There is no such thing as single-payer healthcare. It’s really healthcare that everyone pays for. The federal government would be the “single payer,” but of course it’s taxpayers who fund the federal government.
Keep that in mind when you consider Medicare for All, the “single-payer” healthcare program being touted by U.S. Senator Bernie Sanders and many other progressives. Sanders’ Medicare for All bill has 16 co-sponsors and 70 House members have formed a Medicare for All Caucus.
We’ve previously noted that Medicare is already broke and, in its current condition, will be unsustainable as America’s 77 million baby boomers enroll. Medicare for All would make the financial burden even larger, as “All” in this case means 325.7 million Americans.
And if you think the Affordable Care Act is unaffordable, wait until you see the bill for Medicare for All. A conservative estimate of the cost, according to a new study from the Mercatus Center at George Mason University, is $32.6 trillion over the first decade.
That’s about one-and-a-half times the entire federal debt. You could triple all federal appropriations spending, including national defense and domestic discretionary appropriations, and still not pay for Medicare for All. As The Wall Street Journal recently noted, even doubling taxes would not cover the cost.
A Low-Ball Estimate
And Medicare for All will likely cost far more than $32.6 trillion. Researcher Charles Blahous says his study provides a low-ball estimate and “Medicare for All’s actual price tag would likely be even higher.”
His cost estimate assumes that Medicare for All would lower prescription-drug costs and that administrative costs would “somehow be less than half what they are among private insurers.”
Has anything run by the federal government ever lowered costs?
The assumption that prescription costs would decrease is based on the belief that generic drugs could be substituted more often for brand-name drugs. But as demand drops for brand-name drugs, wouldn’t drug companies be less likely to spend the billions of dollars it now takes to develop a drug and bring it to market? Over time, drug companies would develop fewer life-saving drugs.
And The Hill predicts that administrative costs would increase, not decrease.
“Medicare doesn’t actually spend less on administration than private insurers,” according to The Hill. “Medicare’s overhead costs only appear small as a share of its total budget because its recipients are much older than customers with private insurance, and therefore spend a lot more on health care. If you breakdown Medicare’s administrative costs on a per-patient basis, the program actually spends more on overhead than private insurers. As a result, forcing everyone to enroll in Medicare would increase health care administrative costs by more than $12 billion annually.”
40% Cut in Reimbursement Rates
The study also assumes that Medicare reimbursement rates, which are more than 40% lower than private insurance rates, can be universally applied. Currently, private insurance is indirectly subsidizing Medicare’s low reimbursement rates. Even if healthcare providers were willing to apply Medicare reimbursement rates across the board, doing so would likely have an enormous impact on the availability and quality of healthcare.
The study also doesn’t take into account the cost of increased demand for healthcare. All healthcare, including dental, vision and hearing care, would be paid for by all of us via the federal government. The legislation stipulates that “no cost-sharing, including deductibles, coinsurance, copayments, or similar charges, be imposed on an individual for any benefits.”
Since no one would ever be billed for healthcare, Americans would seek medical assistance for everything from hangnails to hangovers. Visit an emergency room near you for a glimpse of what to expect.
And, of course, we would all be paying to insure those unfortunate Americans who are currently uninsured. But wasn’t the Affordable Care Act supposed to insure everyone?
Impact on the Economy
Perhaps the scariest thing about Medicare for All is the impact of shifting trillions of dollars into healthcare that would have been spent elsewhere.
The Centers for Medicare and Medicaid Services (CMS) found that healthcare spending accounted for 17.8% of GDP in 2015 and projected that it would account for 19.9% of GDP by 2025, when it would cost an estimated $5.5 trillion.
Under Medicare for All, healthcare would become a far greater and far less manageable expense than it is today, even with the Affordable Care Act in place. Growth in other sectors would stall, because we wouldn’t be able to afford anything other than healthcare.