One big problem with Medicare for all: Medicare coverage isn’t that great

Bernie Sanders has talked a lot about a "Medicare for all" plan, releasing a proposal last Sunday for a public health plan that would cover all Americans.

But when you look at the details of the plan and the structure of health benefits there, it becomes clear that Sanders's plan isn't Medicare at all. Sanders seems to use "Medicare for all" as a catchall term to describe a publicly run insurance program. My colleague Ezra Klein wrote about that in detail here:

Sanders calls his plan "Medicare for all." But it actually has nothing to do with Medicare. He's not simply expanding Medicare coverage to the broader population — he makes that clear when he says his plan means "no more copays, no more deductibles"; Medicare includes copays and deductibles. The list of what Sanders's plan would cover far exceeds what Medicare offers, suggesting, more or less, that pretty much everything will be covered, under all circumstances.

But there's another key fact to understanding the Medicare-for-all debate, one that I didn't fully appreciate until reading this piece from Matthew Martin. It's the fact that Medicare coverage isn't actually that great. And if we really did extend Medicare to cover all Americans, a lot of people would likely find themselves quite disappointed with the benefits.

Medicare has high copays — especially for hospital visits

When we talk about Medicare, we're usually talking about three different programs: Part A, which covers hospital visits, Part B, which covers outpatient services, and Part D for prescription drugs.

"On deductibles, Medicare is pretty reasonable: $1,288 deductible for Part A and merely $166 for Part B," Martin writes. "It's everything after the deductible that's crappy."

Take, for example, copays for hospital visits. For the first 60 days, the patient does not pay anything. But after that, it starts to get expensive: Starting on day 61, patients are expected to pay $322 for each day of hospital care. On day 91, the price doubles to a minimum of $644. Eventually, a Medicare beneficiary is responsible for all hospital costs.

The same structure applies to stays in nursing homes: The first 20 days are covered, and after that there is a copay of $161 per day. After 100 days in a nursing home, the patient is responsible for all costs.

This is really different from how private insurance works under Obamacare. Right now health plans that cover people younger than 65 are barred from putting a limit on hospital stay coverage.

Most seniors won't ever need to use that many hospital or nursing home days. But some sicker patients will — and those prices will add up quickly. These are the exact sorts of catastrophic situations that are typically the whole point of buying insurance. Under Medicare, they're not covered.

Most seniors buy supplemental insurance to fill in Medicare's gaps

Eighty-eight percent of Medicare beneficiaries have some sort of other insurance that helps cover the things Medicare leaves out.

Low-income seniors are eligible to enroll in Medicaid, the public program that covers the poor. About 14 percent of Medicare beneficiaries do this.

Another quarter rely on employer-sponsored benefits, which they might have as retirees or because they're still working. Beyond that, 24 percent (9.3 million seniors) buy "Medigap" policies, which are insurance plans specifically designed to fill in these spaces in Medicare coverage. This works out to about one in four Medicare beneficiaries buying plans to cover the things that their insurance plans leave out.

These plans aren't especially cheap: Medigap premiums averaged $183 per month in 2010. They also provide a lot of coverage: All Medigap policies, for example, will cover any hospital co-insurance after the public plan's benefits have been exhausted.

Most Americans don't think of "Medicare for all" as a world where most of us still rely on our employers and private plans to pay our medical bills. But if we were to extend Medicare to the entire population and keep the program we've built for the elderly, this is the exact type of insurance system we'd be signing up for.