The Mercatus Center's Estimate of the Costs of a National Single-Payer Healthcare System: Ideology

[Uncle Joe]

Masquerading as Health Economics

The Mercatus Center's estimate of the cost of implementing Sen. Bernie Sanders’ Medicare for All Act (M4A) projects outlandish increases in the utilization of medical care, ignores vast savings under single-payer reform, and fails to even mention the extensive and well-documented evidence on single-payer systems in other nations – which all spend far less per person on health care than we do. But despite adopting a raft of faulty assumptions that inflate the estimated cost of implementing single payer, the Mercatus Center's report concludes that universal first dollar coverage under Sen. Sanders' bill would actually decrease the nation's total health expenditures, saving the average American about $6,000 over ten years.

We outline below some of the most glaring errors in the Mercatus Center analysis of Medicare for All, which was led by Charles Blahous.

1. Administrative savings, Part 1: Blahous assumes that insurance overhead would be reduced to 6 percent of total health spending from the current level of 13 percent in private insurance. Although overhead in Canada's single payer system is only 1.8%, Blahous justifies his 6 percent estimate by citing Medicare’s current overhead, which includes the extraordinarily high overhead costs of private Medicare HMOs run by UnitedHealthcare and other insurance firms. However, Sen. Sanders’ proposal would exclude these for-profit insurers, and instead build on the traditional Medicare program, whose overhead is less than 3 percent. Moreover, by simplifying hospital payments by funding them through global budgets (similar to the way fire departments are paid), rather than the current patient-by-patient payments, a well-designed single-payer program could fully reduce overhead to Canada’s level of about 1.8 percent. Cutting insurance overhead to less than 2 percent (rather than the 6 percent that Blahous projects) would save approximately $2.9 trillion more than Blahous estimates over a 10 year period.

(snip)

3. Drug costs: Blahous projects that the only drug savings achievable through a single-payer plan would come from switching patients from brand name drugs to generics. He assumes that the prices of drugs – both generics and brand name drugs – could not be lowered through the price negotiations called for in Sen. Sander's bill. Blahous claims that the savings achievable through negotiations cannot be estimated, ignoring the price reductions of about 40-50% that have been achieved by the VA and by many other nations that use the methods called for in the Sanders legislation.

Reducing drug prices to the levels currently paid by European nations would save at least $1.7 trillion more than Blahous posits over 10 years.

(snip)

http://www.pnhp.org/news/2018/august/the-mercatus-centers-estimate-of-the-costs-of-a-national-single-payer-healthcare-sy

[Judi Lynn]

1. Thank you, Uncle Joe. Rec. n/t

[Uncle Joe]

2. It seems Blahous only overestimated it by approximately 10 trillion dollars over ten years.

(snip)

In summary, Blahous grossly underestimates the administrative savings under single payer; projects increases in the number of doctor visits and hospitalizations that far exceed the capacity of doctors and hospitals to provide this added care; and posits that our country would continue to pay much more for drugs and medical equipment than people in every other nation with national health insurance. His thus overestimates national health expenditures by about $10 trillion over 10 years.

Blahous also neglects to mention that massive savings would accrue to businesses, households, and state and local governments that would no longer be saddled with health insurance premiums or out-of-pocket costs. These savings would more than compensate for the increased federal government expenditures. The Sanders bill would, in reality, shift spending from private to public sources, and from state and local governments to the federal government. Over 10 years, our nation would surely pay less overall under Sen. Sanders bill than under current arrangements.

(snip)


http://www.pnhp.org/news/2018/august/the-mercatus-centers-estimate-of-the-costs-of-a-national-single-payer-healthcare-sy

Thank you Judi Lynn.

[marble falls]

3. Every time I hear Democrats say we can't afford universal single payer healthcare, I cringe...

I only expect that line from the GOP.

[Judi Lynn]

4. It just doesn't sound like Democrats, does it? Unbelievable.

Glad they weren't around to block Social Security, Medicare, etc.

[marble falls]

7. Well, I have to admit, in '64 the NFL (National Forensic League) debate resolution was about ...

Medicare and I was always arguing against it. Not because it didn't resolve a problem, but because it was a socialist sort of solution to the problem. I was a totally free market Republican and I worked for Barry Gorldwater's campaign as a 14 yr old volunteer. I watched Ronald Reagan (a newly minted ex-Democrat Republican give his speech introducing Goldwater's nomination to the GOP Convention. "Extremism in the defense of liberty is no vice" and I was pretty extreme. A good attitude but on the wrong side of the dial.

I was one of those middle class kids who thought he could get wealthy because of 'manifest destiny'.

Its been a journey!

[Uncle Joe]

5. Everybody views life through a prism

Peace to you marble falls.

[marble falls]

6. And to you also, Uncle Joe!