Bernie Sanders' healthcare plan: The trouble with nixing private insurers

With the race between Hillary Clinton and Bernie Sanders closer than ever, one of the key differences that has emerged between the two Democratic presidential candidates is their healthcare policy positions.

While Clinton largely wants to keep the Affordable Care Act intact, Sanders (right) has a bolder plan, proposing a single-payer, "Medicare for all" system long sought by some progressives. Sanders says that under the plan, a typical family earning $50,000 a year would save nearly $6,000 annually in healthcare costs.

"It is time for our country to join every other major industrialized nation on earth and guarantee healthcare to all citizens as a right, not a privilege," Sanders said in his announcement of the plan.

But how will a single-payer system affect the country's private insurers--and the impact they have on the economy?

To find out, FierceHealthPayer analyzed data from America's Health Plans (AHIP) on how insurers contribute to the economy and health coverage in each state. Here's a brief rundown of how AHIP's most recent data plays out nationally:

  • States collect $17.4 billion in premium taxes from health plans.
  • Health insurers provide a total of 515,234 direct jobs, which is an average of 10,103 per state.
  • Health insurers provide 842,105 indirect jobs, which is an average of 16,512 per state.
  • An average of 54.69 percent of residents across all 50 states and the District of Columbia are insured through private payers.

The net savings Sanders expects from his plan will come from "reduced spending on administrative activities, in both private insurers and providers' offices, reduced spending on monopoly prices for pharmaceuticals and medical devices, and a slowdown in the growth of spending because of controls on administrative costs and drug prices," University of Massachusetts at Amherst economics professor Gerald Friedman writes in a memo assessing the plan.

The Sanders campaign also has said that his plan would cost an additional $1.38 trillion per year and would be financed primarily by raising taxes on high-earners, employers and other entities. Yet an analysis out Wednesday from the bipartisan Committee for a Responsible Budget finds that those proposed offsets would cover only 75 percent of the projected cost, adding up to a $3 trillion shortfall over 10 years.

For its part, the health insurance industry's biggest trade group is, understandably, against eliminating private payers.

"A competitive market is key to delivering on the promise of consumer choice, value and innovation," America's Health Insurance Plans (AHIP) spokeswoman Courtney Jay wrote in an email to FierceHealthPayer.

"Health plans are working to deliver that value to consumers every day by offering them a range of coverage choices and improving the way we pay for care. That needs to be the focus moving forward."

To learn more:
- here's Sanders' announcement
- read the details of his plan
- check out Friedman's memo
- read the Committee for a Responsible Budget analysis
- here's the AHIP data

Related Articles:
Bernie Sanders details plan for single-payer healthcare system
Clinton vs. Sanders: Battle of the healthcare policies
The rise and fall of Vermont's single-payer healthcare system

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