Medicare for All would cost patients an arm, a leg, and $32 trillion

Ross Marchand

March 6, 2020

This article originally appeared in the Washington Examiner on March 5, 2020.

A new study purports to show that Medicare for All would actually save taxpayers and consumers money. Academics at three University of California campuses looked at 22 studies on the projected cost of single-payer health insurance in the United States only to find that they would likely save money in the long run.

But don’t go branding Bernie Sanders a fiscal hawk just yet. Many of these studies don’t pass the smell test. Some are being completely misconstrued by researchers attempting to analyze socialized medicine.

Researcher Christopher Cai and his co-authors claim that there is “a high degree of analytic consensus for the fiscal feasibility of a single-payer approach in the U.S.” Bizarrely enough, one of the research papers used to support the authors’ claims is a landmark 2018 Mercatus Center analysis finding that Medicare for All (in the form proposed by Sanders) would cost taxpayers more than $32 trillion over 10 years, going by conservative estimates.

Despite this gargantuan price tag found by Mercatus scholar Charles Blahous, Cai and his co-authors claim that this cost actually represents a savings from total, combined healthcare spending under the status quo. In making this assumption, the authors should have talked to Blahous himself, who finds these sorts of claims highly misleading.

According to Blahous, “Some have seized on a scenario in my estimates showing a slight decline in projected total public and private health expenditures under Medicare for All. But that decline, relative to current projections, relies on an assumption that [Medicare for All] would immediately and dramatically cut provider payment rates by roughly 40%.” In make-believe land, policymakers can snap their fingers, slash doctor pay by 40%, and patients end up happier at a far lower cost to everyone. Cai and his co-authors neatly sidestep the reimbursement issue, declaring, “We are unaware of studies analyzing the effects of other key inputs, such as reductions in reimbursement rate.”

Except that this isn’t true, either. There’s plenty of research pointing out the obvious fact that cutting reimbursement rates for medical providers leads to fewer resources to treat patients and worse outcomes. For example, this 2014 analysis by University of Southern California and Naval Postgraduate School scholars found that Medicare payment reductions, in this case as a result of the Balanced Budget Act of 1997, “were associated with deteriorating patient outcomes in the long run.” The research findings showed that every $1,000 in revenue loss was associated with a 6% to 8% increase in mortality rates.

In other words, the “Sandersistas” are proposing national healthcare savings by raising the mortality rate and curtailing care access.

But the shenanigans of Cai and the rest don’t end there. Some studies they cite (including a 2015 study by University of Massachusetts’s Gerald Friedman) assume that Medicare for All would have lower administrative costs than the status quo. To support this notion, Friedman misleadingly claims (on pages 17-18) that Medicare middleman costs are lower than those of private insurance.

But here’s Blahous again: “One reason Medicare’s administrative cost rates appear to be so much lower than private insurance rates is that they are expressed as percentages of Medicare’s overall per capita costs, which are much higher.”

Medicare, after all, caters to the senior population, who consume far more and more expensivehealthcare services than the typical member of the public. If you correct for this by measuring administrative costs per beneficiary, Medicare’s average expenses are at least twice that of private insurance. Medicare for All would most likely increase billing and paperwork costs, not reduce them as claimed by the studies cited by Cai.

Accounting shenanigans and bizarre claims are nothing new in healthcare policy, but the stakes here are just too high to let such things go by. Socialized medicine would spell disaster for millions of patients and, yes, would drastically increase costs on taxpayers. All assumptions must be examined instead of being tacked onto a leaning tower of pseudoscience.