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THE PATH TO MEDICARE FOR ALL  
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Dean Baker
May 20, 2025
CounterPunch
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_ Part of the story of reducing costs is easy. We pay $350 billion a
year for the administrative costs of private health insurance. By
contrast, the administrative costs of Medicare are just over 1.0
percent of what it pays out to providers. _

, Molly Adams – CC BY 2.0

 

I have long been a fan of universal Medicare. While some time back I
thought we could get there fairly quickly, I became a fan of
incrementalist
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approaches as I watched even much smaller changes like the ACA get
bogged down in petty politics and industry lobbying. As bizarre as it
seems, Trump’s second term makes me more optimistic about a quicker
transition.

There are three reasons for my newfound optimism. The first is the
public response to the murder of Brian Thompson, the CEO of United
HealthCare. I am not going to in any way endorse violent actions
against insurance executives, or anyone else in the industry, but the
widespread sympathy
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Luigi Mangione, shows considerable hostility towards insurance
companies. The era where most people liked their insurance company
seems to be behind us.

The second has been the ability of Trump to walk all over
long-established norms and rules of conduct. It’s true that Trump
has a cult following that will literally buy anything he says or does,
and a money-man enforcer in the form of Elon Musk.

But a Democratic president elected on a clear agenda for universal
Medicare could look to apply similar pressure on congressional
holdouts, if they have established their case in the campaign. If
people understand the issues and have given a president a clear
mandate for universal Medicare, they have some ability to push
recalcitrant senators and Congresspeople.

They can also pull a Trump and threaten to withhold important funding
for their state or district. Yeah, this is bullshit politics, but when
billionaires can buy elections, there is no point in playing nice. And
it doesn’t look like the courts will do much to block this, unless
they become even more political in applying different standards for
Republicans than Democrats.

The third reason is that Trump’s looney tariff-fest shows that
people are not as allergic to taxes as has generally been believed.
Trump has imposed one of the most massive tax increases in the last
half century with his tariffs, likely on the order of $300 billion a
year, or $2,200 per household. And it could go much higher. The
tariffs have hurt him in the polls and will likely hurt more when they
really start to bite, but the reaction is nothing like we might have
expected with such a huge tax increase.

Trump’s tax increases are literally for nothing. Yeah, he tells his
followers that we will get back good-paying manufacturing jobs, but
it’s not likely anyone but his extreme cultists buy that. Does
anyone really think workers will get paid $35 an hour, with benefits,
sowing together dolls or turning tiny screws in an iPhone?

The other rationale is offsetting the cost of Trump’s big tax cuts
to corporations and the rich. This is a priority for Trump’s
billionaire backers, but not a huge winner at the kitchen table for
most of the country. If Trump can get away with his massive tariff-tax
increase, surely raising taxes to provide everyone with good quality
healthcare would be politically doable.

There are a million ways to slice and dice both a universal Medicare
plan and also the transition, which will pose real problems. However,
it is important any plan be comprehensive. That doesn’t mean it has
to cover the plastic surgery needed to give people the Mar a Lago
look, but it does need to cover areas like dental, vision, and
hearing, which are excluded from traditional Medicare.

Dental care is by far the biggest of these three. It has historically
been separate from more general healthcare. That may have made sense
sixty years ago, when dental care was relatively simple and cheap
(dentists filled cavities and pulled teeth). It doesn’t make sense
today. We’ll spend close to $200 billion
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this year, $1,600 per household, on dental care. That’s a lot for
people to absorb out of pocket, especially since it is very unevenly
distributed, some will have bills coming to many thousands of dollars,
while others will pay little or nothing.

Much of the story in having the government pick up the tab for
healthcare is getting the money that is currently paid by companies
and workers for private health insurance. That will be close to $1.5
trillion this year. Most of it from employers.

This is where the tax would come in. If it takes the form of an
employer-side payroll tax it would largely replace the money that
employers are now paying to insurance companies. While there are some
issues of implementation that are tricky, it is unlikely many workers
would be upset if their employer was paying money to the government
for insurance rather than a private insurer, especially since the
coverage would likely be better than what they are getting now.

It is also important that we take a chainsaw to costs in the industry.
As has often been pointed out, our government already pays enough for
national health insurance. Federal, state, and local governments will
pay more than $8,500 a person this year for healthcare through
Medicare, Medicaid and other public programs. This does not even count
the tax deduction for employer-provided health insurance. By
comparison, Germany and the Netherlands both spend around $6,000 per
person in total for their healthcare.

Part of the story of reducing costs is easy. We pay $350 billion a
year for the administrative costs of private health insurance, more
than 25 percent of what they pay out to providers. By contrast, the
administrative costs of Medicare are just over 1.0 percent of what it
pays out to providers.

There are a number of reasons for these differences, but an obvious
one is that the insurers pay their top executives tens of millions a
year. By contrast, the top administrators in Medicare get a bit over
$200,000 a year. If someone is looking for waste, the excessive pay of
insurance company executives is a good place to start.

In addition, the insurers are in business to make a profit for their
shareholders, and at least some of them have been doing a good job of
that lately. The stock of HCA, the country’s largest insurer, has
increased [[link removed]] more than fourfold
over the last five years.

On top of the money directly paid to the insurers, there are also
enormous indirect costs.  Hospitals, doctors’ offices, and other
providers have to spend an enormous amount of money hiring staff to
deal with the differing rules and forms of various insurers. A recent
study [[link removed]] found that in 2017
almost a third of our healthcare expenditures went to cover the direct
and indirect costs of insurance, almost five times what Canada was
spending on a per person basis for its universal Medicare system.
Eliminating this waste will get us most of the way toward covering the
cost of universal Medicare in the United States.

But there is also enormous waste in what we pay providers. We pay
twice as much for most of our healthcare inputs as people in other
wealthy countries. The first place to look is prescription drugs. We
will spend
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more than $700 billion this year, $2,200 per person, for drugs and
other pharmaceutical products. Other countries spend less than half
this amount. If we let drugs be sold in a free market, without patent
monopolies, we would likely be spending close to $100 billion a year.

There is a similar story with medical equipment, where we pay far more
for everything from MRIs and other scanning equipment to kidney
dialysis machines. We also pay
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our doctors roughly twice
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as much as doctors in other wealthy countries. (This is much more a
story with specialists than family practitioners.) Getting doctors’
pay down to something close to what they receive in Germany and Canada
could save around $100 billion a year.

In short, there are ways to squeeze out the savings that would make
universal Medicare affordable in the United States. There are
obviously tons of things that need to be worked through in the details
of a universal Medicare plan, which will matter a lot, but the main
thing is to put the idea on the table. The details can be worked out
after the fact.

Will a plan for universal Medicare sell politically? That isn’t my
area, but I can say that what the Democrats have been selling has not
done especially well. They just lost an election to a former
reality-TV show host and failed president who had previously tried to
overthrow the government. And as Trump has made an unprecedented
assault on democracy, the response of its two leaders in Congress was
to embark on tours hawking their new ghost-written books.

Perhaps a plan for universal Medicare will scare away billionaires who
might otherwise support Democrats. That seems a risk worth taking. The
prospect of the party taking and holding power, while offering most
people no real change in the system does not seem very promising.

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_This first appeared on Dean Baker’s Beat the Press
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_DEAN BAKER [[link removed]] is the senior
economist at the Center for Economic and Policy Research in
Washington, DC. _

* Medicare for All; Universal Medicare; Private Health Insurance;
Prescription Drugs;
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