By Steffie Woolhandler, M.D., M.P.H., David U. Himmelstein, M.D., and Adam Gaffney, M.D.
The Nation, August 10, 2018
Last week, Charles Blahous at the Koch-funded Mercatus Center at George Mason University published a study suggesting that Bernie Sanders’s single-payer health-care plan would break the bank. But almost immediately, various observers—including Sanders himself—noted that according to Blahous’s own estimates, single payer would actually save Americans more than $2 trillion over a decade. Blahous doubled down on his argument in The Wall Street Journal, and on Tuesday, The Washington Post’s fact-checker accused Democrats of seizing “on one cherry-picked fact” in Blahous’s report to make it seem like a bargain.
The Post is wrong to call this a “cherry-picked fact”—it’s a central finding of the analysis—but it is probably right that single-payer supporters shouldn’t make too much of Blahous’s findings. After all, his analysis is riddled with errors that actually inflate the cost of single payer for taxpayers.
First, Blahous grossly underestimates the main source of savings from single payer: administrative efficiency. Health economist Austin Frakt aptly demonstrated the “bewildering complexity of health care financing in the United States” in The New York Times last month, citing evidence that billing costs primary-care doctors $100,000 apiece and consumes 25 percent of emergency-room revenues; that billing and administration accounts for one-quarter of US hospital expenditures, twice the level in single-payer nations; and that nearly one-third of all US health spending is eaten up by bureaucracy.
Overall, as two of us documented recently in the Annals of Internal Medicine, a single-payer system could cut administration by $500 billion annually, and redirect that money to care. Blahous, in contrast, credits single payer with a measly fraction of that—or $70 billion—in administrative savings.
Our profit-driven multi-payer system is the source for this outlandish administrative sprawl. Doctors and hospitals have to negotiate contracts and fight over bills with hundreds of insurance plans with differing payment rates, rules, and requirements. Simplifying the payment system would free up far more money than Blahous estimates to expand and improve coverage.
Next, Blahous lowballs the potential for savings on prescription drugs. He assumes that a single-payer system couldn’t use its negotiating clout to push down drug prices, ignoring the fact that European nations and the US Veterans Affairs system achieve roughly 50 percent discounts relative to the US private sector. (Single payer’s only drug savings, he argues, will come from shifting 15 percent of brand-name prescriptions to generics.) Hence Blahous foresees only $61 billion in drug savings in 2022, even though tough price negotiations would likely achieve threefold higher savings.
Third, Blahous underestimates how much the government is already spending on health care. For instance, he omits the $724 billion that federal agencies are expected to pay for employees’ health benefits over the 10 years covered by his analysis, which would simply be redirected to Medicare for All. He also leaves out the massive savings to state and local governments, which would save nearly $3.6 trillion on employee benefits and another $5.3 trillion on Medicaid and other health programs. Hence, much of the “new money” needed to fund Sanders’s reform is already being collected as taxes.
Yes, there will need to be some new taxes—albeit much less than Blahous estimates. But those new taxes would just replace—not add to—current spending on premiums, co-pays, and deductibles. Additionally, at least some of the new taxes would be virtually invisible. For instance, the $10 trillion that employers would otherwise pay for premiums could instead be collected as payroll taxes. Similarly, Medicare for All would relieve households of the $7.7 trillion they’d pay for premiums and $6.3 trillion in out-of-pocket costs under the current system.
It’s easy to get lost in the weeds here. But at the end of the day, even according to Blahous’s errant projections, Medicare for All would save the average American about $6,000 over a decade. Single payer, in other words, shifts how we pay for health care, but it doesn’t actually increase overall costs—even while providing first-dollar comprehensive coverage to everyone in the nation. The Post’s fact-checker is wrong: Single-payer supporters can and should trumpet this important fact.
Of course, the most important benefits of single payer are altogether invisible in economic analyses like the one performed by Blahous. No matter what injury or illness we faced, we would be forever freed from one great worry: the cost of our care. It’s hard to put a price tag on that kind of freedom. Yet, paradoxically, even the slanted analysis of a libertarian economist provides evidence that it would be fiscally responsible.
Steffie Woolhandler is a Distinguished Professor of Public Health at the City University of New York at Hunter College.
David U. Himmelstein is a Distinguished Professor of Public Health at the City University of New York at Hunter College.
Adam Gaffney is a pulmonary and critical care specialist at the Cambridge Health Alliance and Harvard Medical School, and President-elect of Physicians for a National Health Program.
Fact-Checking the Fact-Checkers on Medicare-for-All
By Matt Bruenig
People’s Policy Project, August 13, 2018
Two weeks ago, the libertarian Mercatus Center released a report estimating the cost of Bernie Sanders’ Medicare-for-All (M4A) proposal. Like most think tank products, the author and communications team behind the Koch-funded Mercatus report carefully cultivated a certain kind of media coverage in pursuit of their political agenda. In this case, the political goal was to undermine M4A by getting journalists to write that it was impossibly expensive.
This careful bit of framing and deception by Mercatus initially worked out as planned. They got the Associated Press to write a story with the lede “Sen. Bernie Sanders’ ‘Medicare for all’ plan would boost government health spending by $32.6 trillion over 10 years.” Because of the way the AP wire service works, that means the story showed up on just about every news website in the country: ABC News, Bloomberg, Washington Post, and so on.
