Medicare for All: Definition, Pros & Cons

Medicare for All is a proposed new healthcare system for the United States where instead of people getting health insurance from an insurance company, often provided through their workplace, everyone in America would be on a program provided through the federal government. It has become a favorite of progressives and was heavily championed by Sen. Bernie Sanders (D-Vermont) during his runs for the Democratic presidential nomination in 2016 and 2020.

If you are looking for help with medical planning under our current system, consider working with a financial advisor.

How Medicare For All Works

A Medicare for all bill would replace all other insurance, with limited exceptions, such as cosmetic surgery. Private insurance, employer-provided insurance, Medicaid and our current version of Medicare, would all be replaced by Medicare for All. The Affordable Care Act (ACA), commonly referred to as Obamacare, would also be replaced by Medicare for All.

Medicare for All is actually more generous than your current Medicare program. Right now, Medicare is for Americans 65 and older. They receive care, but they’re also responsible for some of the costs. However, Sanders’ plan would cover medical bills completed, with no financial burden on the patient.

Sanders’s Medicare for all bill would be a single, national health insurance program that would cover everyone living in the United States. It would pay for every medically necessary service, including dental and vision care, mental healthcare and prescription drugs. There would be no copays or deductibles, with the exception of prescription drugs, though the cost would be limited to $200 a year. There may also be additional out-of-pocket costs for long-term care.

The government would set payment rates for drugs, services and medical equipment. Each year, the Secretary of Health and Human Services would come up with a national budget for all covered services and spending would be capped by that national budget. Just 1% of the total health spending budget would be used to provide job dislocation assistance for people working in the insurance industry.

Sanders’s bill includes a four-year phase-in during which increasingly younger people could buy into Medicare. It would work like this: 55-year-olds would be able to buy into Medicare in the first year, 45-year-olds in the second year and 35-year-olds in the third year. Out-of-pocket costs would be reduced for everyone buying into Medicare. There would also be a public option insurance plan offered to people of all ages through the Obamacare marketplaces.

Medicare for all is effectively single-payer healthcare. Single-payer healthcare is where the government pays for people’s healthcare. The new name just makes the concept more popular. A Kaiser Family Foundation poll found that 48% of people approved of single-payer healthcare, while 62% of people approved of Medicare for All.

The Costs Associated With Medicare for All

Here are the pros and cons of Medicare for All.

If everything stays the same, healthcare spending by the private and public sectors will reach $45 trillion by 2026. The libertarian-oriented Mercatus Center at George Mason University estimated that the cost of Medicare for All would be more than $32 trillion over a 10-year period.

Kenneth Thorpe, a health finance expert at Emory University looked at a version of Sanders’ Medicare for All during the 2016 campaign. He estimated that the cost would be about $25 trillion over 10 years.

In order to pay for the program, Sanders has suggested redirecting current government spending of about $2 trillion per year into Medicare for All. To do that, he would raise taxes on incomes over $250,000, reaching a 52% marginal rate on incomes over $10 million. He also suggested a wealth tax on the top 0.1 % of households.

Pros and Cons of Medicare for All

The advantages and drawbacks of this program partially depend on your income bracket. If you make less than $250,000, Sanders’ additional tax will not affect you. If you make more than $250,000 a year or are in the top 0.1 % of households, Sanders’ tax to pay for Medicare for All would be a con for you.

In addition, universal healthcare requires healthy people to pay for medical care for the sick. However, that is how all health insurance programs work. Everyone buys in and pays the costs of health insurance. Then the insurance company only pays when someone needs medical care or coverage. In every insurance plan, healthier people absorb the costs incurred by sicker people.

