Medicare-for-All is the prescription for taming health care costs, says insurance expert

April 6, 2005 -- Years of double-digit increases in health care costs are devastating business, federal, state and family budgets. While the United States pays more per capita for health care than any other advanced country, 44 million people lack assured care.

"Most people overlook the most affordable way to achieve universal coverage; putting all of us under the Medicare umbrella," says Merton C. Bernstein, a founding member of the National Academy of Social Insurance and the Coles Professor of Law Emeritus at Washington University in St. Louis. "That single-payer system would reduce non-benefit spending by doctors, hospitals, clinics, laboratories and health care insurers by about $300 billion a year, providing funds to insure everyone without additional outlays."

Currently, Medicare incurs only 2% for administrative costs and does not need to advertise or pay commissions. According to Bernstein, private insurance spends considerably more on advertising and management. Administrative costs run as high as 30% because providers and insurers have to employ large staffs to cope with thousands of different plans for billions of billings a year. Similarly, federal and state public needs-tested programs must determine whether applicants meet the different programs' eligibility criteria, and these administrative costs run about 7% above Medicare's.

"Medicare-for-All would eliminate the need to ascertain eligibility for billions of billings," Bernstein says. "Shifting employer, federal and state funds already earmarked for medical care to the new plan would provide huge savings and coverage for the uninsured."

The medical care components common to liability insurance are costly and inefficient. According to insurer reports, for each $100 in premiums for auto and truck liability insurance, policies pay $10 for medical care, $2 for wage loss, and $6 for pain and suffering, while expending $37 for insurance company lawyers and other expenses.

Merton Bernstein

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"Medicare-for-All would make liability insurance medical care coverage unnecessary," Bernstein says. "Their share of the premium would be better spent on mental health services as well as dental, vision and hearing care."

Bernstein notes that thousands of people most concerned with patient care — physicians, medical students, nurses and unions representing non-professionals — endorse a single-payer approach.

"Business and state and local governments should embrace Medicare-for-All because it would rein in their costs," he says. "It would relieve providers of the distractions and overhead required to process billions of claims. The present course promises only higher costs and little progress but builds pressure for more regulation, significant cuts, or a government takeover.

"Other savings measures could supplement Medicare-for-All," Bernstein says. "Only a single-payer plan enables savings on a scale sufficient to make universal coverage feasible. And as with Medicare today, patients would choose their own doctors — the choice most of us cherish and that private insurance often limits."