Practically all of the 2020 Democrat candidates have rallied their support behind a “Medicare for all” program, with differing levels of government involvement among their specific plans.
While some plans could take the form of achieving universal coverage by expanding already-existing public programs to those without health insurance, the likes of Bernie Sanders and Kamala Harris support a complete overhaul of the private insurance system whereas everyone ends up receiving the same government healthcare plan, and private insurance is banned. Over 100 House Democrats support banning private health insurance, so such an extreme concept is clearly gaining momentum on the Left.
Of all the 2020 candidates, Sen. Sanders has the most detailed Medicare for All (MFA) plan, and it has existed long enough that numerous organizations have studied its likely impact. For that reason, I’ll be criticizing the questionable math behind the Sanders MFA plan in particular (which other Democrats will likely mold their versions from).
Mercatus’ Sobering Study
According to a comprehensive review from the Mercatus Center, Bernie’s MFA plan would increase the federal budget’s healthcare expenditures by at least $32.6 trillion above current levels projected over the 10-year period from 2022-2031. For some perspective, doubling current projected federal income tax and corporate income tax revenues over the same time period wouldn’t be enough to pay for that increase. While defenders of MFA will point out that some of the new taxes people will pay will be offset by them no longer paying for private health insurance, Mercatus’ estimates prove those individuals would still be paying more overall under the Sanders proposal.
It must be emphasized that the $32.6 trillion figure is the absolute minimum increase in spending needed to facilitate a MFA plan, because Sen. Sanders’ plan assumes that healthcare providers will see their reimbursements fall 40% below current levels under private insurance, and also assumes large cost savings in pharmaceutical spending. These are unrealistic assumptions, but since they are included in Sen. Sanders plan, they are granted by the study to show what would happen in a best case scenario. Sanders also could’ve said he could cut healthcare expenses in half with a magic wand and the study would’ve granted it.
Another reason Mercatus’ estimates are conservative is due to the fact that Mercatus time-frame is from 2022-2031, assuming enactment of MFA in 2018 (due to when the study was conducted). Obviously, enactment would be in at least 2020, so the time-frame has to be pushed back at least two years. And since health care costs increase every year, there are an additional two years of healthcare inflation to account for in estimates.
Sanders’ MFA plan will increase health care costs for a number of reasons:
- The most obvious expense will stem from the previously uninsured becoming covered. While the uninsured do still spend money on healthcare as a category, they are expected to increase their health expenditures by 89% with MFA.
- Eliminating cost-shared for the already-insured.
- Increasing the range of health services offered.
- The absence of deductibles and “free” aspect of care will increase utilization among the previously insured too. While health care is not literally “free,” it is “free” to the individual user, and we all know how supply and demand works. The Sanders’s plan calls for “no cost-sharing, including deductibles, coinsurance, co-payments, or similar charges, be imposed on an individual.” Practically all single payer healthcare systems worldwide make the patient pay at least something, even if it is minuscule.
Quoting Mercatus, “These effects are estimated to add $435 billion to national healthcare spending. The plan would sharply cut payments to providers, subtracting $384 billion, and has also been credited with $61 billion in lowered prescription drug costs. Combining these effects results in projected (annual) personal health spending in 2022 of $3.849 trillion.”
Are Mercatus Findings Biased?
As some readers are already aware, the Mercatus Institute has libertarian-leanings and receives some funding from the Koch brothers (two modern boogeymen of the Left). It doesn’t take a genius to ask the question of if it’s really all that surprising that a libertarian-leaning think tank would come to the conclusion that MFA would cost an arm and a leg – but they’re hardly the only think tank coming to a similar conclusion.
The center-left Urban Institute projected a 10-year additional cost of $32 trillion from Sanders’ MFA plan when they analyzed it in 2016 (for the time period 2017-2026). Another 2016 study of the same time-frame from the Center for Health and Economy projected that Sanders’ MFA plan would increase deficits by $27.3 trillion (and total new spending by $34.67 trillion).
The discrepancy in estimates comes between the latter two studies comes from the fact that the Urban Institute’s projections include a $2.94 trillion cost estimate for Sanders’ plan’s provisions for covering long-term supports and services (LTSS), which the Center for Health and Economy does not.
Misunderstanding Mercatus
Humorously, Sen. Sanders and others have completely misinterpreted the Mercatus study’s results as proving his plan would insure the nation at a lower cost than we spend currently on healthcare.
“Thank you, Koch brothers, for accidentally making the case for Medicare for All!” captioned a tweet where Bernie thanked the Kochs for helping fund a study that proves Medicare for All would save $2 trillion over a 10 year period.
Alexandria Ocasio Cortez also referenced the study when asked how to pay for her socialist proposals by CNN’s Jake Tapper; “One of the things that we need to realize when we look at something like ‘Medicare for all — ‘Medicare for all’ would save the American people a very large amount of money.”
They couldn’t be more wrong – stay tuned for that blunder in part two.
