What you need to know about Medicare for All

Medicare for All is a dividing line in the Democratic presidential primary. Firmly on one side in support are Sens. Bernie Sanders, the man who said pointedly in one debate that he "wrote the damn bill," and Elizabeth Warren from Massachusetts.

Most vocally on the other side are Joe Biden, Pete Buttigieg and Amy Klobuchar. They argue that this single-payer health care program would cost far too much, deny Americans choice and raise taxes on middle-class families. 

Make no mistake, the proposal would shake up an industry that accounts for nearly a fifth of the nation’s economy. When fully implemented, Sanders’ Medicare for All bill would replace private insurance, along with Medicare and most parts of Medicaid. The Affordable Care Act — former President Barack Obama’s signature health care accomplishment — would go away.

Misunderstandings and dodgy claims abound, both for and against Medicare for All. So PolitiFact set out to explain some of the key points about how it would work and how much it might cost.

The idea of Medicare for All is a single, national health insurance program that would cover everyone who lives in the United States. 

If passed, there would be a four-year transition. During that time, people could choose to stay on their current insurance plan, buy into Medicare as it exists today, or buy a new public option plan. After four years, everyone would move to the same comprehensive coverage provided by the government.

Doctors and hospitals would have little choice but to participate, and in theory, be available to any patient. The plan would pay for every medically necessary service: routine doctor visits, surgery, mental health treatment, prescription drugs and more. Dental and vision care are part of the package, too. It also covers home-based long-term care, an expensive addition from past versions.

The veterans health system would stay in place, as would Indian Health Services.

The government would set payment rates for services, drugs and medical equipment. Each year, the secretary of Health and Human Services would determine a national budget for all covered services and spending would be limited by that cap. 

For individuals, there would be no costs — no deductibles, no copays or coinsurance. The two exceptions would be institutional long-term care, which would not be covered, and some prescription drugs — though that would be capped at $200 a year in out-of-pocket costs. Nursing home care effectively would continue as it exists today under the Medicaid program.

The question about how to pay for Medicare for All is ground zero in the Democratic debate. 

The latest estimate comes from analysts at the Urban Institute, a Washington-based policy center. Their computer models predict that the program Sanders has in mind would increase federal spending by $2.8 trillion in 2020, and $34 trillion over 10 years.

Warren, the only candidate with a detailed financial plan, says federal spending would rise $20.5 trillion over that decade.

Her number is so much less for several reasons — partly due to lower costs, and partly due to the way Warren would spread those costs around.

She looks to save $1.8 trillion simply in administrative expenses. Negotiating lower drug costs would save an estimated $1.7 trillion. Hospitals and doctors overall would be paid less, but some, such as rural hospitals and primary care doctors, would get a better deal.

She also taps into projected health care spending by states ($6 trillion) and employers ($9 trillion) and redirects it into Medicare for All.

That leaves about $11 trillion over 10 years to come from other sources. Warren would cover this through stronger enforcement of existing tax law, and raising taxes on billionaires, financial transactions, foreign earnings and similar measures.

Warren says under her plan, middle-class families will see no new taxes, while their health care costs fall "to practically zero."

Warren’s funding plan has drawn fire from the left and the center. Sanders said the way it taxes employers treats lower-wage workers worse than better-paid ones. Buttigieg said her numbers are controversial.

"There are variations in the estimates in the trillions and trillions and trillions of dollars," Buttigieg said Nov. 1.

Former Vice President Joe Biden charged on the debate stage in Ohio that people making between $50,000 and $75,000 a year would see a $5,000 tax hike. We rated that Mostly False at the time, because there are no firm numbers to back it up.

A key dispute is whether the government would be able to use its bargaining power to drive down costs as quickly and as steeply as backers of Medicare for All predict. Skeptics, such as health finance expert Kenneth Thorpe at Emory University, say dramatic reductions are overly optimistic.

Drew Altman, who heads the Kaiser Family Foundation, worries that insulating people from all costs of care will drive usage through the roof. Altman noted that "no other developed nation has zero out of pocket costs."

