What Krugman Doesn’t Understand about Medicare for All

On Monday I proposed a simple solution to the problems of the ObamaCare website: the John McCain health plan.

Paul Krugman has a different solution: enroll everyone in Medicare:

Imagine, now, a much simpler system in which the government just pays your major medical expenses. In this hypothetical system you wouldn’t have to shop for insurance, nor would you have to provide lots of personal details. The government would be your insurer, and you’d be covered automatically by virtue of being an American.

Of course, we don’t have to imagine such a system, because it already exists. It’s called Medicare, it covers all Americans 65 and older, and it’s enormously popular. So why didn’t we just extend that system to cover everyone?

Here’s the answer I gave in a previous post: There is not a single major problem in ObamaCare that would be solved by moving everyone into Medicare. And any minor problems that might be improved by universal Medicare could have been easily solved by tweaks to ObamaCare as well.


He’s a real Nowhere Man,
sitting in his Nowhere Land.

Paying for Medicare for all. Sometime back, the NCPA calculated that we could pay for national health insurance with a 15% VAT tax. But if it were easy to impose such a tax, the Democrats would have financed ObamaCare that way. The easiest way to fund universal Medicare is the same way we are funding ObamaCare. That means: all the same taxes, same premiums, etc., including somehow capturing the current employer contribution and the state’s contribution to Medicaid. Note: new taxes on everything from tanning salons to pacemakers to wheelchairs and crutches are not going to go away.

Individual mandate. For the very same reasons that Paul Krugman tells us ObamaCare insurance must be mandatory, universal Medicare would also have to be compulsory. Otherwise, people would only join when they are sick. To make the budget balance, people would have to pay a premium that, on the average, equals the expected cost of their care. Just like ObamaCare, there would have to be subsidies for lower-income families. With community rating, the healthy would be over-charged and the sick would be under-charged. Incentives to game the system would be monumentally destructive without a mandate. Note: none of the problems with the individual mandate have gone away.

Employer mandate. For people at work, there would be enormous pressure to continue the employer contribution by requiring employers to buy their employees into Medicare. That would raise the issue of exempting small business, exempting part-time workers, etc. Note: none of the problems of the employer mandate have gone away.

Cuts in Medicare Spending on the elderly and the disabled. Almost half the funding for ObamaCare comes from reduced spending on current Medicare beneficiaries. Since the money will still be needed, these cuts will not go away.

The exchanges. Medicare already has an exchange: it’s how enrollees get into Medicare Advantage plans. Note: these plans are not going to go away under universal Medicare for the same reason they are not going away under ObamaCare.

Here’s the upshot: In moving everyone into Medicare, we will not have solved a single problem of any importance that we started with in ObamaCare.

Comments (44)

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  1. Dewaine says:

    It has been apparent his entire time that Krugman and left have just been waiting for problems so that they can “fix them” with single payer. I’m not surprised at all.

  2. Dewaine says:

    “There is not a single major problem in ObamaCare that would be solved by moving everyone into Medicare.”

    Unfortunately, most people won’t recognize that.

  3. Ron says:

    Funny how anyone just thinks going from one enormous problem to another could solve anything. Either way, there was no solution.

    • JD says:

      Though, the “Do something! Do anything!” crowd is pleased. If we our health care is constantly “in flux” then it always looks like we are headed toward solution.

  4. JD says:

    It’s honestly like Krugman doesn’t understand economics at all. His philosophy is akin to a physicist dismissing gravity.

  5. Vicki says:

    Perfect song pairing.

  6. Greg Scandlen says:

    Good grief! Does Krugman know anything at all about Medicare? It doesn’t cover half of what Obamacare requires. There is no pediatric dental coverage, no maternity, no Rx coverage, no limits on OOP costs, plus Part B is not mandatory.

    It is popular for two reasons — 1. It is massively subsidized by other people. If it applied to everyone there would be no “other people” to pay for it. and 2. It has been the only thing available since 1965. It really is now a choice between Medicare and nothing. Even when it was enacted only about half the elderly were covered by something else, not the 85% of today’s population.

