13% reduction in health care costs projected for Sanders Medicare-for-All Act

February 17, 2020

Topics: Quote of the Day

By Alison Galvani, Alyssa Parpia, Eric Foster, Burton Singer, and Meagan Fitzpatrick
Lancet, February 15, 2020

Abstract

… Efforts are ongoing to repeal the Affordable Care Act which would exacerbate health-care inequities. By contrast, a universal system, such as that proposed in the Medicare for All Act, has the potential to transform the availability and efficiency of American health-care services.

Taking into account both the costs of coverage expansion and the savings that would be achieved through the Medicare for All Act, we calculate that a single-payer, universal health-care system is likely to lead to a 13% savings in national health-care expenditure, equivalent to more than US$450 billion annually. The entire system could be funded with less financial outlay than is incurred by employers and households paying for health-care premiums combined with existing government allocations.

This shift to single payer health care would provide the greatest relief to lower-income households. Furthermore, we estimate that ensuring health-care access for all Americans would save more than 68 000 lives and 1·73 million life-years every year compared with the status quo.

Time to act

As public support for health-care reform mounts in the USA, legislators are poised to transform the healthcare system and save thousands of lives every year. Single-payer universal health care has the potential to improve the quality, cost-effectiveness, and accessibility of medical services.

Our projections indicate that implementing the Medicare for All Act specifically would generate net savings across a wide range of possible expenditure and financing options. Objections to the Medicare for All Act based on the expectation of rising costs are mistaken.

Some Americans express concern about the federal government controlling this large sector of the economy, or about violating capitalist principles. However, the health-care sector is already highly regulated in many aspects, and deviates from capitalist ideals through opaque and often monopolistic pricing.

Strong opposition should be expected from powerful vested interests, including the health insurance and pharmaceutical industries. Counterbalancing these concerns is the moral imperative to provide health care as a human right, not dependent on employment or affluence.

The medical community should seize this opportunity to promote wellbeing, enhance prosperity, and establish a more equitable health-care system for all Americans.

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Comment:

By James G. Kahn, M.D., M.P.H., Emeritus Professor, Institute for Health Policy Studies, University of California San Francisco

This important economic study of the Medicare for All Act (MAA, Sanders), in the prominent journal Lancet, is the first cost analysis of single payer in the medical literature since 1991, and the most extensive ever.

It’s notable and valuable for four reasons:

First, it projects that single payer – as crafted for the MAA – will save money, likely lots of money – 13% of current health care spending. This level of savings is more than current out-of-pocket costs. Therefore, new revenue just needs to cover current premium payments, and that’s relatively easy with a combination of payroll, income, and wealth taxes.

Second, the findings are consistent with cost estimates from 1990-2018, which we reviewed recently in PLoS Medicine: 19 of 22 analyses projected savings in the first year of single payer. This concurrence of rigorously peer-reviewed studies is very encouraging.

Third, the authors provide an online calculator, so that skeptics and quant geeks can explore the effects of different input values. This is standard fare for decision and cost-effectiveness models in medicine, but rarely done for economic models of single payer costs. It’s a very important resource.

Finally, the authors review the real reason we want single payer: improved health. They estimate tens of thousands of deaths averted per year, important synergies between health and prosperity (including less opioid use), and an improved care experience with free choice of doctors and continuity of care – no more insurance changes requiring a new provider network.

There’s a broadness of scope and richness of detail in this article. Single payer opponents will no doubt pick some details to dispute, but ignore that diversion.

Read and enjoy the article, and check out the online calculator.

Tell your friends: single payer saves money and lives. It defies the economic dictum, “there is no free lunch” – we can both have universal health care, and pay less for the privilege.

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