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Analysis: Bernie’s “Medicare for All” would cost $32.6 Trillion

Analysis: Bernie’s “Medicare for All” would cost $32.6 Trillion

Historic tax hikes.

A study by the Mercatus Center at George Mason University predicted that Sen. Bernie Sanders’ “Medicare for All” plan will cost $32.6 trillion over ten years.

One more thing — this is a “conservative” estimate, which means the cost could be a lot higher.

The Plan Includes Historic Tax Hikes

Fox News reported:

The hikes would allow the government to replace what employers and consumers currently pay for health care — delivering significant savings on administration and drug costs, but increased demand for care that would drive up spending, according to the report.

According to the report, the legislation’s federal health care commitments would reach approximately 10.7 of GDP by 2022, and rise to nearly 12.7 percent of GDP by 2031.

But the study, conducted by senior research strategist Charles Blahous, said that those estimates were on the “conservative” side.

The study found that the government would have to raise taxes like never before because even “doubling of all currently projected federal individual and corporate income tax collections would be insufficient to finance the added federal costs of the plan.”

From Mercatus:

  • First and foremost, the federal government would become responsible for financing nearly all current national health spending, including individual private insurance and state spending.
  • M4A would increase federal health spending on the currently uninsured as well as those who now carry insurance by providing first-dollar coverage of their healthcare expenditures across the board, without deductibles or copayments.
  • M4A would expand the range of services covered by federal insurance (for example, dental, vision, and hearing benefits).
  • M4A would dramatically expand the demand for healthcare services, consistent with economics research findings that the more of an individual’s health costs are covered by insurance, the more services they tend to buy, irrespective of the services’ efficacy and value.

Sanders has never conducted a cost analysis and criticized this one:

But Sanders blasted the analysis as “grossly misleading and biased,” noting that the Mercatus Center receives funding from the conservative Koch brothers. Koch Industries CEO Charles Koch is on the center’s board.

“If every major country on earth can guarantee health care to all, and achieve better health outcomes, while spending substantially less per capita than we do, it is absurd for anyone to suggest that the United States cannot do the same,” Sanders said in a statement. “This grossly misleading and biased report is the Koch brothers’ response to the growing support in our country for a ‘Medicare for all’ program.”

A spokesman for Sanders said that the senator’s office has not done a cost analysis on the new plan, however the estimates in the latest report are within the range for other cost projections for Sanders’ 2016 plan.

Or maybe the socialist should just accept that Medicare For All would only work on that fantasy island of his where money grows on trees.

States Turned Away From Single Payer When Confronted With Cost

The Washington Examiner mentioned a few states who cheered for this plan, but now that reality has slapped them in the face, officials have started to back away. This includes Vermont, the state Sanders hails from, which developed single-payer in 2011:

Vermont made the mistake of adopting an extraordinarily costly overhaul of the entire healthcare system without waiting for a fiscal estimate or establishing exactly how the state would pay for it. When the estimates came in, they were stratospheric. In a wealthy state with the second-lowest uninsured rate in the country (3.7 percent, compared to a national average of 8.8 percent), the state’s own estimates concluded that single-payer would require a near-doubling of the state’s budget.

Vermont hoped to use federal funding for half of this cost, but to cover its share, taxes would have to go up — a lot. Payroll taxes would have had to rise by 11.5 percentage points. Individual income tax rates could go up by as much as 9 percentage points. Shumlin scrapped the plan, concluding that it would be “unwise and untenable.”

California introduced Healthy California in 2017, but the state’s House leadership pulled it “with the speaker expressing concern that the proposal was too expensive, lacked appropriate funding mechanisms and wasn’t ready for primetime.” California only has a $201 billion budget:

He was right about how expensive it was. The state’s estimates pegged the cost at $400 billion per year, twice the state’s budget. An outside report commissioned by an advocacy group rejected the estimates of the nonpartisan legislative office, concluding that the plan would cost a mere $331 billion.

Colorado had a similar problem:

Voters in Colorado arrived at much the same conclusion when single-payer healthcare went on the ballot in 2016. The price tag (which was arguably low-balled) was enough to tax income at rates as high as 14.63 percent, more than triple the state’s current flat income tax rate.

The electorate balked at the costs. They may have been concerned about the details, too, as it vested authority to adjust benefits and even change tax rates with a board of largely unaccountable trustees. No one operates under the illusion that private insurance is a panacea in this regard, but at least people have options and avenues of appeal. Single-payer strips that away; the government provides what it chooses to provide. In Colorado, that proved a potent concern.

