Tuesday, March 15, 2016

Medicare for All vs Obamacare

Mr. Tan
Can you explain the difference between "Medicare for All" proposed by Bernie Sanders and Obamacare, which is the signature legislation of President Obama.

Medicare in the USA applies to seniors above age 65. All the medical fees are paid by the Federal Government, except for prescription drugs, which can be covered separately by private insurance.

Bernie Sanders want to extend Medicare to all eligible persons. Their medical fees will be paid by the Federal Government. This will be funded through a payroll tax.

The Federal Government is able to negotiate prices and fees with the hospitals, doctors and drug companies under a "single payor" system. The government is the single payor.

Bernie Sanders expect that the "single payor" system will reduce the cost of health insurance, similar to the experience in other industrial countries.

Obamacare is provided by private insurance companies. In theory, the buyers can shop for the best deal through the competitive private market, but in practice, the cost is higher than a "single payor" system due to the cost of marketing and profit margin of the insurance companies.

In short, the key difference is:

a) Medicare is run by the government as the "single payor"
b) Obamacare is provided by private insurance companies

The system in Singapore is similar to Obamacare, as it is largely provided by for-profit insurance companies.

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