The US could insure 30 million more Americans and virtually eliminate out-of-pocket health care expenses while saving $2 trillion in the process, according to a new report about Medicare for All released by the libertarian Mercatus Center.
In the report, Charles Blahous attempts to roughly score Bernie Sanders’s most recent Medicare-for-All bill and reaches the somewhat surprising (for Mercatus) conclusion that, if the bill were enacted, the new costs it creates would be more than offset by the new savings it generates through administrative efficiencies and reductions in unit prices.
The report’s methods are pretty straightforward. Blahous starts with current projections about how much the country will spend on health care between 2022 and 2031. From there, he adds the costs associated with higher utilization of medical services and then subtracts the savings from lower administrative costs, lower reimbursements for medical services, and lower drug prices. After this bit of arithmetic, Blahous finds that health expenditures would be lower for every year during the first decade of implementation. The net change across the whole ten-year period is a savings of $2.054 trillion.
When talking about Medicare for All, it is important to distinguish between two concepts: national health expenditures and federal health expenditures. National health expenditures refer to all health spending from any source whether made by private employers, state Medicaid programs, or the federal government. It is national health expenditures that, according to the report, will decline by $2.054 trillion.
Federal health expenditures refer to health spending from the federal government in particular. Since the federal government takes on nearly all health spending under Medicare for All, federal health expenditures will necessarily go up a lot, $32.6 trillion over the ten-year period according to Blahous. But this is more of an accounting thing than anything else: rather than paying premiums, deductibles, and co-pays for health care, people will instead pay a tax that is, on average, a bit less than they currently pay into the health care system and, for those on lower incomes, a lot less.
At first glance, it is strange that the Mercatus Center, which is libertarian in its orientation and heavily funded by the libertarian Koch family, would publish a report this positive about Medicare for All. The claim that “even the Koch organizations say it will save money while covering everyone” provides a useful bit of rhetoric for proponents of the policy.
http://jacobinmag.com/2018/07/medicare-for-all-mercatus-center-report