Here’s a breakdown of some of the most important benefits of a Medicare for all system:

Lower healthcare costs: Universal healthcare lowers healthcare costs for the economy overall since the government controls the price of medication and medical services through regulation and negotiation.
Less administrative cost: It would also eliminate the administrative cost of working with multiple private health insurers. Doctors would only have to deal with one government agency, rather than multiple private insurance companies along with Medicare and Medicaid.
Save companies money: Companies would not have to hire staff to deal with many different health insurance companies rules. Instead, billing procedures and coverage rules would be standardized.
Same healthcare, less cost: Hospitals and doctors would be forced to provide the same standard of service at a low cost, instead of targeting wealthy clients and offering expensive services so they can get a higher profit.
Healthier population: Universal healthcare leads to a healthier population. Studies show that preventive care lowers expensive emergency room usage. Before Obamacare, 46% of emergency room patients were there because they had nowhere else to go. The emergency room became their primary care physician. This type of healthcare inequality is a major factor in the rising cost of medical care.

On the flip side, here are some potential issues associated with Medicare for All:

Savings might not be as advertised: Some analysts are concerned that the government may not be able to use its bargaining power to drive down costs as steeply and as quickly as Sanders predicts. Thorpe argues that Sanders is overly optimistic on this aspect of the bill.
Increase in medical usage: Other analysts are concerned that insulating people from costs of care will drive up the usage of medical care. Drew Altman, who heads the Kaiser Family Foundation, pointed out that “no other developed nation has zero out-of-pocket costs.”
Less careful population: People may not be as careful with their health if they do not have a financial incentive to do so.
Less incentive for doctors: Governments have to limit healthcare spending to keep costs down. Doctors might have less incentive to provide quality care if they aren’t well paid. They may spend less time per patient in order to keep costs down. They also have less funding for new life-saving technologies.
Longer wait times: Since the government focuses on providing basic and emergency healthcare, most universal healthcare systems report long wait times for elective procedures. The government may also limit services with a low probability of success and may not cover drugs for rare conditions.

Other Medicare and Medicaid Expansion Bills

Beyond the well-known “Medicare for All” proposals, lawmakers have introduced several other bills aimed at expanding access to healthcare through the existing Medicare and Medicaid systems. These efforts share a common goal, broadening coverage and lowering costs, but differ in how far they go toward achieving universal healthcare. Some focus on lowering the eligibility age for Medicare, while others expand Medicaid in states that haven’t adopted it under the Affordable Care Act.

One of the most discussed alternatives to full Medicare for All is the proposal to lower the Medicare eligibility age from 65 to 60. Supporters argue that this approach could give millions of near-retirees access to affordable healthcare sooner, reducing financial strain for those in their early 60s who often face high private insurance premiums. Critics, however, worry that expanding eligibility could increase federal costs and strain the Medicare trust fund.

Some lawmakers have pushed for a “public option” that would allow individuals to buy into a government-run insurance plan similar to Medicare, while keeping private insurance available. Others have focused on expanding Medicaid coverage to close gaps in states that opted out of the ACA’s Medicaid expansion. These targeted reforms aim to improve affordability and accessibility without fully overhauling the healthcare system.

While Medicare for All represents a sweeping transformation, these smaller-scale proposals take a more incremental approach. They aim to expand coverage to more Americans without eliminating private insurance or restructuring employer-based plans. Whether through Medicare expansion, Medicaid reform, or a new public option, these efforts reflect the ongoing debate over how best to make healthcare affordable and accessible for everyone.

Bottom Line

While Medicare for All represents a bold vision for universal healthcare, it’s not the only path lawmakers are considering. Proposals to lower the Medicare eligibility age, expand Medicaid, or introduce a public option offer more gradual ways to broaden coverage without overhauling the entire system. Each approach comes with trade-offs in terms of cost, accessibility and political feasibility. For now, the national conversation continues to focus on balancing affordability and choice, finding solutions that expand healthcare access while maintaining a sustainable system for future generations.

Tips for Keeping Your Finances Healthy

It is important to keep yourself physically and financially healthy. If you are concerned about budgeting for healthcare costs, you may want to look into working with a financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
A health savings account (HSA) may be a good option for younger people who are worried about potential healthcare costs. HSAs can greatly reduce monthly premiums.