Advocates of single-payer health care—like Sen. Bernie Sanders, I-Vt., with his “Medicare for All” legislation—suggest Americans would enjoy a health care utopia if only the government took over.
But claims of lower costs and better, more efficient care are widely overblown. Here are the facts.
What Is Single-Payer?
A “single-payer” health system is a government-controlled health care system. Government is the “single-payer.” In most versions of single-payer, most private health insurance is either outlawed or restricted, and most public health programs are absorbed into the single, national health insurance program.
While there are a variety of “single-payer” proposals—including several state proposals—Sanders’ “Medicare for All” bill is the most prominent. His plan would finance the national insurance program through a combination of payroll and income taxes, and it would replace private and employer-sponsored health insurance and existing government health programs—including Medicare itself.
Under the Sanders plan, only the Veterans Administration and the Indian Health Service would remain largely as they are today.
How Much Would It Cost?
The cost of a single-payer system would depend upon its design, benefit levels, and scope of coverage. In the case of Sanders’ proposal, estimates consistently show that the plan would impose dramatic obligations on the federal taxpayer, and that the proposal would incur substantial annual deficits. For example:
- The Urban Institute estimates 10-year spending of $32 trillion, only about half of which would be covered under Sanders’ funding options
- Mercatus Center’s Charles Blahous estimates a 10-year $32.6 trillion increase in federal spending. Even “doubling all currently projected federal individual and corporate income tax collections would be insufficient to finance the added federal costs of the plan.”
- Economist Kenneth Thorpe of Emory University estimates $24.7 trillion in additional federal spending, and also estimates an average deficit of $1.1 trillion per year.
- The Center for Health and Economy estimates a 10-year net cost of up to $44 trillion, and an annual deficit of $2.1 trillion.
Would Single-Payer Reduce Administrative Costs?
Advocates argue that single-payer would save the nation money by reducing administrative costs, eliminating the administrative expenses of marketing and advertising private health insurance, managing private benefits and utilization, and securing profits.
Advocates claim that administrative costs would be much lower in a Medicare-like system than under a system dominated by private insurance. Payment would be based on the Medicare model, where annual administrative costs are about 2 percent of total costs.
But pointing to Medicare’s low percentage of administrative costs is over-simplistic and misleading.
- Per capita administrative costs may be higher in Medicare. For instance, in 2009 they were $509 in Medicare and $453 in private insurance. Medicare costs are lower as a percentage of the total only because total claims costs tend to be much higher in Medicare than in private insurance. This is because Medicare’s older and less healthy population file the claims costs.
- Medicare shifts administrative costs to doctors, hospitals, nursing homes, home health agencies, and other medical professionals who must comply with Medicare’s huge and complex regulatory requirements. Compliance with tens of thousands of pages of Medicare rules, regulations, guidelines, billing, and other paperwork requirements consumes vast amounts of time, energy, and effort on the part of the private-sector professionals who participate in the Medicare program.
- Medicare fails to effectively control waste, fraud, and abuse in the program. This failure of administration results in the staggering loss of tens of billions of taxpayer dollars each and every year. Private-sector health plans, policing their billing, have no comparable record in accumulating such enormous losses.
Read the full story from The Daily Signal
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