On Election Day, the constitutional amendment establishing ColoradoCare met a crushing defeat, rejected by an astonishing 79 percent of voters.

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Comments

rabid wombat | July 30, 2018 at 9:16 pm

A trillion here, and a trillion there….soon you are talking about real money….

Not it if is someone’s elses…

There is no way it could cost that little without severe rationing. With no out-of-pocket (no co-pay), no one would have any incentive to minimize their use of the system. Rationing, whether by decree or by lack of health care providers, would be the only way to limit demand. And since when did any government program cost as little as the original estimate?

    amatuerwrangler in reply to topcat69. | July 30, 2018 at 10:42 pm

    I am guessing that you are not familiar with Medicare. FYI, it is rationed by lack of care providers. Doctors have found that they cannot fund a medical practice (facility, staff, equipment) unless they limit their practice to approximately 25% Medicare. The Medicare reimbursements for services rendered are literally pennies on the dollar.

    Medicaid and state-run systems are a similar drag on the system. Why anyone goes to medical school and incurs the debt for this kind of reimbursement is a mystery to me. They could make a better living buying a Peterbilt tractor and driving long-line. The hours might even be better driving.

      “”Why anyone goes to medical school and incurs the debt for this kind of reimbursement is a mystery to me.””

      A lot of them don’t. I’m eligible for Medicare and TFL (Tricare “for Life”). A lot of doctors take Medicare and just add a few unnecessary tests or procedures, but if you want to get laughed out of a doctor’s office, mention Tricare.

        Edward in reply to txvet2. | July 31, 2018 at 7:19 am

        Exactly. I have perfectly good health insurance, which doesn’t require I have Medicare) from when I retired from work, could have TFL but decided I didn’t want it and didn’t want to pay twice for coverage (health insurance and Part B). Don’t use my VA coverage either (as it turns out a very smart decision).

      “The Medicare reimbursements for services rendered are literally pennies on the dollar.”

      You apparently don’t understand the game which is played regarding reimbursement by Medicare and most all private health insurance companies (I’m most familiar with BC/BS which also has varying reimbursement for providers of services which are “in-plan” and those which are not). Medicare and BC/BS use Usual, Customary and Reasonable (UCR) standards to reimburse for services. These reimbursement amounts are set each year and based on what like physicians and facilities are charging, what the specific provider has been charging and what the reasonable amount is (simplified explanation).

      What the providers of service do is charge outlandish figures for their services, knowing they will only get a very small amount in reimbursement. But over time their UCR will increase due to the overcharging. So yes, they only get pennies on the dollar for many services, but the dollars they are billing are inflated to cause the pennies to add up over time.

I said this all through the Obamacare debacle, and I’ll repeat it now: after the monumental screw-up of Obamacare, the American people are not going to reward Democrats with more control over healthcare.

    oldgoat36 in reply to Matt_SE. | July 30, 2018 at 10:18 pm

    Many voters seem to have short term memories, and the shiny free stuff looks far too appealing till they get the bill, when it’s too late.

    The one thing with Obamacare, costs that most people are paying are still rising at a fast rate, and many people are stuck having to have sort of pretend insurance, which doesn’t kick in till many thousands are spent out of pocket.

      txvet2 in reply to oldgoat36. | July 31, 2018 at 1:38 am

      Of course what’s happening is that the left is blaming Obamacare’s high costs on the private market, and trying to convince people that it will get all better if they just add MORE government.

That article glossed over one of the most unintentionally comic parts of this entire story – Sanders bitterly denounced the economic findings, but when asked what he thought the numbers should be, admitted that his side hadn’t bothered to do any actual calculations yet.

    txvet2 in reply to Tom Servo. | July 31, 2018 at 1:39 am

    They never do. They just pull numbers out of the air and then bitterly complain when anybody contest them.

IIRC, single payer is on the ballot here in #Failifornia for November.

i predict it will pass.

    txvet2 in reply to redc1c4. | July 31, 2018 at 1:40 am

    I predict you’re right. The average IQ in California seems to have decreased to somewhere around the average Californian’s shoe size.

That’s the DemoCraps platform ,,, Tax & Spend !!! I live in Maine and the DimWits have supported Medicaid For All without any thought HOW to PAY FOR IT !! Remember this the next time you vote ,,, they are DELUSIONAL !!!

