Feel the Bern…or Not
Washington (AP) — Sen. Bernie Sanders’ “Medicare for all” plan would increase government health care spending by $32.6 trillion over 10 years, according to a study by a university-based libertarian policy center. This is a similar conclusion to the Urban Institute’s study.
Sanders-style Medicare-for-All would cost $32.6 TRILLION. That’s: -Nearly twice our annual GDP -54x our annual defense spending -Over 8x our annual federal budget -281x the private sector’s annual medical R&D investment -867x the federal government’s annual medical R&D investment.
The latest plan from the Vermont independent would require historic tax increases as government replaces what employers and consumers now pay for health care, according to the analysis being released Monday by the Mercatus Center at George Mason University in Virginia. It would deliver significant savings on administration and drug costs, but increased demand for care would drive up spending, the analysis found.
Sanders’ plan builds on Medicare. All U.S. residents would be covered with no copays and deductibles for medical services. The insurance industry would be relegated to a minor role.
“Enacting something like ‘Medicare for all’ would be a transformative change in the size of the federal government,” said Charles Blahous, the study’s author. Blahous was a senior economic adviser to former President George W. Bush and a public trustee of Social Security and Medicare during the Obama administration.
Hospital costs are predominantly the expenses involved in staffing and equipping various medical departments, and therefore to a large extent fixed in the short run. Hospital prices do not reflect marginal costs involved in treating each patient, so much as attempts to spread daily running costs overall patients. It is, therefore, possible for Medicare to pay hospitals 87 percent of their average costs so long as private insurance pays 144 percent of their average costs. But such an arrangement would clearly not be sustainable if all rates were brought down to Medicare levels, as Medicare rates are below average costs at two-thirds of hospitals.
hospitals are often able to reduce their costs across the board when payment rates are cut, reducing costs means cutting staff and closing departments, which unsurprisingly tends to come at the expense of quality and access to care. For instance, following the reductions in hospital-payment rates made by the 1997 Balanced Budget Act, relative heart-attack mortality rose at the facilities subjected to the steepest cuts. Hospitals across rural America are already struggling financially, and it is fantastical to imagine that substantial savings can be gained without widespread closures. Americans, 77 percent of whom are happy with their own health-care arrangements, are unlikely to tolerate the collapse of services at their local hospitals.
As the government assumes the entirety of hhealth carecosts, this would require a massive tax increase. It would also have to reduce costs by streamlining and cutting services. But the cost of coverage would easily outpace the savings from reduced operations and services. The government would more than likely have to double all individual and corporate taxes.
The most politically sophisticated single-payer advocates understand this, and acknowledge that taxpayers would have to make up for hospital revenues currently financed by private insurers. Indeed, the honest calculation of how much this would cost was the reason why Vermont’s single-payer initiative collapsed. No other state has since been able to realize such a scheme — and plenty of liberal ones have tried.