Either you buy chemotherapy, at whatever ultimate price, or you die.

Insurance companies try to help control costs by pooling patients together. In theory, they negotiate on behalf of patients with healthcare providers. But in practice, the more insurance companies there are, the harder it is for insurance companies to control costs. And if there’s just a small number of big insurance companies, then the insurers begin taking a larger cut for themselves. With a private insurance system, either the providers are too strong, or the insurers are too strong, but the patients – who need to buy healthcare to avoid death – have no leverage and always end up overpaying.

The consequence of this is that in the United States, the healthcare sector has ballooned to 17% of GDP. The United States has a GDP of $29 trillion. That means that the healthcare sector accounts for nearly $5 trillion of US GDP. In 1960, healthcare was less than 5% of US GDP, and in 1960 the United States had a GDP of just $542 billion, in current USD. That means the entire healthcare sector was roughly $27 billion. The US population in 1960 was 179 million, which means that in 1960 healthcare accounted for roughly $150 million per 1 million people. Today, there are about 345 million Americans, which means that today healthcare accounts for about $14.5 billion per 1 million people. It’s 42 times more expensive relative to population, and, let’s be clear: that’s adjusting for inflation.

Now, populations have gotten older, new medical technologies are more expensive, and there’s good reason to invest in healthcare to improve outcomes. Some increase in healthcare spending as a percentage of GDP was warranted between 1960 and 2024. Every other major developed country also saw an increase in the relative size of the healthcare sector. But no country saw the sector grow to 17% of GDP. Canada and the UK each have a healthcare sector that commands roughly 11%. Denmark’s system is just under 10%. Norway’s system is a touch under 9%. In most of these countries, the system was created when the sector was still small, and then over the course of the last half century, there was a managed expansion.

It is clearly possible to provide quality healthcare to all Americans for something like 12% of GDP. The United States is much richer on a per capita basis than the UK or Canada. A healthcare sector that’s 12% of US GDP would be significantly better resourced. The objective in the United States would be to manage the contraction of the sector, not the expansion.

This is why we need a single payer system. Only a unitary payer, with monopoly power to fix reimbursement rates, can force the sector to contract. Between 17% of US GDP and 12%, there’s roughly $1.45 trillion in potential social savings.

Objections and Responses

Objection – Funding Research & Development

Now, you might argue that 12% isn’t good enough. Perhaps you feel that the United States needs to continue to play a leading role in global medical research, and that the extra money that Americans surrender to the healthcare sector is necessary for the United States to continue to play that role. Maybe you think that the United States is effectively subsidizing all the other healthcare systems in the world by absorbing the cost of research and development, and you think this is a good and noble thing, something that should continue, even if the high cost and stark inequalities of the system weakens American workers and pushes down American life expectancy.

Response

Most drug companies spend more on marketing than they do on research. In 2013, nine of the top ten drug companies spent more on marketing. Even in 2020, during the pandemic, seven of the top ten spent more on advertising. Johnson & Johnson – which developed one of the major COVID-19 vaccines – spent $22 billion on sales and marketing in 2020, compared to just $12 billion on research. Prohibiting drug companies from wasting social resources on ads would, in itself, free up an enormous amount of money for research. All told, in 2020, just $245 billion was spent on medical research. Given that the US healthcare sector is roughly $5 trillion in size, it seems very unlikely that it is truly necessary to spend 17% of GDP to get that $245 billion in research funding.

If you think the US should spend more to encourage further research, this could be done within the framework of a much smaller healthcare sector. Say we decided to boost the sector from 12% to 14%, but we ensured that the 2% boost was entirely R&D. That would be worth about $580 billion, which is more than double what is currently spent. A healthcare sector at 14% of GDP would still be $870 billion smaller, leaving almost a trillion to be socially reallocated.

Objection – Unemployed Healthcare Workers

Whether you want a sector that’s 12% of GDP or 14%, there’s also the question of what to do with the very large number of people who are currently wasting their lives doing unnecessary administrative work for insurance companies, drug companies, and hospitals. Rapidly contracting the sector in a reckless and irresponsible manner would leave these people without jobs.

Response

Bernie Sanders had two ideas here – one was to help these workers learn new skills by making public colleges tuition-free. That would cost the federal government $50-$100 billion per year, depending on how much of the burden is borne by the states. Then there was the jobs guarantee, which was to provide workers exiting the bloated healthcare sector with new opportunities in other sectors. This was something of a public policy trident. You get rid of the bloat in healthcare, you use the jobs program to ensure immediate stability for the workers exiting that sector, and you offer cheap higher education so that those workers can explore further possibilities in the long-term. The administrative jobs in the healthcare sector pay well, but they are unnecessary and meaningless. By replacing them, we would help the bureaucrats make a real contribution to society.

