How could "Medicare for all" succeed when the program spends 3% of GDP to cover only 15% of the population (3/.15=20% of GDP)?

First, from “Per person personal health care spending for the 65 and older population was $18,988 in 2012, over 5 times higher than spending per child ($3,552) and approximately 3 times the spending per working-age person ($6,632).”

With a more granular distribution curve you’re going to see the 20% GDP for everyone droping to around .42/.15 = 2.8% GDP. So that’s the first correction to your math.

Second, if Medicare is the only game in town for most healthcare coverage (aside from boutique stuff) then the leverage Medicare will have to negotiate prices is going to be TREMENDOUS. This is why Canada and the UK pay a lot less for the same drugs used in the U.S. — about 1/6 to 1/3 of U.S. prices. Although the margins aren’t as great for medical devices, we could see 50% reductions there as well. And of course removing the bloated private insurers (with much higher admin overhead, and of course impatient shareholders) from the equation means that services will be roughly 40% lower too (this is based on how much less Medicare pays for the same procedures already, compared to private insurers). Even by conservative estimates, this means that overall healthcare costs will be reduced, on average, by AT LEAST 50%. Which brings the total coverage number down to at least 1.4% GDP.

If what has happened in other countries is any indication, all of this will also have the effect of INCREASING the total number of healthcare consumers over time, while REDUCING the per capita outlays over time — especially since every $1 spent on preventative care saves about $6 in lifetime costs. I’d predict, then, that this last bit will result in a wash (i.e. more healthcare consumers at net lower lifetime outlays). And, as preventative care and predictive diagnostics (via genetic testing, etc.) become more refined, I think we’ll see those costs drop even further.

Which means that fee-for-service models are going to eventually become unprofitable anyway…so why not abandon them now?! :-)

My 2 cents.


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