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Despite its central role in the Democratic debate in Houston, Medicare for All remains unclear on one essential point: the price to pay.
Former Vice President Joe Biden said it would cost $ 30 trillion. And Senator Bernie Sanders, the author of the bill, did not discuss.
"Joe said that Medicare for All would cost more than $ 30 trillion," Sanders said. "The status quo, over 10 years, will be $ 50 trillion."
Sanders said the net savings would be "substantial".
The reality is that predicting the cost of Medicare for all is a delicate task.
There is no doubt that federal spending on health care would increase significantly with Medicare for All. Based on two independent estimates, the program would add about $ 32 trillion to the federal budget over the next 10 years.
But if it's a better deal for the people, it depends on the other figures published by Sanders, the $ 50 trillion needed to maintain the system in place.
These are not federal health care expenditures. This is the government's estimate of total spending on health care, whether public or private, over the next decade. (It's actually $ 47 trillion by 2027.)
Medicare for all would transfer much, but not all, of private spending to the benefit of the government. In 2017, private insurance and household payments accounted for about 45% of all bills.
Sanders, who drafted the bill, and Senator Elizabeth Warren, the other leading candidate who supports the approach, contend that their plan limits total spending, which would allow people to achieve more. easily savings. Some studies say that it would increase, which would make the task more difficult.
And in the midst of this uncertainty, there is no clear plan on how to pay for it. If insurance companies no longer collect premiums and no longer pay doctors, and states no longer pay for Medicaid, bills must still be paid. The money would come from taxes, but how much and about who is trouble.
Cost estimate
A study of Medicare for All by the Libyan-focused George Mason University Mercatus Center estimated the cost at more than $ 32 trillion over 10 years.
The Urban Institute, a more liberal university center in Washington, reviewed Sanders' plan in 2016 and predicted a $ 32 trillion increase over 10 years.
But what about compensation, money now paid by Washington?
The Urban Institute estimated that state and local governments would save $ 4.1 billion over 10 years and that households and businesses would save about $ 21.9 billion.
Modeling is a challenge – how much would hospitals, doctors and drug manufacturers be paid for? Without benefits from insurance companies, what are the net savings? What would be the cost when more affordable care leads to increased use?
But while the Urban Institute figures are reasonably correct, total compensation of $ 26 trillion – state and local governments plus private savings – leaves a $ 6 trillion gap over new federal spending. Overall, the Urban Institute said total spending on health care would increase by $ 6.6 trillion over this period.
John Holahan, a colleague from the Urban Institute, pointed out that Medicare for All does not cover broad areas of health spending, such as long-term residential care and veterans health care. The amount would be in the billions of dollars. Sanders did not leave that aside when he compared the Medicare for All price tag to total health care expenses.
The RAND Corporation said that by 2019, Medicare for all would accompany a 1.8% increase in total health care spending.
Medicare for All contributors publish a report from the University of Massachusetts at Amherst. Economists have said that the program could reduce the cost of care by about 10%. The bulk of these dollars come from administrative costs and lower drugs.
Who pays for this?
There is no doubt that Washington would need to raise more money to fund Medicare for All. Sanders made several suggestions. They include a payroll tax of 7.5% of employers and a tax of 4% of workers. Households earning more than $ 250,000 a year would see their taxes increase, and a range of tax changes would mainly affect the better-off, such as higher capital gains rates and a higher wealth tax (0%). 1%). households.
And since employers are no longer paying tax-free contributions on their employees' contributions, Sanders expects the government to earn a net gain of $ 4,200 billion over 10 years. The Tax Policy Center, a joint project of the Urban and Brookings Institutions, said that by 2018, this tax break had cost the government $ 280 billion.
Nevertheless, Sanders' proposals would raise about $ 16 trillion over 10 years. That's half of what the program would cost and he did not say how he could close the gap.
Warren offered less detail than Sanders.
"The richest people, the richest and the biggest companies will pay more," Warren said during the debate. "And middle-class families will pay less."
In the absence of a complete proposal, no independent study has analyzed the situation of households at different income levels.
Sanders and Warren argue that in the end, "middle-class families" will be better off. According to them, the amount of their taxes will be largely offset by not paying premiums and not paying for the part of the care that the insurance does not cover.
But the truth is that the data is missing.
"Taxes will vary enormously from one worker to another," said Katherine Baicker, an economist at the University of Chicago in July. "On the net, some people are going to be much better off, others much less well off, and overall taxes will need to increase dramatically."
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