    • Perry says:

      And that’s the problem with Obamacare. My wife and I are in our 50’s and have no small children. Why would we care about maternity care, birth control, and breast pumps being covered? We’re more concerned about cancer, heart disease, arthritis, etc.

      • Moeys says:

        I agree – you can not make one-size-fits-all for health insurance of any kind. Obviously if you go to an insurance agent to purchase life insurance and you recently had by-pass surgery or you have pancreatic cancer – they are either not going to cover you or the premium will be such that one couldn’t afford it anyway. It is just common sense and logical – that’s why this crazy Obamacare system will never work and they are finding that out now. One would think someone would have read the bill and figured out what the regulations might entail!!!!

    • Moeys says:

      You hit the nail on the head!!!!

    • Dennis Byron says:

      the last sentence is an important and little known fact but I think it is worded incorrectly. You say:

      “Even when it was enacted only about half the elderly were covered by something else, not the 85% of today’s population.”

      When Medicare was enacted about 65% of seniors had insurance (they weren’t walking around destitute and dying in the streets as the Dems like to pretend now) and to put that in context, only about 75% of non-seniors had insurance. Insurance was just not the big thing it is today

      But I have no idea what you mean that “85% of today’s population?” You are mixing apples and oranges, no?
      — Seniors (99% on Medicare but 110% also making other arrangements because Medicare is so bad) vs
      — the whole population (85% today).

      • Greg Scandlen says:

        First, thanks for the correction. I was too lazy to look it up, but was trying to make the point that 1. Medicare was trying to solve a much bigger problem than Obamacare is (a greater proportion of the affected population was without coverage) , and 2. Therefore the affected population was more receptive to it than is true today. The American people have never wanted Obamacare. It was enacted over their objections.

        But it is absolutely true that we could have easily solved the problem of the uninsured elderly without creating a massive program for all of them.

    • Angela says:

      That’s EXACTLY what I’ve been saying. Supposedly all the plans that didn’t have Maternity Coverage or birth control pills or pediatric dentistry were “crap plans” or “junk plans” according to the talking points on the left. That makes the Government-controlled Medicare plan a “crap plan”, according to those SAME talking points.

  7. Keith Bell says:

    I am an insurance broker and I have always touted that opening up Medicare to every American citizen would be something to consider. Insurance companies could continue to offer Medicare Advantage and agents could sell both Medicare Advantage and Traditional Medicare Supplements to the entire population. Is it perfect? No, no system is perfect within any society. Yet, the idea is so simple and logical, the government would never consider it.

    • Dennis Byron says:

      You would not mind selling a product to your clients that does not offer catastrophic coverage and that has no cap on annual out of pocket expenses. I would think that would be a tough sell. (Never mind all the other things that Medicare does not cover and the limits it has on days and/or types of medical services)

  8. Marl says:

    I’m sit sure that’s how it would be funded at all. Universal Medicare would come our of taxes built on a progressive scale. There would be no direct premiums or subsidies. You made it seem more complicated that need be. When it’s universal it’s a much easier collection system.

    I’m not saying it’s right, and it would destroy the top half of America with taxes and the stuff provided would suck, but I think this article over complicates things, even for government.

  9. Buster says:

    A better example is Medicaid For All. If health care is paid for by only one insurer, it will pay Medicaid rates.

  10. Stuebaker says:

    The system I like best is one where everyone pays their own bills.

    • OLD RN says:

      Personal responsibility. what a concept!
      Medicare is cutting and hospitals & physicians are hurting because of it. Do some research on “Observation Status” and you will see how MCare is shifting costs back to the pockets of the patient and cutting reimbursement to providers too.

    • Moeys says:


  11. Moeys says:

    Does Mr. Krugman NOT realize that Medicare does NOT cover everything. Further it does not cover much in the way of medication EVEN IF YOU HAVE A PRESCRIPTION ADD ON. He is not thinking clearly. Why should the government be responsible for MY health insurance – That is a personal choice I make and I should not expect the government to pay for it any more than I would expect them to pay for my car insurance, homeowners insurance or mortgage. The US CONSTITUTION or our BILL OF RIGHTS do not guarantee health insurance or insurance of any kind and certainly not paid for by the US Government. IT IS A PERSONAL DECISION!!!!!

