What Will Medicare For All Cost?


At the Debate Circus
If you watched the debates, you know just what I’m talking about. Imagine that you are in front of a national TV audience and you are given one minute and fifteen seconds to explain the expenditures and income sources of your family budget. Meanwhile, six semi-hysterical people interrupt you, laugh, hoot, shout and wave their arms in the air.  Could you do it? If your income is as low as mine, perhaps you could, but that applies to a very few. OK, now try the same thing by putting budget amounts to a national health care system. There is an answer. We will get to it, and it will take less than a minute and fifteen seconds. 

Making the Calculations
The debates show that Bernie Sander’s Democratic opponents don’t understand that buying a health care system is not the same as having contractors submit bids for a new aircraft carrier. To cost out a new health care plan, start with what is currently projected to be spent system wide over ten years if nothing changes, $47 trillion.  Then, estimate various Single Payer savings, for example eliminating insurance company profits and not having to bill hundreds of insurance plans all with different rules for coverage. Next, estimate how much will be raised by a series of changes in the tax laws. For example, a 4% income-based premium paid by employees, exempting the first $29,000 in income for a family of four. Now, add the costs of covering the forty-seven million people who are under or uninsured, plus additional benefits. Then, subtract from the total ten year projection of what the government will spend under current law (Medicare and Medicaid,) over $18 trillion or 39%, and there’s your answer. Why didn’t he just say so?

The Answer!
After actually making these calculations, The Lancet  weekly medical journal, estimates that Medicare for All will cost $3.034 trillion annually, which is $458 billion less than was spent on all US health care in 2017. This  would be a savings of 13% per capita over current spending. Altogether, the authors say, the government would have to raise an additional annual $773 billion in new revenue, about 62% of what is currently spent on Social Security.  The point is that this money is already being spent on health care. What needs to be done through the tax code is to move it from payments to private insurance companies into the national health plan. 

The International Context
France which has one of the more expensive single payer systems, spends 11% of its total economy (GNP) on health care, about $4,965 for each person.  Single Payer Canada spends 10% of GNP or about $4,974 per person. The US now spends 17% percent of GNP or $10,596 per person.  


“… A universal system, such as that proposed in the Medicare for All Act, has the potential to transform the availability and efficiency of American health-care services. Taking into account both the costs of coverage expansion and the savings that would be achieved through the Medicare for All Act, we calculate that a single-payer, universal health-care system is likely to lead to a 13% savings in national health-care expenditure, equivalent to more than US $450 billion annually (based on the value of the US $ in 2017). The entire system could be funded with less financial outlay than is incurred by employers and households paying for health-care premiums combined with existing government allocations. This shift to single-payer health care would provide the greatest relief to lower-income households. Furthermore, we estimate that ensuring health-care access for all Americans would save more than 68,000 lives and 1.73 million life-years every year compared with the status quo.”

To sum it up, while the debate stage is no place for analysis, what should come across is that over the next ten years, the country is already projected to both spend more on health insurance than Medicare for All would cost, and get less actual health care for the dollar than a Medicare for All would deliver.