How Will Reported '$34 Trillion' Price Tag Affect The Politics Of 'Medicare For All'?

Oct 16, 2019

In meeting halls, rallies and living rooms across America, "Medicare for all" is an applause line. It is a cornerstone of Senator Sanders’ campaign and one of Senator Warren’s best known plans. Earlier this week, the Urban Institute, a center-left think tank, released a report finding that "Medicare for all" would increase federal spending over the next decade by $34 trillion. These new numbers offer the first reality check on the rhetoric that has dominated the Democratic debate over health reform.  The question is how much of a difference a few numbers will make. 

Reckoning with a Reality Check

"When policy debates are just about my opinion versus your opinion or my wish versus your wish, they often get derailed," said Robert Reischauer, former director of the Congressional Budget Office and president emeritus at the Urban Institute. "When you have, information, numbers, a range of impacts presented on a piece of paper before you. The debate becomes real."

Reischauer is right. One way or another, Democrats will have to reckon with this paper—if only because it is the first of the 2020 race to put an actual price tag on these plans. The magnitude of the cost of "Medicare for all"—$34 trillion over 10 years—likely strengthens the case candidates like former Vice President Joe Biden and Mayor Pete Buttigieg are making that the country needs an alternative. Len Nichols, an economist at George Mason, agreed. "It's going to challenge the credibility of those who say that only single-payer can accomplish our goals," Mason said. The report shows you can design a "public option" plan that provides insurance to 26 million more Americans than today and slash out-of-pocket costs—all for a fraction of what "Medicare for all" would cost the federal government.  At the same time, under a public option, consumers would continue to face out-of-pocket costs, and Urban’s analysis showed nearly seven million undocumented immigrants would remain uninsured.  Strong supporters of "Medicare for all" including Senators Sanders and Warren will either sidestep this report or tackle it head on, said Dr. Kavita Patel, former health care advisor to President Obama. "I don't think it's going to stop the people who are currently proponents of single payer," Patel said. "If you're Bernie Sanders, then you're going to look at that—and his campaign obviously will—and they're going to poke holes at it because it really takes aim at one of his basic principles." For those deciding to take on the report directly, they will likely start by scrutinizing the assumptions on which the $34 trillion estimate is based.  

Data-Driven Disagreements

Harvard physician Adam Gaffney, who is also President of Physicians for a National Health Program, admitted to being "worried that we're going to see a particularly high cost for single payer." All he wants, he said, is "to see fair assumptions about savings and costs."

Single-payer proponents like Gaffney criticized Urban for a prior paper that analyzed Sanders’ 2016 "Medicare for all" proposal. Gaffney worries the Urban team will again lowball how much the federal government would save by negotiating with doctors, hospitals, and drug companies. He also believes the authors may shortchange the savings that would come from downsizing the administrative army of billers, coders, and collectors currently required by our complex patchwork of a health care system. Both sides agree, single payer will save lots on certain costs. The disagreement lies in the details. Just how much will be saved and what will the consequences be?  For example, it is difficult to predict how much the federal government would pay doctors and hospitals under a “Medicare for all” plan. "The only real way you keep costs down is by paying providers less,” explained Urban economist John Holohan. "How much can you push hospital rates and physician fees down without causing massive chaos?" Holohan and his co-author Linda Blumberg hope that disagreements over numbers and nuances like these assumptions are an antidote to the aspirational rhetoric that has dominated the debate so far. The two economists think a candid conversation about the substance of these two plans is long overdue. "We're in a situation where often the politicians talk in extremes," said Blumberg. "No policy related to health care ever [leaves] everybody better off or everybody worse off. Some people are going to get more. Some people are going to pay more. Good policy should rest on knowing what those tradeoffs are." Ultimately, Blumberg hopes this paper reminds candidates—and voters—of the imperfect solutions in front of us.  There’s too much at stake, she said, to pretend otherwise.   This is the final part of a three-part series diving deep into the heart of the debate dividing Democrats in their efforts to fix the U.S. health care system. It was reported by the team at Tradeoffs, a new podcast exploring America’s confusing, costly, and often counterintuitive health care system.