Since Senator Bernie Sanders of Vermont drove the idea of “Medicare for all,” or a single-payer health system, to the center of the political debate, few other issues have so divided the Democratic presidential candidates and voters. The result has been a cascade of competing assertions, estimates and statistics about the costs and effects of what would amount to a fundamental overhaul of the size and role of the government and the way Americans receive care.
Here’s a fact check of some of these claims.
what the facts are
Studies diverge on the cost of Medicare for all because of different assumptions.
What Was Said
The Medicare for all proposal released by Senator Elizabeth Warren of Massachusetts last week would cost the federal government an additional $20.5 trillion over a decade, and she would fund it in large part through new taxes on business and the wealthy. Unlike Ms. Warren, Mr. Sanders has not committed to funding proposals, but he has released several “options to finance Medicare for all” — characterized as discussion starters — that would generate about $16.2 trillion over 10 years.
Mr. Biden and Mr. Bennet have a point that several major studies have found higher additional federal expenditures than Ms. Warren’s estimate or Mr. Sanders’ revenue options: $34 trillion over a decade, according to the liberal Urban Institute; $32.6 trillion, according to the conservative Mercatus Center; and $24.7 trillion, according to an estimate by Kenneth E. Thorpe, a health care economist at Emory University. And the RAND Corporation, a research group, projected an increase of $2.4 trillion in 2019 alone. But lower estimates exist as well. A University of Massachusetts at Amherst study suggested the number was $13.5 trillion while Gerald Friedman, a health economist at the same university who did not contribute to that study, said that a single-payer system would need to come up with about $9.6 trillion more.
Apart from examining different time frames, such diverging estimates result from the unpredictable nature of projecting how Medicare for all would work in practice. How much fees paid to doctors and hospitals, prescription drugs prices and administrative costs could be reduced — and how many more people would become insured and use health care services — will all affect a single-payer system’s bottom line.
Ms. Warren assumes, for example, cuts of 70 percent in prescription drug prices and 2.3 percent in administrative costs while the Urban Institute projected reductions of 40 percent in drug costs and 6 percent administrative costs.
What Was Said
The Centers for Medicare and Medicaid Services projects that under the current system, total health care spending, including both private insurance and government programs, will reach a little over $47 trillion from 2018 to 2027. But that number is not completely comparable to the $30-some trillion estimates for Medicare for all. That is because those estimates reflect federal government spending, not total health care spending, under Medicare for all.
Mr. Sanders’s broader point — that a such a system is less expensive than the status quo — is up for debate.
The Urban Institute found that total health spending would reach $52 trillion from 2020 to 2029 under existing law versus $59 trillion under Medicare for all. The RAND Corporation estimated the status quo costing $3.8 trillion versus $3.9 trillion for single-payer in 2019.
On the flip side, the University of Massachusetts study projected that national health expenditures would be $5.1 trillion lower over 10 years under Medicare for all. Mr. Friedman estimated $5.5 trillion to $12.5 trillion in savings.
what the facts are
Claims about cost or savings for consumers can obscure details that complicate the argument.
What Was Said
— Mr. Biden, at a Democratic debate in October— Mr. Bennet, in the interview with CNN
These statements refer to a 7.5 percent payroll tax and a 4 percent premium tax based on income, two financing mechanisms listed by Mr. Sanders. But these taxes are merely options. Moreover, the statements omit key details about how these potential taxes could work.
A $7,500 payroll tax and a $4,000 premium tax for Mr. Biden’s hypothetical household making $100,000 a year would still lower be than the $20,576 average annual family premium on employer-sponsored plans in 2019. (Employers picked up the bulk of the tab, $14,561 on average.)
Economists generally agree that employers pass on the cost of health benefits to workers in the form of lower wages, and payroll taxes also come out of paychecks. So it is theoretically possible that under Medicare for all, a family would get a $20,000 raise as they and their employers no longer had to pay for premiums, while their additional health care taxes would amount to less than $20,000, said Gerard F. Anderson, a professor of health policy at Johns Hopkins University.
“But it is also likely that the company would not give them a $20,000 raise,” he said. “While the average is $20,000, not everyone receives this in benefits. We simply cannot make that projection without a fully fleshed out financing plan.”
Under a single-payer plan, said Linda J. Blumberg of the Urban Institute, the wages for workers who currently do not receive employer-sponsored health care, however, may decrease.