But this initial success slipped away from Mercatus because folks like myself quickly noticed that, buried in the report’s tables, the author had actually found that Sanders’ plan would save $2 trillion. That’s right: the same estimate with the scary $32.6 trillion figure they were promoting to all the journalists in the country also said that the US could insure 30 million more Americans, virtually eliminate out-of-pocket expenses, and cover dental, vision, and hearing care for everyone all while spending $2 trillion less over the next 10 years. After this was pointed out, the coverage of the report changed dramatically and Bernie Sanders put out a video thanking the Koch brothers for their positive study.
Needless to say, Mercatus was not thrilled that its attempt to torpedo M4A had become one of the leading talking points in its favor and so it badly wanted a do-over. The preferred theater for their do-over was gullible and biased fact-checkers who they successfully coached into declaring that Bernie Sanders is lying using their inane truth-o-meter and Pinocchio-based measures.
Politifact pointed to the alternative scenario to declare the claim that the Mercatus study says M4A will save $2 trillion “Half True.” The AP, which I didn’t even realize did fact-checking, called the claim “spin.” And the Washington Post gave the claim 3 Pinocchios out of a possible 4 Pinocchios, which apparently means it is a “significant factual error” or contains “obvious contradictions.”
Think for a second about how completely absurd these three suspiciously identical fact-check pieces are. They acknowledge that Sanders and others are right that the Mercatus estimate does say there will be $2 trillion in savings. But then they say Sanders is mostly lying because he does not also talk about alternative scores of totally different plans that are not his plan.
As noted by Vox’s Dylan Scott, the really important takeaway of the Mercatus report is not whether Sanders’ plan saves precisely $2 trillion, but rather that the report confirms that the general Medicare-for-All idea is clearly doable. If you play around with the utilization rates, the provider rates, the coverage areas, and the actuarial value variables, you can generate estimates that range from modest savings to modest spending increases, meaning that a national health insurer that covers everyone in the country is clearly in reach, if we want it.
By Don McCanne, M.D.
It is an unequivocal fact that a well designed, single payer, Medicare for All system, as proposed by Physicians for a National Health Program, would provide first-dollar, comprehensive coverage to everyone in the nation while making health care forever affordable for each one of us. The Mercatus study and the reaction to it is a distraction that does not change this indisputable fact.
Charles Blahous’ Mercatus analysis of Bernie Sanders’ single payer plan was seriously flawed by omissions, incorrect assumptions, and inclusion of alternative policies that were not a part of Sanders’ legislation. In spite of this, Blahous included in his report, though buried, the conclusion that the proposal would cover everyone while saving Americans $2 trillion over a decade.
The fact-checkers then jumped in to criticize those who reported this favorable finding from Blahous’ analysis. The fact-checkers were wrong to report that other findings in the Mercatus report more or less invalidated this contention. More importantly, there were other highly credible reports describing the deficiencies and errors in the Blahous analysis. The fact-checkers ignored these reports and assumed that Blahous’ statements were complete and factual, which they were not. That resulted in the fact-checkers assigning their demerits to the wrong party when it should have been Blahous who was challenged on his facts.
This is not a petty dispute over spin. It is a much more serious matter. The single payer Medicare for All model is now widely supported, to the chagrin of opponents, but this dispute threatens that support.
On the one side, the medical-industrial sector is joining forces to mount an intensive campaign to counter the Medicare for All movement. They have formed “Partnership for America’s Health Care Future” (PAHCF) with a mission of improving what’s working in health care and fixing what’s not, specifically “building on the strength of employer-provided health coverage and preserving Medicare, Medicaid, and other programs that so many Americans depend on.” Members of this coalition include, amongst others, AHIP, AMA, PhRMA, Federation of American Hospitals, and the BlueCross BlueShield Association. Watch their spin. We are going to have to preempt it.
On the other side, progressive politicians are running on a platform that includes Medicare for All. But when you listen carefully to them or check their websites, some are saying that a good place to start would be with allowing the purchase of Medicare as a public option (which would be disastrous since it would create inertia, perpetuating and compounding virtually all of the problems with our highly dysfunctional, fragmented system of financing health care).
Further, a new Medicare for All caucus has formed in the House of Representatives. It is rumored that they intend to rewrite HR 676, the Expanded & Improved Medicare for All Act. In the name of compromise it is likely that there will be pressure to move incrementally towards Medicare for All by leaving employer-sponsored plans in place and by offering a Medicare public option that will likely be under the private Medicare Advantage program. After all, at this time we can’t afford the $32 trillion program that Blahous is warning us about, so the fact-checkers tell us.
I’m much more worried about our friends than our enemies. A decade ago our friends kicked us out of the negotiations and brought us Obamacare. By now we could have had everyone covered at a cost we could afford, but instead we have tens of millions of uninsured and underinsured who are losing their choices in health care while our national health care expenditures increase at twice the rate of inflation, all the while perpetuating suffering, hardship, and premature death.
Be sure that the Medicare for All Congressional Caucus continuously hears our voices loud and clear.
Partnership for America’s Health Care Future:
Medicare for All Congressional Caucus:
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