Biased Study Still Finds Significant Medicare-for-All Savings, Though Author’s Assumptions Should be Met with Skepticism
The Medicare-for-All movement’s ever-growing momentum is beginning to spook conservatives, forcing them to engage directly with the issue when previously opponents had simply brushed off the policy. Just last week Seema Verma, Administrator of the Centers for Medicare and Medicaid Services (CMS), took it upon herself to rail against the increasingly popular policy of Medicare-for-All. And earlier this week, the Mercatus Center, a libertarian think tank funded by the right-wing Koch Brothers, released a report with estimates of the price tag for Medicare-for-All. What’s funny about the report is that instead of providing data to support opponents of the policy, it actually bolsters the many arguments in favor of expanding and improving Medicare and providing it to everyone.
Not to say the report was neutral. Charles Blahous, the author of the report, showed his bias by emphasizing the rise in federal government spending on health care under Medicare-for-All while glossing over his finding that Medicare-for-All would reduce overall health system spending by $2 trillion over ten years. Even with some questionable assumptions about costs and savings which are discussed below, Blahous estimates that total health system spending from 2022-2031 would drop from $59.7 trillion under our current system to $57.6 trillion under Medicare-for-All. This finding even led Bernie Sanders to thank the Koch Brothers for helping to make the case for Medicare-for-All.
Not only would Medicare-for-All cost less than our current fragmented system, it would do so while covering the more than 30 million Americans that are currently uninsured and providing more generous benefits, including vision and dental coverage. In addition, the approximately 40 million Americans that are currently underinsured—meaning their out-of-pocket costs prevent them from getting the care they need—would finally be able to access medical services that were previously out of reach.
Despite finding significant overall savings, some of Blahous’ estimates differ widely from previously published research on the topic. Blahous significantly underestimated potential savings from government negotiation of prescription drugs and reducing administrative waste. An earlier estimate found that the U.S. could save around $600 billion a year (those savings would likely be higher now, given that the study was done in 2014). Another study, which reviewed a series of single-payer academic studies, found the average estimate of savings on administrative waste and prescription drug negotiation was $556 billion a year, with estimates ranging from over $1.5 trillion to $140 billion. By contrast, Blahous’ only estimated savings of $120 billion in 2019, the most recent year he studied.
In addition, Blahous overestimated increased demand for health care services. He estimated that utilization would jump by around $370 billion in 2019, much higher than previous estimates. For example, one study, estimated increased spending of only around $144 billion. Further, other authors have highlighted that previous health reforms generally only lead to modest increases in health care utilization.
As can be seen by just these examples, the actual savings from transitioning to a single-payer Medicare-for-All system are likely to be much larger than the $2 trillion in savings that was estimated in the biased Mercatus study. However, it’s always great when our opponents put out reports that lend support to our arguments!
It’s always good to remember the old saying “first they ignore you, then they laugh at you, then you WIN.” With your help, we can WIN the fight for single-payer, Medicare-for-All. Please spread the word about the benefits of Medicare-for-All, including cost savings, and help us keep this momentum growing!