Mercatus: Medicare for All will cost over $32 trillion. With a 'T'.

“That’s trillion with a T,” the Associated Press reports in its coverage of a new, comprehensive study of the cost of the Democrats’ demand for single-payer health care. The Mercatus Center and Charles Blahous, a former economic adviser to George W. Bush and a trustee for Medicare during the Obama administration, blasts holes in assumptions by supporters that tax hikes on the wealthy will be sufficient to pay for their pet project. While the government would save some money on some areas, the savings amount to less than ten percent of the overall added costs:


“It’s showing that if you are going to go in this direction, it’s going to cost the federal government $2.5 trillion to $3 trillion a year in terms of spending,” said Thorpe. “Even though people don’t pay premiums, the tax increases are going to be enormous. There are going to be a lot of people who’ll pay more in taxes than they save on premiums.” Thorpe was a senior health policy adviser in the Clinton administration. …

The study found that the plan would reap substantial savings from lower prescription costs — $846 billion over 10 years — since the government would deal directly with drugmakers. Savings from streamlined administration would be even greater, nearly $1.6 trillion.

But other provisions would tend to drive up spending, including coverage for nearly 30 million uninsured people, no deductibles and copays, and improved benefits, including dental, vision and hearing.

Mercatus and Blahous published the study this morning, which can be found here, along with a summary of their findings. It’s worth noting that the $32.6 trillion is the additional cost after the savings realized. The summary notes that $32.6 trillion is actually a conservative estimate of increased costs, buying into the theory that government control will force providers to take much less money for their work.

As for how to pay the bill, Mercatus and Blahous are curious about that too:

These estimates are conservative because they assume the legislation achieves its sponsors’ goals of dramatically reducing payments to health providers, in addition to substantially reducing drug prices and administrative costs.

A doubling of all currently projected federal individual and corporate income tax collections would be insufficient to finance the added federal costs of the plan.


So much for Alexandria Ocasio-Cortez’ plans to fund it by reversing last year’s tax reforms, eh? The new system’s costs would eat up nearly 11% of GDP in its first year, increasing to 12.7% by the end of the decade and increasing thereafter. There is no possibility of getting this kind of funding except by massive tax hikes across the board, not just “soaking the rich.” And this cost estimate assumes that providers will continue to operate with significantly lower levels of payment, an assumption that has not worked well in other single-payer nations, particularly in the specialties.

Bernie Sanders didn’t waste any time in criticizing the study, attacking Mercatus as funded by the Koch Brothers and, er, waving the flag:

“If every major country on earth can guarantee health care to all, and achieve better health outcomes, while spending substantially less per capita than we do, it is absurd for anyone to suggest that the United States cannot do the same,” Sanders said in a statement. “This grossly misleading and biased report is the Koch brothers response to the growing support in our country for a ‘Medicare for all’ program.”

There are two major problems with this response. First, as the AP’s Ricardo Alonso-Zaldivar points out, this study falls into the same range as previous studies done on Medicare for All, which have ranged from $24.7T to $34.7T. Second, it turns out that Sanders wouldn’t know which study is the most accurate, emphasis mine:


Sanders’ office has not done a cost analysis, a spokesman said.

Say what? Sanders has been pushing this in the national spotlight for at least three years, and he hasn’t even attempted a serious calculation of its cost? How would he know, then, that Mercatus’ estimate is too high, or even too low?

This is what Democratic Socialism requires — demanding government control of economic sectors without knowing what it costs or how it will impact delivery. Small wonder that other nations that attempt Democratic Socialism, such as Venezuela, transform from wealthy and advanced nations to abject poverty and starvation.

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