• Freedom
  • Innovation
  • Growth

Five Takeaways from Mercatus's Medicare for All Cost Study

The Mercatus Center at George Mason University just released a study by the Center’s Charles Blahous estimating the cost of a government-run, single-payer health care system similar to Senator Bernie Sanders’s Medicare for All Act (M4A). 

Under single-payer, Americans drop their private insurance coverage, pay higher taxes and the government pays most health care costs—no system covers all costs.  

It’s an idea Sanders has long supported, but not most Democrats—until recently. 

Having destabilized and undermined the private health insurance system with the Affordable Care Act, Democrats are now embracing single-payer as the only way to save us from their last attempt to reform our health care system. 

Here are five takeaways to help put the issue in perspective: 

$32.6 trillion over 10 years is not outrageous. Blahous’s finding that M4A would cost the federal government $32.6 trillion over the first 10 years—or about $3.3 trillion per year—has created considerable media buzz.  But the country spent $3.3 trillion on health care in 2016. And Blahous points out that his findings, which he considers conservative, are basically in line with previous studies of the cost of implementing single-payer. 

The 28 million uninsured would theoretically have coverage. However, the additional cost of providing them coverage would be “paid for” in part by administrative savings, but primarily by lower reimbursements for prescription drugs and health care providers. Whether doctors could survive on Blahous’s estimated 40 percent reimbursement reduction is unclear. 

Blahous’s study could be seen as a gift to single-payer advocates. They could argue that the country could provide universal health coverage, eliminate insurance hassles, and cost the same. That could be an appealing argument to some voters. 

However, Sanders immediately criticized the study. Why doesn’t he see it as helpful? Because he believes that M4A would cost the country significantly less than we are currently spending. He defends that view by pointing out that other developed economies provide universal coverage and spend less than the U.S. 

The tax increase would be enormous. Blahous writes, “doubling all currently projected federal individual and corporate income tax collections would be insufficient to finance the added federal costs of the plan.” Not to worry, liberals say, the money employers and individuals currently spend on private health insurance, $1.1 trillion in 2016, could be diverted to the government. Or would it?

The vast majority of those health insurance premiums are paid by employers as an employee benefit. Are liberals sure that money would be handed over to employees to help them pay their new M4A taxes?

Americans need to understand that the same Democrats who made glowing promises about Obamacare are now making glowing promises about Medicare for All. They were completely wrong about Obamacare, why should anyone believe them now?