The Urban Institute’s Hatchet Job on Medicare for All
By Steffie Woolhandler and David U. Himmelstein
Las Vegas Review-Journal, May 17, 2016
The latest attack on Bernie Sanders’ single-payer health reform proposal comes from John Holahan and his colleagues at the Urban Institute. They claim that under Sen. Sanders’ plan medical spending would shoot up by $518.9 billion in 2017 alone, and by $6.6 trillion over the next decade.
Mr. Holahan’s analysis couldn’t pass a laugh test — it’s based on absurd assumptions, ignores a raft of real-life evidence from both the United States and abroad, and directly contradicts itself — but serious people seem to be taking it seriously. So we’ll recite a few of its most egregious gaffes.
Mr. Holahan insists we can’t get more than piddling savings on insurance overhead and the vast costs for billing and bureaucracy that insurers inflict on doctors and hospitals.
Traditional Medicare runs for less than 3 percent overhead, and insurance overhead in Canada’s single-payer system is 1.8 percent. But Mr. Holahan proclaims that a single-payer system here couldn’t get below 6 percent. That drives his spending estimate up by $1.7 trillion over the next 10 years.
While the Urban Institute crew low-balled single-payer savings on insurance overhead, they no-balled the huge bureaucratic savings for hospitals and doctors’ offices under a streamlined single-payer system.
Every serious analyst of single-payer reform has acknowledged these savings, including the Congressional Budget Office, the Government Accountability Office, and even a consulting firm owned by the nation’s largest private insurer, UnitedHealth Group. And they’ve all found that the provider savings on paperwork are even larger than the savings on insurance overhead.
Today our hospitals spend one-quarter of their total revenues on billing and administration. That’s more than twice as much as hospitals in Canada or Scotland, where hospitals get paid a lump-sum budget and don’t have to bill separately for each bandage and aspirin tablet.
And America’s doctors spend at least one-fifth of every working day (and tens of billions of dollars) on bureaucracy and billing hassles that would mostly disappear under single-payer.
A reasonable accounting for the administrative savings for doctors and hospitals would cut Mr. Holahan’s cost estimate by another $2.6 trillion over 10 years. Add in about $1.5 trillion in administrative savings for nursing homes, home care agencies, pharmacies and other health care providers and the grand total of Holahan’s administrative savings estimate is off by about $5.8 trillion.
While they understate single-payer health care savings by about $6.9 trillion, the Holahan group also overstates new costs, based on a projection of massive and implausible increases in doctor visits and hospital care. Their estimates suggest that single-payer reform would result in about 200 million additional doctor visits and seven million more hospitalizations each year. But there just aren’t enough doctors and hospital beds to deliver that care.
Instead of a huge surge in utilization, more realistic projections would assume that doctors and hospitals would cut back on the unnecessary care they’re now delivering (about 10 percent of all care, according to the National Academy of Medicine), and deliver more care to patients who are currently underserved.
That’s what happened in Canada, and in the United States when millions got coverage under Medicare. In both instance there was no overall increase in doctor visits, just a shift from the healthy and wealthy to sick, newly-insured patients. Doctors and hospitals routinely adjust care to meet demand; that happens every year during flu season.
Today, surveys show that most doctors would welcome national health insurance, and thousands of physicians recently issued a call (and detailed proposal) for single-payer reform in the American Journal of Public Health.
In the real world, single-payer systems in dozens of nations are providing more and better care at lower cost than our system, and Sanders’ plan (and the plan proposed by Physicians for a National Health Program) would almost certainly decrease health spending over the next 10 years.
Steffie Woolhandler, M.D., M.P.H., and David U. Himmelstein, M.D., are internists in the South Bronx, professors at the City University of New York School of Public Health at Hunter College, and lecturers in medicine at Harvard Medical School.
PNHP note: Physicians for a National Health Program (PNHP) is a nonpartisan educational and research organization. It neither supports nor opposes any candidate for public office.