By Adam Gaffney, David U. Himmelstein, Steffie Woolhandler, and James G. Kahn
Health Affairs, January 2021
The return of a Democratic administration to the White House, coupled with coronavirus disease 2019 (COVID-19) pandemic–induced contractions of job-based insurance, may reignite debate over public coverage expansion and its costs. Decades of research demonstrate that uninsured people and people with copays and deductibles use less care than people with first-dollar coverage. Hence, most economic analyses of Medicare for All proposals and other coverage expansions project increased utilization and associated costs. We review the utilization surges that such analyses have predicted and contrast them with the more modest utilization increments observed after past coverage expansions in the US and other affluent nations. The discrepancy between predicted and observed utilization changes suggests that analysts underestimate the role of supply-side constraints—for example, the finite number of physicians and hospital beds. Our review of the utilization effects of past coverage expansions suggests that a first-dollar universal coverage expansion would increase ambulatory visits by 7–10 percent and hospital use by 0–3 percent. Modest administrative savings could offset the costs of such increases.
The supply-focused framework advanced in this article challenges the long-dominant paradigm among US health economists that health care demand (and costs) must be curbed by forcing patients to have “skin in the game.” Many health care systems have constrained utilization and cost growth without resorting to cost barriers while achieving universal coverage and a more equitable distribution of care. The US can do the same.
Universal Healthcare Less Costly Than Previously Projected: Harvard / UCSF Study
Physicians for a National Health Program, January 5, 2021
Previous projections of the costs of universal coverage, much cited by its opponents, have concluded that expanded coverage would lead to surging healthcare use and costs. But a new study by researchers from Harvard Medical School, the University of California San Francisco and the City University of New York at Hunter College published January 5 in Health Affairs concludes that predictions of large cost increases are likely wrong. The researchers, citing real-world experience with society-wide coverage expansions in the US and ten other wealthy nations, conclude that universal coverage increases the overall use of care only modestly, or, in some cases, not at all.
The researchers find that a factor rarely considered in the previous analyses – the finite supply of doctors’ and nurses’ hours and hospitals beds – has constrained cost and utilization increases in essentially all past coverage expansions, and would similarly prevent a surge in use under Medicare for All or other universal coverage reforms. The study finds strong evidence that new services provided to the people who gain coverage would likely be offset by reductions in useless or low-value care currently over-provided to the well-off.
Overall, the study estimates that a Medicare for All reform offering first-dollar universal coverage would lead to a 7-10% increase in outpatient visits, and a 0-3% increase in hospital use, figures far lower than most previous analyses, which could be readily offset by administrative cost savings.
By Don McCanne, M.D.
This report refutes the claim that the surge in health care utilization under a single payer Medicare for All program would not be affordable for the nation. Under modest supply-side constraints, health care would be prioritized according to need, causing the health care professionals to reduce unnecessary care for patients with minimal needs thereby making way for patients with greater needs. That trade-off produces the benefit of improved efficiency.
Another important conclusion is that it is unnecessary to erect financial barriers to care such as deductibles and other cost sharing which otherwise might cause patients to forgo essential health care services.
Also the reduction in administrative costs by switching to a more efficient single payer Medicare for All can produce enough savings to pay for most or all of the costs of increasing the patient population while decreasing out-of-pocket cost sharing.
It is not that we can’t afford Medicare for All, rather it is that we cannot afford not to do it.
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