IMAGINE A world in which the rosy assumptions Sen. Bernie Sanders (I-Vt.) makes on behalf of his “Medicare for all” health-care plan turn out to be true. That is what Charles Blahous, a professor at George Mason University’s libertarian-leaning Mercatus Center, did in a paper released last month. He found that the government would expand massively — by a whopping $32.6 trillion over 10 years, gobbling up an additional 12.7 percent of gross domestic product by 2031. If everything went perfectly, millions more people would be covered and receive generous benefits over that decade, while the country as a whole would save $2 trillion in total health-care costs when reductions in private health-care spending are taken into account. But that is a cosmically huge “if.”
Mr. Sanders’s bill would move practically all responsibility for spending on Americans’ health care onto the federal budget. It would offer health-care coverage to everyone with zero co-pays and extend dental, vision and hearing benefits to all. The Vermont senator would then impose extreme cost-cutting on doctors and hospitals to make the numbers add up, requiring providers to accept Medicare payment rates for their services. Medicare hospital payment rates currently run at about 60 percent of private insurance rates.
Mr. Blahous notes that hospitals make up losses on Medicare patients by charging private insurance companies far more. If hospitals and doctors were forced to accept Medicare rates, “perhaps some facilities and physicians would be able to generate heretofore unachieved cost savings that would enable their continued functioning without significant disruptions,” he observes. “However, at least some undoubtedly would not, thereby reducing the supply of services at the same time [the plan] sharply increases healthcare demand.”
An analysis of an earlier version of Mr. Sanders’s Medicare-for-all plan from the Urban Institute, a nonpartisan think tank, concluded that provider payment rates would have to be substantially higher, significantly raising the national health-care spending tab. Even then, care shortages would result. For his part, Mr. Blahous estimates an additional $5.4 trillion in spending if rates are more realistic. That would erase the $2 trillion in savings he projected under the rosiest scenario.
Mr. Sanders frequently points to European single-payer programs that provide health care to all and spend less per person than the U.S. health system. But these programs have mainly been successful in restraining growth in health-care costs, not slashing spending. The Europeans have not found some secret formula to cut health-care spending from existing levels, which is the they keystone of Mr. Sanders’s plan.
Predicting wildly low spending levels is just one of the questionable maneuvers required to make Mr. Sanders’s plan look feasible. One must also make very favorable predictions about achievable administrative savings and lower drug costs. And one must accept the notion that not even the super-rich should have to pay a penny for health-care. Mr. Sanders’s plan would be more affordable, discourage unnecessary health-care spending and reserve federal resources for other priorities if he demanded co-pays of upper-income people.
One also should not discount another salient fact: Such disruptive reform of the health-care system would require a national consensus to dramatically expand the government that is not foreseeable even under a hypothetical Sanders presidency. There are ways to cover everyone with far less disruption.