Moneybox

Conservative Think-Tanker Accidentally Argues That Single Payer Could Save Americans $2 Trillion

Bernie Sanders speaks from a podium that says "It's time to act! Medicare for all!"
Bernie should be pleased.
Justin Sullivan/Getty Images

Today in political own goals: A prominent conservative think-tanker appears to have published a white paper showing that Bernie Sanders’ plan for a national single-payer health care system could, in theory, reduce American health care spending by as much as $1.4 trillion. Take that, Medicare for all.

The study was published by Charles Blahous of the libertarian Mercatus Center at George Mason University, who is known, among other things, for arguing that Social Security retirement benefits need to be cut. Blahous seems to have set out to show that, even if you assume switching to a single-payer system will lead to major cost savings on medical care and administrative expenses, it will still require a massive increase in federal spending. He calculates that if Sanders’ bill delivered on all of its promises, it would increase federal spending on health care by $32.6 trillion between 2022 and 2031—which is, of course, quite a bit of money, and the number that conservatives are choosing to focus on. But as economist Ernie Tedeschi noted on Twitter this morning, Blahous’ report also shows that total U.S. health care spending would fall by about $2.05 trillion during that time period, even as all Americans would finally have insurance, because the plan would reduce payments to doctors and hospitals to Medicare rates (which are lower than what private insurance pays) while saving on prescription drug costs and administrative expenses.

Savings from single payer
Jordan Weissmann/Slate

This is the entire argument Sanders and his supporters make for single payer. They don’t pretend it’s not going to cost a lot of money. Rather, they argue that it only seems expensive if you look at its effect on the federal budget alone. Families are already paying money through their insurance premiums. Wouldn’t it be better if there weren’t premiums, and families paid some portion of that money as taxes instead? Then the federal government could use its power to keep health care costs down, which would, in the end, save the families and businesses money, and ensure coverage for all.

Blahous isn’t totally clueless about this. He devotes a good part of his paper to arguing that paying every doctor at Medicare reimbursement rates is probably not realistic (other, more centrist think tanks have argued the same), meaning single payer won’t save as much money as Sanders hopes. He produces a separate estimate showing that, without cuts to providers, single payer would increase national health spending by more than $3.2 trillion, as Americans would go to the doctor a lot more. But that estimate isn’t especially realistic either, since it’s fairly unlikely that Congress would pass anything remotely resembling a single-payer bill without any payment reductions.

Giving a high and low estimate of what Sanders’ bill could do to health spending is intellectually honest on Blahous’ part, and for that he should be commended. But somehow, I don’t think he really intended to write a campaign spot for single-payer supporters, which is what he appears to have done. Sanders, for his part, is already trumpeting the paper: