Sanders and Ocasio-Cortez are referring to a working paper, “The Costs of a National Single-Payer Healthcare System,” published by the Mercatus Center at George Mason University. The Mercatus Center gets some of its funding from the libertarian Koch brothers, but more about that later.
The author of the paper, Charles Blahous, a senior research strategist at the Mercatus Center who once was the deputy director of President Bush’s National Economic Council, says the two proponents of a universal health care system are distorting the findings of his paper.
The study looked at the impact of the Medicare for All Act introduced by Sanders on Sept. 13, 2017. The bill, which has 16 Democratic cosponsors, would expand Medicare into a universal health insurance program, phased in over four years. (The bill hasn’t gone anywhere in a Republican-controlled Senate.)
The top line of the paper’s abstract says that the bill “would, under conservative estimates, increase federal budget commitments by approximately $32.6 trillion during its first 10 years of full implementation.” According to the paper, even doubling all “currently projected federal individual and corporate income tax collections would be insufficient to finance the added federal costs of the plan.”
But Sanders’ spokesman, Josh Miller-Lewis, told us that presenting only the additional governmental cost of Medicare-for-all — “the scary $32 trillion figure” — leaves out the larger context. Of course the government would spend more on health care under a Medicare-for-all system, he said, but the idea is that it would result in less spending on healthcare in the U.S. overall.
Miller-Lewis referred to figures not highlighted in the report that show that between 2022 and 2031, the currently projected cost of health care expenditures in the U.S. of $59.4 trillion would dip to $57.6 trillion under the “Medicare-for-all” plan. That’s how Sanders arrives at his claim that the study “shows that Medicare for All would save the American people $2 trillion over a 10 year period.” (See Table 2.)
In an email to FactCheck.org, Blahous said he didn’t highlight that figure because he doesn’t think it’s realistic.
As Blahous wrote in the fourth sentence of his abstract, “It is likely that the actual cost of M4A would be substantially greater than these estimates, which assume significant administrative and drug cost savings under the plan, and also assume that health care providers operating under M4A will be reimbursed at rates more than 40 percent lower than those currently paid by private health insurance.”
Blahous used the text of Sanders’ bill to guide assumptions. For example, he said, the bill says health care providers will be reimbursed for patients at Medicare payment rates. Blahous said Medicare payment rates are projected by the Centers for Medicare and Medicaid Services to be roughly 40 percent lower than those paid by private insurers, so he built those assumed savings into his estimate.
But in the report, Blahous cautions that the assumption is suspect.
