Even Doubling Taxes Wouldn’t Pay for ‘Medicare for All’.

By Catherine Cooper | Aug 09, 2018
Source: By Charles Blahous Wall Street Journal

From the Wall Street Journal:

The idea of “Medicare for All” has energized progressives ahead of November’s midterm elections. Across the country, candidates like New York congressional hopeful Alexandria Ocasio-Cortez have rallied to the slogan. Vermont Sen. Bernie Sanders introduced the Medicare for All Act last year and has so far rounded up 16 co-sponsors. Last month, 70 House members formed a Medicare for All Caucus.

But there is an enormous gulf between the appealing idea of Medicare for All and the incredibly expensive reality. According to my calculations, paying for every American’s health-care expenses would increase federal spending by $32.6 trillion over the first decade of Medicare for All. Even if Congress were to double what it collects in individual and corporate income taxes, there still wouldn’t be enough money added to the federal coffers to finance the costs of this plan.

While such large amounts of money are difficult to comprehend, my cost estimate is essentially a lower bound. Medicare for All’s actual price tag would likely be even higher. My projection generously assumes the plan would succeed in lowering prescription-drug costs and that administrative costs would somehow be less than half what they are among private insurers.

Most important, it assumes Medicare for All would successfully cut all health-care provider payments down to Medicare’s reimbursement rates, which are more than 40% lower than private insurance rates—and even below providers’ costs of delivering services. Moreover, it assumes that Medicare for All will somehow do all this without disrupting the availability and quality of health care.

Medicare for All would require an unprecedented rise in already unaffordable federal health-care subsidies, which are currently equal to about 6.6% of gross domestic product. The plan would expand federal taxpayers’ obligations by 10.7% of GDP right away. That would rise to 12.7% of GDP and beyond within 10 years of full implementation—over and above taxpayer obligations under current law. This would be even more expensive than tripling all future federal appropriations spending, including national defense and domestic discretionary appropriations.

Part of the cost increase from Medicare for All would naturally come from covering those who are currently uninsured. But the proposed legislation would also expand coverage of specific benefits such as dental, vision and hearing, and greatly increase demand for health services that are already insured, through its stipulation that “no cost-sharing, including deductibles, coinsurance, copayments, or similar charges, be imposed on an individual for any benefits.”

The more of a person’s health care is paid by insurance rather than out of pocket, the more health-care services he tends to buy, regardless of quality and effectiveness. Providing first-dollar coverage for a range of health-care services would therefore be a powerful force driving additional health-care spending. Although Medicare for All proponents believe the administrative efficiencies of single-payer insurance would reduce national health-care costs, my research found the opposite—specifically, that the added costs associated with increased coverage far surpass not only the savings attainable from lower administrative costs, but also the savings potentially gained from swapping brand name drugs for generics.

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%. Without such cuts, Medicare for All would drive national health costs further upward, and the federal price tag would be $38 trillion during its first 10 years.

Mine isn’t the first study to show that Medicare for All’s price tag would be enormous. Independent estimates from the Urban Institute, the Center for Health and Economy, and Emory scholar Kenneth Thorpe have reached similar conclusions.

Medicare for All would place more than 15 times as much pressure on federal finances as did last year’s tax reforms. Before too many Americans become invested in the rhetorical vision of Medicare for All, there needs to be a serious national discussion about whether shouldering its vast cost is even remotely within the realm of practical possibility.


Comments (5)
Posted by: Kevin Riley | Aug 13, 2018 07:42

"The economy is doing well and eclipses all but one 4 month period of the Obama administration."


Ahhhh no.

Posted by: Ronald Horvath | Aug 08, 2018 05:30

Nice try, Catherine, but I'm pretty sure your posts only strengthen the growing public opinion of trump supporters; delusional to the nth degree.  But, hey, just so long as you feel good about yourself.

Posted by: Karla Schwarze | Aug 04, 2018 07:19

Isn't it funny how Mercatus doesn't mention that their own study shows a savings of 2 trillion over 10 years?  They must think nobody would ever actually read the thing.  Based on the original post, I suppose they're right.   Oh well, just another bunch of American Exceptionalists claiming we can't do what virtually every other civilized country in the world has already done.

Posted by: Ronald Horvath | Aug 03, 2018 18:57

That's a pretty poor excuse for a copy-cat post there, Catherine.  I guess it's not cut and paste, at least, right?  Oh, and if you put everything in bold it kind of kills the purpose.  But then I'm talking common sense to a trump supporter who gets all her "information" from Fox news so what's the purpose inthat, right?  In any case here's another cut and paste you won't like.


Poll: Most Americans want to replace Obamacare with single-payer — including many Republicans

"Well over half of Americans want to replace Obamacare with a single-payer system. That figure, amazingly, includes 41 percent of Republicans and Republican-leaning independents — even though the wording of the question specifies that the program would be "federally funded." (Mind you, more than half of Republicans oppose the idea.)

The high number of Republicans approving of the idea may be because Republicans are so hostile to the Affordable Care Act. Gallup's polling has consistently shown that Republicans hold strongly negative views of the program. Replacing the ACA with anything probably holds some appeal.

Nearly 8 in 10 Democrats want to keep the ACA in place; just under three-quarters want to replace it with single-payer. (Only 16 percent of Republicans want to keep the ACA, which is why single-payer gets the highest support overall.) It's not that simple, though. Fifty-nine percent of Democrats support the idea of both keeping the ACA and replacing it with a single-payer program. Asked to pick between the two, though, that group favors single-payer by a 2-to-1 margin."


Posted by: Scott O'Brien | Aug 03, 2018 16:12

No one reported on the second half of the report that showed the costs stated are 2 trillion LESS over the decade than a continuation of what we are doing now - and it would cover everyone. Anyone who pays premiums for insurance knows that the insurance companies are raising premiums almost unchecked. If you can pay for the premiums, you can't afford the co-pays and that's if some bean-counter at the insurance company doesn't deny coverage outright. Much of our premiums goes for administrative costs geared to deny us coverage and to obscene compensation to upper management.

EVERY other major "1st world" country provides better healthcare at lower cost per person. This is a FACT, not based on crack-pot calculations provided by Republicans.

It's time to return healthcare, education, infrastructure etc to the "commons" and out of the clutches of for-profit business.

Joanne OBrien

If you wish to comment, please login.