A couple of things that I had to cut for time (I think I still used about double the time I had been allocated - sorry to all of you in the audience) and so I want to expand on them a bit here:
Job Lock:
One of the biggest drawbacks of our current system of primarily employer-based health insurance comes from what economists call "Job Lock." 3 out of 10 Americans say they or someone in their household have at some time stayed in a job they wanted to leave mainly to keep the health benefits, according to a New York Times/CBS News Poll from several years ago. This is a pretty big problem for two reasons - (1) from a happiness and quality of life standpoint, we don't want people staying in jobs they hate and (2) from an economic efficiency standpoint, we don't want to be losing productivity by having people mis-matched in jobs that don't fit their skills. Imagine an extreme case where someone who wanted to strike out on their own with a great entrepreneurial idea or invention that could change all of our lives (picture a Steve Jobs or Bill Gates or Henry Ford ... whoever) decided to stay at their Starbucks barista job instead because they didn't want to lose their health insurance and as a young inventor working out of their garage, they couldn't afford private health insurance. This is bad for everyone, and a terrible waste of resources and talent. Now, understandably the magnitude of this impact is pretty hard to measure and there is a wide range of estimates but I have seen very believable studies that put the annual cost of job lock as high as 2% to 6% of U.S. GDP. For frame of reference, at the upper end that would be nearly a $Trillion of lost opportunity (which is incidentally also about the magnitude of our annual budget deficits). So one school of thought on moving toward a more universal or otherwise portable insurance model would be that by doing so we stand to potentially gain quite a bit from alleviating some of the pressures of job lock.
Inter-generational transfers and long run growth:
One other point I'd like to make that often goes overlooked in discussions of budgets and deficits is hidden in the subtlety of static vs. dynamic thinking. That may sound like I'm about to get technical, but all I mean is that often when we're weighing budgetary costs of a particular policy (say, Medicare) we think about how that will impact this year's annual budget deficit rather than the overall growth path of our future budgets. The analogy I always use is that when planning our individual household budgets, we consider both our yearly (or monthly) budget but also our lifetime budget. When we decide to by a house or go to college, we incur massive debt at that point - a recent college graduate buying their first house is likely to be hundreds of thousands of dollars in debt when they make that purchase and thus running a gigantic deficit that year (perhaps 4,5, or more times their annual salary ... for frame of reference, the U.S. debt is currently almost exactly 1 year of "salary" or GDP). We are willing and happy to make that choice to go to college despite the incurred debt, because we expect that by gaining education our long term salary will be able to grow more, and in the long run we make back our initial investment and much more over the course of our lifetime before we retire. When considering national policy, we should be aware of times when there are similar opportunities, particularly as the country as a whole will never "retire" hopefully (while individual citizens will, there is always a next generation coming behind them to continue working) and our income into the infinite future will depend on the investments we make today.
To that end, one reason to support programs such as Medicare (and social security for that matter) is that they can lead to increased growth. How you ask? Well, luckily I did a chapter of my dissertation on this topic so I can tell you. One of the rarely talked about advantages of programs that give transfers to retirees and seniors is that it means that they have to save less for retirement. By having the next generation of workers pay for current retirees health care, this frees up money earlier in life to spend in other ways. And one of the most important things people do with money earlier in life is invest in their children (or more broadly, in the next generation - schools, water and air quality, etc). Inter-generational transfers go both ways ... we have things like social security and medicare that go to retirees who can no longer work but we also have education and other child-rearing costs that go to kids who can not yet work. When you have to save less for retirement, you have more to spend on your kids, and thus more investments are made in education and human capital accumulation which are some of the most important things for sustaining growth in the economy. I know this sounds a bit convoluted and like we're just passing money around in a circle, but it's the timing that's crucial when we're considering the compound effects of growth much like any other kind of investment (picture the difference between getting $100 today and getting the result of $100 your parents put in the bank for you 30 years ago gaining compound interest). Life works in such a way that we have all of our money in the middle of our lifespan, and the amount we have unfortunately depends on investments in education that come before we have that money. Thus, we are inherently dependent on the previous generation to make that investment for us. In order to make this transfer work, the trade-off is that when we grow up and become workers with money, we have to pay it back to the generation that came before us, and one of the best ways to do that is via programs such as social security and medicare (especially as fewer and fewer children are taking care of their parents in old age).
So my punchline is: Medicare is an expensive program. But there is reason to believe that the absence of such a program may be more expensive in the long run when you consider the resulting cuts in human capital investment and other similar education and child welfare programs that would be otherwise necessary.
Anyway, I know this was a long, dense post but now you can see why I didn't try to cram all of this into my presentation for constitution day.
ps ... if anyone wants a really good listen regarding health care issues, I really highly recommend this podcast episode of NPR's "This American Life" featuring an interview with an economist I know personally, Melissa Thomasson, discussing some of the history of employer-based insurance among other things.
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