Objection – The Fiscal Dilemma

What about the cost? While M4A shrinks the size of the healthcare sector, reducing its social burden – its burden on patients and employers – it does this by increasing the state’s role in the sector, increasing the burden of the system on the state. The more we shrink the sector to make it affordable for the state in the long-term, the more workers in the sector will become unemployed, and the adjustment costs will be higher. Conversely, if we avoid shrinking the sector to limit the adjustment costs, the long-term cost of the system will be very onerous indeed.

Response

Currently, the United States government spends around $944 billion on Medicare and $805 billion on Medicaid, along with $125 billion in Obamacare subsidies. This means that nearly 40% of the sector is already in state hands. If the goal is to reduce the total size of the sector by 3-5% of GDP, then the annual expenditure needs to be roughly $3.5 to $4 trillion. That means that what’s needed is around $1.5 to $2 trillion in additional permanent annual revenue, plus adjustment costs. Bernie Sanders proposed to raise the funds by taxing businesses and individuals, on the premise that these taxes would be smaller than the social savings the businesses and individuals would stand to experience. You’d be able to use his healthcare cost calculator to see that the tax hike would be smaller than your savings. He then proposed to add some taxes on the wealthy, bringing our top rates of tax into closer alignment with OECD competitors. As you might expect, this was the part of the proposal that drove opposition to the plan from outside the healthcare sector. This resistance from capital needs to be overcome, politically, for M4A to become possible. In this sense, M4A not only alleviates human suffering and unlocks reserves of timenergy for social and political organizing, it is itself an expression of the struggle to politically overcome capital.

The more funding M4A gets from taxing capital, the more difficult it is to do M4A from within the framework of capitalism. There is, then, a political question about whether M4A should be funded in a manner that makes it more attractive to capital. Reasonable socialists can disagree about this. If you cater too much to capital, the social savings for workers will be smaller than they could and should be. But if you insist that M4A must be achieved completely and totally against the capitalists, then it can only be achieved along with socialism. That would negate its potential as a non-reformist reform, as a capitalist reform that improves social conditions, unlocking further, higher forms of organizing. Sanders proposed to fund M4A in a moderate way that balanced between these concerns. There’s room to argue for altering the balance a bit, one way or the other – but a balance is clearly necessary, if M4A is to be politically feasible in the medium-term.

The way in which M4A is implemented, fiscally, should be sensitive to the macroeconomic context. Transitional provisions should be more generous in periods of stagnation or recession and more conservative during a boom. If M4A is pursued at a time when the economy is overheating and there is a need to reduce inflation, unemployment generated during the transition is counter inflationary. It enables the Federal Reserve to avoid interest rate hikes that it might otherwise implement to create unemployment. Conversely, if M4A is pursued at a time when the economy is struggling and there is a need for fiscal stimulus, a period in which the gap between federal spending and federal revenue rapidly increases can provide stimulus and enable the Federal Reserve to avoid lowering rates or engaging in large amounts of quantitative easing. The system should be implemented in a manner that reduces dependence on monetary policy and on the Federal Reserve. This would have the added benefit of reducing the public’s reliance on the technocrats to manage economic disturbances.

Objection – Going Through the States

Some argued that there needed to be proof that M4A could work before it would be possible to overcome political resistance from capital. They suggested that M4A be tried at the state level. There was, in 2018, an effort by a gubernatorial candidate in Michigan, Abdul El-Sayed, to implement M4A at the state level. El-Sayed lost that election, but someone else might try it.

Response

The problem with state pilot programs is that M4A works on the premise that there is a single payer, not 50 payers. Individual states do not have sufficient leverage to push down the cost of the system. So, when a US state tries to implement M4A at the state level, it discovers the costs are enormous. US states typically raise a much smaller amount of revenue per capita than does the federal government. They do not raise enough money to fund even a modest healthcare system, let alone a system equipped to compete with the private system in other US states. The result can only be both ballooning budget deficits and shortages of healthcare workers, as high-quality medical practitioners relocate to US states where the reimbursement rates are higher.

Pilot programs in US states will fail. When they fail, they undermine the credibility of M4A as a federal solution. M4A only works as a federal policy. Any attempt to implement it at the state level is not only useless – it’s counterproductive. This means that the easiest way for insurance companies, drug companies, and hospitals to defeat M4A is to persuade foolish people to try the policy at the state level. Unfortunately, many in the Sanders movement do not understand how the policy works or why it works, so there was always a danger that this would be tried. Thankfully for us all, Abdul El-Sayed was defeated. But if the movement for M4A ever gains steam again in the future, others are sure to pursue this dead end.

Objection – Going Through the Democratic Party

The Democrats aren’t sincere about M4A. In the 2020 campaign, many of their candidates pretended to be for the policy when in point of fact they were using it as a slogan to describe a public option, or something similar. This was a major problem with Kamala Harris, Pete Buttigieg, Andrew Yang, Elizabeth Warren, and others. These campaigns deliberately deceived voters about their intentions by using M4A rhetorically to provide cover for their inferior plans. Buttigieg’s “Medicare-For-All-Who-Want-It” plan was especially insidious.