Bernie’s been campaigning on this for years, yet he and his staff are so lazy that they couldn’t even be bothered to do a cursory study to get some program cost estimates. I’m guessing his answer to pay for it is to just keep raising taxes as needed. Can’t believe anyone takes that assclown seriously.

ultraskeptic | July 31, 2018 at 9:42 am

The trouble with preconceptions is that they get badly distorted by reality and in delivery turn into something quite different than conceived. Our maternal health care provides the worst outcomes in the Western World by a substantial margin, despite per-capita costs which are TWICE the next leading country. But of course insurance profits are great, and that’s what our health care is designed to provide: cash for the uber-wealthy.
There is so much fraud and deception involved in our present insurance system that it’s hard to believe. I save 40% off my insurance co-pay on a medication I have required for years by purchasing it myself. The “20%” co-pay is a sham. No, it’s a fraud. I was just this week given a new prescription. The pharmacist was very honest – but only after I asked. It turns out that my insurance pays 20% of the cost. Or I can purchase it without insurance for the EXACT SAME PRICE! This isn’t insurance. It is FRAUD! And given the awful outcomes, I can’t believe the support for this system given by otherwise intelligent, thoughful folks on sites like this.
I’m thinking of starting a referendum petition to require truth in marketing throughout the health care system, and further requiring that all purchasers of health care supplies or services be charged exactly the same fee (except for indigents, who deserve some compassion). And further requiring that all providers not create separate identities for divergent transactions. Since corporations are now people, this would seriously help put some integrity into a system which has little to do with healthcare, and everything to do with fraud, theft, and deception.

    Milhouse in reply to ultraskeptic. | August 1, 2018 at 2:56 am

    Our maternal health care provides the worst outcomes in the Western World by a substantial margin, despite per-capita costs which are TWICE the next leading country.

    BS.

      ultraskeptic in reply to Milhouse. | August 1, 2018 at 7:29 am

      Your “BS” is BS. This is a fact-based statement, data driven, but not very Politically Correct, since most Right-wingers would like to believe that we live in a Capitalist state (both meanings of that latter word) and that Capitalism is efficient.
      When it comes to health care, we live in a state of Fraud and efficiency plays little role in health care, effectiveness even less. Prices are phony, as the examples I cited demonstrate. Care, when measured by outcome, is worse than any other Western nation by a considerable margin.
      So the BS is in your faith-based notions, not in my assertions. Faith is for fools. Fact is for the rest of us.

Actually only (only?!) $26 trillion, because anyone over 80 will be rationed to death.

And did the Socialist draft this idea in his 2nd home or his 3rd home? Each according to his need eh? Fen needs three servants, blonde brunette and redhead.

buckeyeminuteman | July 31, 2018 at 1:19 pm

It’s those evil Koch brothers again! Trying to mislead the American people!

That Sanders is a pathetic demagogue-clown with zero credibility and is not to be taken seriously has already been amply demonstrated by his total absence of private sector work experience prior to entering politics, the fact that he wasn’t financially self-sufficient until age 40 (when he entered government), and, his affinity for statist fantasies and pipe dreams.

That Sanders wouldn’t even take the time to produce a cost estimate for this lunatic farce of a conceit shows his abject craziness – – what entity in the private or non-profit sectors proposes a massive spending project without producing a budget to account for the source of the spending? Once again, the Dumb-o-crats demonstrate their appalling and embarrassing fiscal illiteracy.

    ultraskeptic in reply to guyjones. | July 31, 2018 at 6:46 pm

    I can’t understand how all you folks seem to think that we are not paying for healthcare now, that centralized health insurance would somehow be completely added to current expenses. Sanders doesn’t have to do an evaluation. The reality is that Medicare, that vastly maligned institution which has provided wonderful benefits to us antiques, cost a bit over 2% of billings to administer. But “regular” insurance, costs 15 to 25%, and that doesn’t include all the extra effort (cost) of administration by health care providers. A single-payer system would actually result in savings over present costs, when you do a proper analysis. The only downfall is that our healthcare system provides third-world results, while charging astronomical rates. We should send our ill to some other country where care is cheaper, better, and is focused on patients rather than profits.

      guyjones in reply to ultraskeptic. | July 31, 2018 at 10:03 pm

      Comrade, your naive, myopic and foolish post makes for splendid comedy. I have some connections with the Central Committee in Washington, D.C., and, can have you appointed as the official Village Schmuck, if you so desire.

Lots of morons running around the last 2 days saying “this would actually save over what we’re spending now.”

Cost estimates are always low … actual costs are always much, much higher.

This is a valid question … “If every major country on earth can guarantee health care to all, and achieve better health outcomes, while spending substantially less per capita than we do, it is absurd for anyone to suggest that the United States cannot do the same,” … Why can’t we?

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