“Medicare for all” has become an issue in the Democratic Party presidential primary. It has particular relevance for rural people.
Rural people are less likely to have medical insurance than city dwellers. And those who do have insurance are likely to pay more for it.
Rural residents are more likely to buy insurance themselves than to get it through an employer. This “individual market” is the most expensive way to buy insurance. Rural employers who provide medical insurance are more likely to be small businesses for whom such insurance is more expensive than for larger firms.
Private insurance is an expensive way to pay hospital and medical bills. Insurance companies keep 10-15 cents of every dollar they handle. Medicare keeps 1-2 cents per dollar. At least equally important, collecting money from an insurance company is an adversarial process for a clinic or hospital and adds greatly to their costs. The Duke University Hospital employs 1,700 billing clerks for 957 hospital beds, or 1.8 billing clerks per bed. The smaller the clinic, the harder it is to have people in billing and collections who understand the peculiarities of every insurance plan sold by every company.
Results are bizarre. For every practicing physician there are 16 other people getting salaries from medical insurance, hospital and clinic payrolls, according to the book Priced Out, by Uwe E. Reinhardt. Of those 16, 10 provide no patient care but rather do billing, collections, administrative and maintenance work. Overall, insurance and provider administration costs $2,479 for every U.S. resident, compared to $551 per Canadian. In other words, administration consumes about a third of U.S. spending for medical care.
“Medicare for all” is an approach to controlling our run-away costs of managing medical care money. The Medicare program’s overhead costs are about one tenth as great as the overhead costs of private companies. Medicare’s rules are not perfect, but a single set of rules would be much less expensive for hospitals and clinics than the muddle of private insurance plans.
A study published this year in the Annals of Internal Medicine estimates that Medicare for all would reduce U.S. medical insurance and care costs by about $600 billion per year. That’s close to $2,000 per American or $8,000 for a family of four.
Will taxes need to be increased? Probably, but any tax increase will be more than offset by eliminating costs of our current wasteful situation to families and employers who pay for medical insurance.
Wayne Myers is a retired pediatrician and rural medical educator. He served as the head of the federal Office of Rural Health Policy 1998 through 2000 and is a former president of the National Rural Health Association. He and his wife, JoAnn, farm in rural Maine.
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