Even the members of congress who have been endorsed by the Democratic Socialists of America and by the Justice Democrats have at points indicated a willingness to use M4A as a device to win Obamacare reforms. Many of these people do not understand the importance of prioritizing M4A. During the 2020 campaign, many of these people claimed they wanted to “push Bernie left.” In practice, this meant forcing Sanders to decenter M4A and to instead center the interests and concerns of establishment non-governmental organizations (NGOs), like the Human Rights Campaign, Black Lives Matter, Planned Parenthood, the NAACP, the National Organization for Women, and the Southern Poverty Law Center. These are the organizations that standardly donate to the Democratic Party establishment. In focusing on the issues these organizations emphasized, the Democrats not only deemphasized healthcare, they also polarized the workers on racial, educational, sexual, and religious lines. The effect of this was to create sharp cultural antagonisms that made it much more difficult to effectively organize for anything. It also diminished the ability of the left to compete electorally in more socially conservative regions of the country. Many of these regions are poorer and badly in need of the benefits of M4A, but the Democratic Party establishment contemptuously casts these Americans into the “basket of deplorables.” These are the people whose votes you must not seek to win, lest you secure the kind of legislative majority that might create an expectation that you follow through on M4A.

Response

This is the objection to which we as yet have no good response. While some, like Batya Ungar-Sargon, have argued that the Republican Party might take up M4A after a realignment, it seems very likely that all the same problems would simply be replicated in the Republican Party. That party has its own set of traditional funding sources, and they are every bit as disinterested in M4A as the organizations that fund the Democratic Party.

The only way to get the two parties positively involved in the fight would be to create new lines of financial dependence. Now, it is true that many rich people in the United States would stand to benefit, in the long-term, from a smaller healthcare sector. The social savings could generate new investment opportunities outside the healthcare sector, leading to booms in housing or higher education. The healthcare sector is bloated in much the same way that heavy industry was bloated in the Soviet Union in the 80s. It’s bloated in much the same way that the construction sector is bloated in China today. Huge amounts of capital are tied up in this sector that could be made free to roam. There is a real capitalist case for M4A, even leaving aside the benefits for workers.

But I don’t think most of our capitalists are operating at high enough level of analysis to appreciate the business opportunities M4A would create for them in the rest of the economy. They are, unfortunately, considering it mainly in terms of the immediate tax hikes they would face. That means those tax hikes have to be moderate in scope if M4A is to be achieved under capitalism. The higher the taxes on capital, the more M4A will require independent social organizing by the workers outside of the Democratic and Republican parties. Despite efforts to play up union organizing efforts, the percent of American workers in labor unions continues to decline. It is now perilously close to dropping below 10%. And many of these unions are appendaged to the Democratic Party. They were slow to endorse Sanders or failed to endorse him, and there is little reason to think their leaders are genuinely committed to M4A now. New forms of organization will be needed, not just to struggle against the Democratic and Republican establishments, but also to struggle against the “progressive” movements that only pretend to be interested in achieving the goal. The weaker the workers’ level of organization, the more concessions will have to be made to the rich on the funding mechanism to secure their support.

Objection – Going Through the Capitalist State

Some press this objection even further, arguing that M4A is the kind of policy that reveals the inadequacy of the capitalist modern state as a political form. International capital mobility has made it progressively harder for states to raise tax revenue at the level necessary to create this kind of program. Money flees to tax havens and emerging markets when the tax man comes. Too often the hypothetical possibility of capital flight is enough to silence these discussions before they even begin in earnest.

Our procedural understanding of democracy is itself increasingly an obstacle. Today many US states require political parties to nominate their candidates for many offices through primaries, and primaries leave any new party open to penetration by outside money. But you won’t find many people in US politics who call for abolishing primaries. Instead, much of the procedural discussion focuses on abolishing the senate or judicial review. These arguments only deepen antagonisms between the rural red states and the densely populated blue states. They exacerbate cultural struggles, making it even harder to work together. Many reformers are waiting for constitutional amendments that simply aren’t coming.

Response

In so far as this objection holds, it shows how central M4A is to the struggle for socialism. In struggling for M4A, we are struggling to overcome the party system and perhaps even the modern state as a political form. Developing our ability to meaningfully push toward M4A plausibly develops our abilities to do all these other things. And yet, M4A is a much more concrete objective than, say “socialism.” It is much easier to show people the good that it does, unburdened by the controversial legacy of 20th century state socialism in the Soviet Union, China, and elsewhere.

And if this objection is too pessimistic, that just means that M4A can be achieved through the capitalist state and through the American two-party system. If M4A is compatible with capitalism after all, that doesn’t make it bad. Even within a capitalist framework, M4A would remain a non-reformist reform. It would create conditions under which workers are less dependent on their employers, less anxious about their futures, and more able to think big about how to live full, human lives.

And, you know, fewer of them would drown in medical debt or die premature deaths. There’s also that.

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