  12. Anonymous says:

    Krugman spoke at Sixth & I Historic Synagogue in Washington, D.C. and stated that “death panels and sales taxes is how we do this” http://www.championnews.net/?p=51624#comments

  13. Breck says:

    The way to fix our health care system is to stop trying to fix it with a government solution. Insurance, whether it is Medicaid, Medicare, ObamaCare, or employer provided IS the problem because it disconnects the patient from the cost of care. If free markets were allowed to function — which would entail removing insurance mandates in all 50 states — prices would come down, quality would go up and instead of a national brouhaha over health care each individual would negotiate, shop and otherwise provide for his own health care. We all somehow figure out how to afford to buy expensive automobiles — it’s not much harder to figure out how to buy medical care. Everybody doesn’t drive a cadillac, you’ve probably noticed, but everybody gets where they need to go. We’re a long way from a free market solution, but I believe that’s what John would like to see if politics would allow.

  14. Don McCanne says:


    You are not describing the improved Medicare for all supported by most single payer supporters in the policy community, including those of us at PNHP. The universal single payer risk pool would be financed through progressive taxes.

    Paying for Medicare for all. The pool would not be funded the same as with Obamacare. The taxes paid into the system would not be linked to separate insurance plans. There would be only one comprehensive plan for everyone – a universal pre-paid health care program.

    Individual mandate. The single payer system would provide automatic coverage for everyone.

    Employer mandate. The insurance link to employment would be eliminated.

    Cuts in Medicare spending on the elderly and the disabled. A large percentage of the reduction in Medicare spending required by Obamacare comes from the private Medicare Advantage plans which are being paid significantly more than under the traditional Medicare program. These private plans would be eliminated. The extra benefits they provide would be rolled into the single payer system, along with other benefits that should be part of a comprehensive program. The efficiencies of the single payer model provide enough savings to fund these additional benefits for everyone.

    The exchanges. There would be no exchange since there would be only one program.

    • Dennis Byron says:

      It is not correct to say that

      “A large percentage of the reduction in Medicare spending required by Obamacare comes from the private Medicare Advantage plans which are being paid significantly more than under the traditional Medicare program.”

      … unless you consider 25% is a large percentage.

      Of the almost trillion dollars in cuts to Medicare in PPACA (pick your timeframe but 2016-2025 gives you a nice round number, only a few hundred billion are in changes to the public Part C Medicare Advantage health plan bidding process.75% of the cuts are to hospitals and SNFs.

      And the key cuts to the Part C bidding process have already happened. Read the 2013 annual report on medpac.gov rather than repeating the same bullet points someone gave you in 2006. If it has not been for the allegedly illegal Obama bonus program (according to the GAO) and the one-time change Obama himself made to the 2014 Part C bidding process in March 2013, part C would have already reached parity with fee for service Medicare.

      As it is, part C plans are getting 4% more per capita than traditional Medicare average in 2013, almost all of that because of the bonus program. Most of that is going to PPOs for the urban and rural poor. Seniors in classic HMOs for the middle class suburbanites get about 95% of what a fee for service medicare person “gets.”

    • John Goodman says:

      Don: your “solution” involves solving every problem by making fanciful, unrealistic assumptions. If it were politically possible to create universal coverage with progressive taxes, the Democrats would have done it.

      Even Democrats who take Medicare expansion seriously are talking about a “buy-in,” not a free lunch. Today’s seniors BTW pay 25% of Part B in premiums. Young people (and their employers)would have to pay a larger portion of their costs under any realistic expansion.

      And there is no way Congress is going to take Medicare Advantage away from 10 million seniors.

      So although I can conceive of the possibility of Medicare for all, every other problem with Obama care would remain under any realistic scenario.

      • Don McCanne says:

        Yes, but my points were about policy, not politics. H.R. 676, John Conyers’ Expanded & Improved Medicare For All Act is far more than a Medicare buy-in. It has 51 cosponsors. Clearly it will not advance in the current Congress, but the dissatisfaction with the inadequate reforms of ACA may well increase the political support such that someday it could become a reality. The basic policies are not that much different from those of Medicare, just that Medicare was limited to a specific age group with the later addition of those with long term disabilities and ESRD.