What Was Said
— Ms. Warren, in a Twitter post in November— Mr. Sanders, in the PBS interview
Whereas Mr. Sanders has said taxes will increase for average families under Medicare for all and Ms. Warren has based her plan on a promise to avoid additional taxes on the middle class, their statements make a similar point: Most Americans would see savings under Medicare for all. But both of their claims require additional context.
Ms. Warren does not include any middle-class tax increases in her plan but would charge employers a tax equal to 98 percent of what they were previously paying for employee health care. Unlike Mr. Sanders’s suggested payroll tax, this tax is not proportional to workers’ pay and thus would have regressive effects, Howard Gleckman of the Tax Policy Center and Matt Bruenig of the progressive People’s Policy Project have argued.
Since employers would essentially pay the same amount for health care under Ms. Warren’s plan than under the status quo, that hypothetical household making $100,000 is also theoretically less likely to see a pay raise under the employer tax than under a payroll tax. (Nonetheless, Ms. Warren assumes that higher take-home pay is guaranteed, because employees would no longer be paying a share of health premiums or contributing to health savings accounts, and includes $1.15 trillion in additional tax revenue in her calculations.)
While Mr. Sanders does not commit to specific financing mechanisms, those proposed by his 2016 campaign would leave the program $16.6 trillion short, according to the Urban Institute, raising the possibility of additional costs to families. Mr. Thorpe found that 72 percent of families would see savings under that 2016 plan. But when Mr. Thorpe modeled higher taxes to achieve a deficit-neutral plan, it resulted in 71 percent of families paying more.
Other researchers have been more optimistic that finding ways to pay the full cost of the program and savings to families are both achievable. The University of Massachusetts study determined that low- and middle-income families would pay less for health care. Under Mr. Friedman’s proposal, households with incomes of $30,000 to $130,000 would receive the greatest savings.
what the facts are
Claims that single-payer would lead to the widespread collapse of hospitals or would cause seniors to lose their care are unsupported.
What Was Said
A spokesman for Mr. Delaney cited three sources for his assertion: a report from the Centers for Medicaid and Medicare Services noting that two-thirds of hospitals lose money on Medicare services; a New York Times article on the financial toll Medicare for all would place on some hospitals, and Mr. Delaney’s personal experiences visiting rural hospitals.
While the evidence suggests that Medicare for all would adversely affect some hospitals, it does not prove Mr. Delaney’s claim that “most” in the United States would close under a single-payer system.
The impact on hospitals also depends on what rates the new system would pay. If current reimbursement levels were maintained, annual revenue for hospitals could have a net decrease of 16 percent, or about $151 billion, in a Medicare for all system, estimated a 2019 article in JAMA; that could possibly lead to job losses of 800,000 to 1.5 million.
Kevin Schulman, a physician and economist at Stanford University who helped write the article, cautioned that these findings did not reflect performance at individual hospitals.
“Predicting hospital closures from operating losses would be difficult because many hospitals have endowments that they can use to support themselves for some period of time despite a financial loss,” he said. “Hospitals that do not have endowments would be at greater risk, but may still be able to operate despite financial losses.”
And if Medicare for all were phased in over time, the impact would be more blunted.
“The hospitals would revise their cost structures,” said Sherry Glied, a health economist at New York University. “That means that they would probably reduce some staffing — both administrative and clinical — slow investments in new technology, and stop building marble-paneled lobbies. Would that be terrible? Not sure.”
Moreover, a Medicare for all system would more likely pay hospitals at higher rates than current Medicare levels, said Mr. Anderson of Johns Hopkins. As an example, he pointed to Washington State’s public option, which pays 60 percent more than Medicare rates. Legislation introduced in the House replaces existing Medicare payments with a new negotiated lump sum for each provider. Ms. Warren proposes to pay hospitals at about 10 percent more than current Medicare rates.
What Was Said
Medicare Advantage is a private alternative to traditional Medicare, run by companies but funded with government subsidies. They cover the same services as Medicare and often additional benefits. About a third of Medicare enrollees opt for this type of plan.
Though Mr. Sanders’s legislation would eliminate Medicare Advantage, current enrollees would receive more benefits under a single-payer system — contrary to Mr. Trump’s suggestion that they would lose their coverage. On average, Medicare Advantage premiums cost $29 a month while Mr. Sanders’s plan eliminates premiums and covers dental, vision and long-term care and hearing aids.
Wealthier seniors may end up paying more under single-payer, Ms. Blumberg said. “It’s all a matter of how the new taxes fall.”
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