There is no question that the costs would be massive. On the other hand, according to government projections, if things stay as they are, by 2027, the combined health care spending by the private and public sectors will have totalled over $43 trillion regardless.

No. Medicare for All is much more generous than the current Medicare program. Right now, the Medicare program is for Americans age 65 and over; they receive care, but they’re also responsible for part of the costs. Unlike traditional Medicare, Sanders’ Medicare for All would cover medical bills completely, with no burden on the patient. There would be no Medigap insurance or Medicare Advantage. 

If Medicare for All sounds a lot like a single-payer health care system — where the government foots the bill for people’s health care — that’s because the two are largely the same. The new name seems intended to make the concept more popular.

When an earlier version was rolled out, polling showed people felt better with the Medicare for All label than single-payer.

An October poll by the Kaiser Family Foundation found 51% in favor of Medicare for All, and 47% opposed.

Early on, pollsters spotted a consistent pattern: Medicare for All could get high marks at first, but as surveyors probed deeper, its popularity declined. The likelihood of higher taxes and the end of private insurance caused people to turn away from the idea. 

There’s a clear partisan divide, with 60% of Republicans strongly opposed, and 40% of Democrats strongly in favor. Independents break 35% strongly opposed to 30% strongly in favor.

A recent study by the Harvard School of Public Health, in partnership with the New York Times and the Commonwealth Fund, identified three types of health care voters.

About a third support Medicare for All. Another third prefers a more gradual approach through changes in the Affordable Care Act. And the final third would replace the Affordable Care Act with a federal program that sends money to the states to craft their own programs within federal guidelines.

The first and second groups have similar views on a basic pocketbook issue — paying higher taxes to pay for health insurance. More than three-quarters who like Medicare for All (79%) and two-thirds of those who want to improve the existing ACA (67%) say they would personally be willing to pay more in taxes so that everyone can have health insurance in the U.S. But only 23% of those who want more state control support that idea.

The fate of rural hospitals has emerged as a flash point. A lobbying group backed by drug makers, health insurance companies and the Federation of American Hospitals paid for a report that said that any of the plans proposed by Democrats — Medicare for All and all public option proposals — would put over 1,000 rural hospitals at high risk of closure.

RELATED: John Delaney’s debate claim that ‘Medicare for All’ will shutter hospitals is unsubstantiated

Rural hospital researcher George Pink at the University of North Carolina criticized that study for ignoring the potentially large savings from lower administrative costs with Medicare for All. 

Estimates of administrative costs range from 8% to 25%.

"Rural hospitals have fewer patients, so their overhead costs are relatively higher," Pink said. "If you were able to reduce administrative costs by 1%, you’d have room to pay them more for the care they give."

So far, there is no independent study on how rural hospitals would fare. Warren has said she would increase payment rates to rural hospitals. There’s not enough information to sort this out, and it’s likely that some hospitals would do better than others.

Sanders, Warren and Andew Yang offer the most full-throated support for Medicare for All. Four others — Kamala Harris, Cory Booker, Julian Castro and Tulsi Gabbard — endorse variations on Medicare for All that don’t go quite as far or get there as quickly. 

Harris, for example, would phase in the program over 10 years, and allow private insurance to sell plans that meet Medicare for All requirements. Booker has been less specific, but said there would be room for private insurers.

Castro and Gabbard have said they support Medicare for All, but that they see a role for ongoing private insurance.

Biden, Buttigieg and Klobuchar oppose Medicare for All.

Sanders’ bill includes a 4-year phase-in during which increasingly younger people could buy into Medicare. So 55-year-olds could choose that option in the first year, 45-year-olds in the second, and 35-year-olds in the third. There would be out-of-pocket cost reductions across the entire Medicare program.

Outside of Medicare, Washington would offer a public option insurance plan for people of any age through the Obamacare marketplaces.

To help people who work in the insurance industry, the government would set aside up to 1 percent of the total health spending budget for job dislocation assistance.