Bernie's 'Medicare for All' Might Cost $32.6 Trillion and That's Fine

An analysis that emphasized the hefty price tag also revealed how it would cut healthcare costs while providing insurance to millions.

|
Jul 30 2018, 8:33pm

"Medicare for all," the healthcare holy grail many progressives have dreamed of for decades, continues to look like both an utter fantasy and a potent possibility. Democrats are at least three years away from even being able to pass a healthcare bill, which would require control of both houses of Congress and the presidency. Still, dozens of progressives politicians are now part of a Medicare for All Caucus, and it seems likely that healthcare will be a defining issue of the 2020 primaries, which are closer than you think. The central questions both Republican and Democratic opponents of the plan will ask is: How much will it cost, and who will pay for it?

A new paper by the right-of-center wonk Charles Blahous at the libertarian Mercatus Center offers an answer at least to the first question, giving the idea a $32.6 trillion price tag over the decade 2022–2031 if a Medicare for all bill was passed this year (which obviously won't happen).

That actually sounds like a pretty good deal.

It's tough to analyze Medicare for all as a proposal since the specifics are so far away from being worked out. But Blahous focused on a bill introduced last year by Bernie Sanders, who has spent a good chunk of his Senate career calling for Medicare for all, also referred to as "single-payer" healthcare. Sanders's bill would, over a four-year period, replace the current hodgepodge of employer- and government-provided insurance plans with a government-run system. (This four-year phase-in is why Blahous started his projections in 2022.)

In a statement to Fox News, Sanders called the paper “grossly misleading and biased,” in part because the Mercatus Center gets funding from the Koch Center, whose billionaire patrons are key sugar daddies of right-wing politics. But it's not far away from other cost estimates, and it actually shows that Medicare for all would reduce healthcare costs in the US in a huge way.

Granted, $32.6 trillion over ten years is a lot of money—Blahous estimates the additional cost to the federal government in 2031 would be about $4.2 trillion, or "nearly 12.7 percent of GDP." But in 2016, the US spent $3.3 trillion on healthcare, or around 18 percent of the country's GDP. As Axios, no bastion of left-wing thought, put it:

All told, "Medicare for All" would actually slightly reduce the total amount we pay for health care. But the plan would increase the share of that cost paid through taxes, rather than through insurance premiums or out of pocket.

So instead of paying for healthcare through premiums and co-payments, Americans would pay through taxes. In exchange, the tens of millions of people who still lack health insurance would have access to it—even dental and vision plans—and out-of-pocket costs would be smaller than they are for even current Medicare recipients. By Blahous's math—and remember, he's not a Medicare-for-all hype man—national health expenditures would drop $93 billion in 2022 as a result of lower prescription drug costs, administrative savings, and lower reimbursement rates to healthcare providers. (National health expenditures is what the country as a whole, not just the government, pays for medical care.)

It's that point about reimbursements where things get a bit murky—Sanders's plan would save a lot of money by paying Medicare rates to hospitals and doctors, and those rates, Blahous writes, "are projected to be roughly 40 percent lower than those paid by private insurers during the first 10 years of M4A’s proposed implementation." That cut in rates could cause huge problems: "Universal Medicare-like payment rates would almost certainly cause some major disruptions, like hospital closings," wrote the New York Times in an explainer on Sanders's bill last year. If the government tried to remedy this by reimbursing hospitals at higher rates, that price tag on Medicare for all gets even higher.

Reimbursement is the sort of issue that would be hotly debated should Democrats actually take control of the federal government in 2021. But in broad strokes, this right-wing attack on Medicare for all winds up looking perversely good for Sanders and his sympathizers. Yes, healthcare costs would shift to being the responsibility of the federal government, and thus taxes would be a lot higher. But that shifting would insure millions more for less money—as Matt Bruening pointed out in socialist mag Jacobin, Blahous's paper suggests net national health expenditures would drop by $2.054 trillion over a decade if Medicare for all became law. So what's the catch again?

Sign up for our newsletter to get the best of VICE delivered to your inbox daily.

Follow Harry Cheadle on Twitter.

More VICE
VICE Channels