  15. Abby Waxenberg says:

    John, I didn’t read this but after having been in health insurance for 42 years, I have been pondering aloud for a very long time – why not just open up Medicare at actuarially appropriate rates with more plan designs. Billions have been wasted on ObamaCare because he needed a signature piece of legislation. We have been robbed.

    Love your stuff.

  16. L. BRODY, M.D. says:

    MEDICARE FOR ALL I can see it now….it would change into MEDICAID for all. We would all be sitting on the same bench in the waiting room, except for the politically elite

  17. Ron says:

    Forcing everyone into Medicare is like mandating everyone buy a 1965 Chevy when they have been driving newer vehicles with power steering, air conditioning, cruise control, power seats, etc. Medicare is an anacronistic plan design based on BCBS coverages in 1965. It is bad enough that retirees are subjected to this time warped coverage, requiring all to be under Medicare might even be worst than ObamaCare. Heck, why not put us all under Medicaid, we would all have an insurance card with no providers willing to treat us.

  18. Dennis Byron says:

    There are so many things that Krugman does not understand but particular to Medicare he does not understand
    — that many people do have to provide reams of “personal information details;” 25% on the low end provide it to get free drugs and/or free Part B; 15% (growing to 25%) on the high end have to provide it in order for the government to assess them their extra B and D premium surtax
    — that Medicare (and Social Security) is already means tested
    — that Medicare is so “popular” that 85% of us buy supplemental insurance, 18% of us go on Medicaid, 2% of us keep working after Medicare age, 1% are in the VA system (adds up to more than 100% because some people on Medicaid and in the Va system also buy supplements)

  19. Bob Hertz says:

    As Dr McCanne implies, Medicare for all need not be funded primary by premiums.

    But it does need a lot of taxes, and most importantly there can be NO exceptions.

    If Medicare for all it to be funded by a payroll tax, every single firm must pay the 15% rate on every nickel of payroll. (as happens in France and Germany and several other nations. Virtually all firms pay social security tax now, but it has taken almost 70 years to get there.

    There could be no exceptions for small firms or part timers or contract employees.

    I cannot imagine an American central government that would have the power to compel all employers to pay 15%. We cannot even impose the relatively timid employer mandate in the ACA.

    If we used a sales tax, it would have to apply to all products. Food, clothing, and internet sales all the same. Again I cannot see this happening.

    I am saying this as someone who might support Medicare for all. I just do not see how we would pay for it.

  20. Allan (formerly Al) says:

    I have just one question for Don. Since Medicare for all appears to be his solution and Medicare is single payer for all over 65 why hasn’t Medicare solved its own problems over the past half a century? Doesn’t Don think that he has an obligation to get Medicare right before forcing it on the rest of the country?

    • Dennis Byron says:

      You are highlighting one of Mr. Krugman’s other deceptions in the article identified above. At least Mr.Canne tries to resolve the problem by calling his proposal “new improved Medicare” or some such thing.

      To call the Democratic Party Medicare mismash single payer you have to forget that this is what seniors do in the real world (as opposed to Mr. Krugman’s and Mr. McCanne’s fantasy world):
      — Parts A, B and C (30% of us seniors) OR
      — A, B, D and private Medigap (about 20% of us), OR
      — A,B, D and employer retiree insurance (about 35% of us) OR
      — A, free B, SS Extra-Help LIS D and Medicaid (about 18% of us) OR
      — A, VA and D (a few percent) OR
      — A, possibly B and a spouse’s retiree insurance (a few percent), OR
      — A, B and a working spouse’s insurance OR
      — A and your own working insurance because you can’t afford to retire

      Mr McCanne thinks he can reduce everything to a few Democratic Party talking points.

  21. John Fembup says:

    “Imagine, now, a much simpler system in which the government just pays”

    Imagine that – – one size fits all.

    And that is why I have proposed a government single-grocer program to eradicate hunger and a government single-employer program to eradicate unemployment.

    You see, it would be a much simpler system in which the government just pays.