When thinking about the cost of health care legislation, it’s helpful to put the numbers in context: The final cost estimates for Obamacare, which passed in 2010, came in around $940 billion over a decade, and the legislation was structured in a way designed to move some spending outside the 10-year budget window in order to keep the cost under $1 trillion, which was generally considered the threshold of political acceptability. Even amongst Democrats, a trillion-dollar health care plan was just too expensive. Former Vice President Joe Biden’s recently announced plan to expand Obamacare comes in around $750 billion over a decade—which, at more than three-quarters the cost of the initial legislation, makes for a relatively pricey fix.
In contrast, estimates from organizations across the ideological spectrum have pegged Bernie Sanders’ single-payer health care plan, Medicare for All, at around $32 trillion over 10 years. The vast gap between the cost estimates reveals the dramatic difference in scale between the Obama/Biden health care plans and Sanders-style single-payer, and suggests how radical and expansive Democratic health care policy has become over the last decade.
And Sanders appears to think the cost could be even higher than those estimates. At a Washington Post forum, he said that he expects his plan would cost somewhere between $30 and $40 trillion. And then he defended the price tag on the grounds that it would actually be cheaper than the alternative of letting today’s system, or something roughly like it, continue.
“Somewhere between $30 and $40 trillion over a 10 year period,” Sanders told the Post‘s Robert Costa. “What the most serious economists tell us, that if we do nothing to fundamentally change the healthcare system, which is what Joe [Biden] was talking about, keeping it as it is, we’ll be spending something like $50 trillion over a 10 year period.”
Single-payer supporters often make the argument that their plan, which would eliminate virtually all private insurance and rely on the government to finance the vast majority of health care services in the country, would cost less than maintaining the current mixed public-private system.
There are several things worth keeping in mind about that claim. The first is that what they mean when they say single-payer would cost less is that total health care spending would be less overall; the cost to the government would be far, far higher than it is today, as all of the spending that now flows through private payers would move onto the government’s books.
And it’s not at all clear that single-payer would actually result in reduced overall spending. The studies that have attempted to estimate the cost of Sanders’ plan have typically accepted at face value the assumption, built into his proposal, that the new system would maintain today’s Medicare rates for health care services. Those rates are, in many cases, substantially less than what private insurance pays. One estimate concluded that providers would face cuts up to 40 percent. Paying those rates everywhere would almost certainly cause substantial disruption to the provision of health care, especially at first. Some hospitals, especially facilities that serve the rural poor, would almost certainly shut down or drastically reduce their services.
Which is why it is plausible, perhaps even likely, that those rates would not be sustained over time. And if Medicare’s pay rates were increased, that would eat into or eliminate the supposed savings. Indeed, in Maryland, the one state to pay equalized rates for all hospital services, Medicare pays far, far more than it typically does elsewhere.
Sanders, meanwhile, has already demonstrated that he is willing to spend more to keep hospitals afloat. He has complained about potential hospital closures he fears would reduce access for the poor, and yesterday he proposed a $20 billion bailout fund for struggling hospitals, many of which have a patient population that is heavily reliant on government payers like Medicare and Medicaid. Sanders wants to use government money to bail out hospitals that are struggling because they rely too heavily on government money.
Sanders can’t have it both ways. He is either advocating for a plan that would result in a dramatic curtailment of health care services, especially for the rural poor, or for a system that costs far more than the sky-high price tag to which he has now admitted.