Here's how 'Medicare for All' would affect every part of the $3.5 trillion US healthcare system

bernie sanders medicare for allDemocratic presidential candidate Bernie Sanders (I-VT) delivers remarks at a National Nurses United event to honor Medicare and Medicaid's 50th anniversary on Capitol Hill in Washington July 30, 2015.Reuters/Gary Cameron

  • "Medicare for All" sound like a simple idea: Everyone in the US would receive comprehensive healthcare coverage from the government.
  • The reality of implementing that idea is far more complex. It would represent the biggest reshaping of the $3.5 trillion US healthcare system in more than half a century.
  • Though some specifics are missing on how Medicare for All would likely work, we can start gauging the effects some of the proposals could have on insurers, drug companies, employers, patients, providers and hospitals.
  • Visit Business Insider's homepage for more stories.

"Medicare for All" sound like a simple idea: Everyone in the US would receive comprehensive healthcare coverage from the government.

But the reality of implementing that idea, which has become a major focus of debate among the contenders to be the 2020 Democratic presidential candidate, is far more complex. It would represent the biggest reshaping of the $3.5 trillion US healthcare system in more than half a century.

The 2020 Democratic candidates for president all agree on creating a more robust healthcare safety net, but they disagree on how to do it. Those on the party's left wing like Sen. Bernie Sanders and Sen. Elizabeth Warren envision a government-run insurance system where Americans get relatively comprehensive coverage, leaving little role for private insurance.

More moderate candidates like Beto O'Rourke and Joe Biden would preserve the current system, while expanding the availability of government-run public options and injecting more federal subsidies into the exchanges set up under the Affordable Care Act.

Candidates have proposed incremental or sweeping healthcare reform plans, but Sanders' Medicare for All bill is the one that's furthest along. Sanders has authored a bill which has 14 co-sponsors in the Senate, including fellow 2020 candidates Warren, Sen. Kamala Harris, Sen. Cory Booker, and Sen. Kirsten Gillibrand. It would do away with private insurance insurance and provide care to everyone without costs such as co-pays or deductibles.

Sanders has proposed several different taxes to help pay for the plan.

There is a lot of speculation on what would happen to all the key players in the healthcare system if a single-payer plan such as Medicare for All gets passed. Though specifics are missing on how Medicare for All would be fully implemented, we can start gauging the effects some of the proposals could have, based on analysis from groups including the nonpartisan Kaiser Family Foundation, Mercatus Center, and Urban Institute.

Read on to see what Medicare for All would mean for every part of the US healthcare system: insurers, drug companies, employers, patients, providers and hospitals.

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People living in the US would probably pay higher taxes, but less for their healthcare.

People living in the US would probably pay higher taxes, but less for their healthcare.

Under Medicare for All, people living in the US would receive their medical insurance coverage from the government.

In the Sanders plan, patients would face little-to-no costs to get medical care, as the proposal does away with most charges like copays, coinsurance, and deductibles.

The system would likely be financed by new taxes, and Sanders has put forward a number of different tax proposals to help fund the coverage. Higher income individuals would likely pay more for healthcare while lower-income individuals would generally pay less, Kaiser Family Foundation Executive Vice President for Health Policy Larry Levitt told CNBC. But he pointed out it also depends on which taxes are increased.

It's impossible to know who the winners and losers would be because it depends on what combination of taxes is used to finance the plan. Sanders has argued that most Americans would be better off, because their healthcare savings would outweigh any tax increase.

Big companies would no longer have to provide insurance for their workers. They could see taxes go up, too.

Big companies would no longer have to provide insurance for their workers. They could see taxes go up, too.

More than half of Americans get their health insurance through employers, according to the Kaiser Family Foundation.

In the Sanders plan, employer-sponsored insurance would be eliminated. Sanders has argued that Medicare for All is a cheaper alternative compared to what's already in place and that employers would spend less time fretting over providing decent health benefits to their workers.

Employers might face new taxes, though. Among the options Sanders has proposed to pay for his Medicare for All plan is a 7.5% income-based premium that's paid by employers, but exempting the first $2 million in payroll.

Doctors might get paid less money.

Doctors might get paid less money.

One concern for doctors is how Medicare for All would affect their pay.

If private insurance is eliminated, physicians could make less than they do currently.

Private insurers typically pay more for physician services than Medicare, the US government health insurance program for the elderly, the Congressional Budget Office reported. If Medicare for All was implemented, doctors could get paid those rates for all their patients.

That'd be a hit to pay for doctors who treat lots of privately insured patients now, but it could boost pay for doctors who treat lots of patients covered by the Medicaid program for low income people. The Sanders bill would move people who currently get their insurance from Medicaid into the new Medicare for All coverage.

The American Medical Association, which represents doctors, opposes Medicare for All, though there are signs that doctors may be shifting their views, according to Vox.

Hospitals are worried their funding will get cut.

Hospitals are worried their funding will get cut.

It's likely that many hospitals could see the amount they get paid to take care of patients fall under Medicare for All.

The American Hospital Association and the Federation of American Hospitals, which lobby on behalf of the industry, released a report stating that an option allowing more people to buy insurance coverage via Medicare would cut funding for hospitals by about $800 billion over a decade. The groups oppose Medicare for All.

Hospitals say that government programs like Medicare and Medicaid typically pay them less than the cost of delivering healthcare. Hospitals often charge higher rates to private health insurers.

An analysis from the libertarian think-tank Mercatus Center estimated that payments to providers such as hospitals would decline roughly 40% under a Medicare for All plan.

On the other hand, hospitals that serve low-income or rural populations could benefit under Medicare for All, as Bob Herman at Axios has reported.

Pharmaceutical companies could face limits on how much they can charge for their drugs.

Pharmaceutical companies could face limits on how much they can charge for their drugs.

Pharmaceutical companies largely oppose a single-payer system in the US, as they'd likely face stricter limits on how much they can charge for their drugs, similar to the systems in other wealthy countries.

Sanders' Medicare for All bill would give the government more power to negotiate with drug companies and secure lower prices.

Sanders has visited Canada to highlight that country's cheaper drug prices, which stem from the country's system of government regulation. Republicans have also criticized the fact that Americans face higher drug prices, and the Trump administration has proposed allowing Americans to import cheaper drugs from Canada, Business Insider recently reported.

There'd be little role left for private health insurers.

There'd be little role left for private health insurers.

Private insurers would likely have little role to play under the Sanders proposal.

The government would be the sole insurance provider and virtually eliminate the private insurance industry — as employers and private insurers would be barred from providing coverage that overlaps with the government system, according to the Kaiser Family Foundation.

Sanders has said that supplemental insurance would be allowed for things like cosmetic surgery, though it's not clear that there'd be much of a market, as Margot Sanger-Katz has reported in the New York Times.

Other candidates are more guarded in their approach to reform, leaving a bigger role for private health insurers instead of essentially getting rid of them under Medicare for All. Former Vice President Joe Biden's plan would preserve a role for private insurance and instead implement a public option that would give people the option of buying a government health plan.

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