Single-payer concept for U.S. healthcare requires close fiscal scrutiny

What would be the price tag of “Medicare for All”? It’s an important question, given current bills under consideration in Congress, the primacy of healthcare thus far in the 2020 presidential election campaign and general public support for the Medicare for All concept.

On Feb. 27, Rep. Pramila Jayapal (D-Wash.) introduced the Medicare for All Act of 2019 in the House. The bill was touted as an improved version of prior bills proposed in the Senate by Sen. Bernie Sanders (I-Vt.) in 2013 and 2017. Not to be outdone, on April 10, Sanders and 14 of his Democratic colleagues in the Senate introduced a bill with the same title as the Jayapal bill.

In general, the Medicare for All bills would create a federally administered single-payer healthcare program that would provide comprehensive coverage for all Americans, across the entire healthcare continuum. All physicians would be effectively in-network, and there would be no deductibles, copayments or cost-sharing requirements of any kind.

Public attitudes

Many Americans support the idea of Medicare for All. According to polls conducted by the Kaiser Family Foundation, public backing in 2019 for a single-payer system averaged 56% from January through April.[1] Similarly, a survey of 2,000 U.S. registered voters conducted from April 30 through May 5 by RealClear Opinion Research found 55% in support of Medicare for All.[2] However, a January Kaiser Family Foundation Health Tracking Poll found that 60% would oppose Medicare-for-All legislation if it would require most Americans to pay more in taxes. Perhaps even more concerning — because it indicates a lack of understanding of the fundamentals of the Medicare-for-All concept — 60% would oppose such legislation if it would threaten the current Medicare program and 58% would oppose it if it would eliminate private health insurance companies.

The cost of a single-payer system

Citing the lower per-capita costs of healthcare in other industrialized countries that have single-payer systems, Sanders contends that national health expenditures (NHE), which totaled $3.5 trillion in 2017, would actually amount to $6 trillion less over 10 years under his plan compared with the current system.[3] Currently, the federal government’s spending on healthcare amounts to roughly one-third of NHE, about $1.1 trillion, funding Medicare, Medicaid, the Children’s Health Insurance Program, health insurance subsidies and related spending, and veterans’ medical care.[4]

Unquestionably, under a single-payer system, the federal government’s expenditures for healthcare would increase significantly. Sanders posits that $16.2 trillion would be the implied expected increase in federal expenditures over a 10-year period under his plan.[5] However, several analyses have concluded that federal expenditures would rise by significantly more than Sanders projected, and NHE would be higher under Medicare for All than under the present multi-payer system.

The Urban Institute, a left-center think tank, has concluded that federal expenditures would increase by about $32 trillion over 10 years (2017-2026) — roughly twice what Sanders projected — and NHE would, in fact, increase, not decrease, by $6.6 trillion over the same 10-year period. Notably, the Urban Institute’s projection incorporates “provider supply constraints faced by current Medicaid enrollees,” which means not all increased demand for healthcare would be met under the program.[6]

Emory University professor of health policy Kenneth Thorpe has concluded that, under the Sanders plan, federal expenditures would rise by almost $25 trillion over the same 10 years.[7] To put the Urban Institute and Thorpe projections in perspective, total federal expenditures in fiscal 2019 will be roughly $4.5 trillion.

In July 2018, Charles Blahous, a senior research strategist at the Mercatus Center at George Mason University, estimated that the Sanders plan would increase federal expenditures by $32.6 trillion during its first 10 years of implementation.[8]

On May 22, Congressional Budget Office deputy director Mark Hadley testified at a House Budget Committee hearing on Medicare for All. Although Hadley declined to provide a cost estimate for the legislation, he noted that the changes required to implement a single-payer system “could significantly affect the overall U.S. economy” and be “potentially disruptive,” and he cautioned that “the amount of care supplied and the quality of that care might diminish.”.[9]

Lessons from the states

Four states have tried to garner public support for a single-payer system, but their plans all fell apart because of concerns about their programs’ high costs and requisite financing. In 1994, California’s Proposition 186 was rejected by 73% of voters. Similarly, in 2002, Oregon’s Measure 23 was voted down by 79% and in 2016, 79% of Colorado voters rejected Amendment 69, a universal healthcare proposal.

Shedding light on the potential tax implications of a single-care program, in 2014, Vermont’s then-Gov. Peter Shumlin, a Democrat who had famously championed a single-payer system, abandoned his drive after concluding that 11.5% payroll assessments on businesses and sliding-scale premiums of up to 9.5% of individuals’ income “might hurt our economy.”[10]

A shift to a single-payer system requires rare objectivity

The divergence between the desire for a single-payer system and equally strong opposition to the tax increases to fund it is emblematic of the human condition: Our wants often exceed our ability or willingness to pay. Ultimately, policymakers and other stakeholders — especially voters, who generally are less aware of the fiscal realities associated with Medicare for All — must consider the downside risks and weigh the benefits of a single-payer system against alternative uses of public resources, from spending on other programs to avoiding significant tax increases. 

Footnotes

^[1]  Kaiser Family Foundation, “Public opinion on single-payer, national health plans, and expanding access to Medicare coverage,” June 19, 2019.

^[2]  Cannon, C.M., “Poll: ‘Medicare for All’ support is high—but complicated,” RealClear Politics, May 15, 2019.

^[3]   Friedman, G., “What would Sanders do? Estimating the economic impact of Sanders programs,” Jan. 28, 2016.

^[4]  Congressional Budget Office, “The budget and economic outlook: 2019 to 2029,” January 2019.

^[5]  Sanders, B., “Options to finance Medicare for All,” accessed June 22, 2019.

^[6]  Urban Institute, “The Sanders single-payer health care plan,” May 2016.

^[7]  Thorpe, K.E., “An analysis of Senator Sanders’ single payer plan,” Jan. 27, 2016.

^[8]  Blahous, C., “The costs of a national single-payer healthcare system,” July 30, 2018.

^[9] Thorpe, K.E., “An analysis of Senator Sanders’ single payer plan,” Jan. 27, 2016.

^[10] Wheaton, S., “Why single payer died in Vermont,” Politico, Dec. 20, 2014.