by Robert King · August 12, 2018
Sen. Bernie Sanders, I-Vt., and progressive Democrats have defended their push for “Medicare for All” in recent days with an unlikely aid: A study from a free-market think tank that concludes, in their reading, that the reform would save $2 trillion in healthcare costs.
But the study’s author said that the advocates are glossing over key details in the findings: namely that it doesn’t say that.
“Some are people under the misimpression that the study found that healthcare spending nationally would go down or rise more slowly if we enacted Medicare for All,” Charles Blahous, the author of the study published last month by the libertarian Mercatus Center at George Mason University, told the Washington Examiner. “The study absolutely did not say that. It says the opposite.”
The study came out in July, as Medicare for All and single payer grew in importance in Democratic primary races.
Earlier this week, Democratic establishment candidate Gretchen Whitmer defeated progressive challenger Abdul El-Sayed for the Democratic nomination for Michigan’s gubernatorial race. El-Sayed had campaigned for a state-run single payer program and got support from Sanders and Alexandria Ocasio-Cortez, the progressive star who defeated incumbent congressman Joe Crowley in his New York City district.
The study looked at a bill introduced last September by Sanders, who represents Vermont as an independent in the Senate, that would expand Medicare to every American. Blahous found that Medicare for All would add $32.6 trillion in federal budget commitments over the next decade.
But Sanders looked past the $32.6 trillion price tag to seize on another figure in the study, interpreting it as a validation of his legislation.
“Let me thank the Koch brothers, of all people, for sponsoring a study that shows ‘Medicare for All’ would save the American people $2 trillion over a ten-year period,” Sanders said in a video posted on Twitter, referencing GOP megadonors Charles and David Koch.
Sanders claimed that the $2 trillion in savings would come from lower administrative costs and lower drug prices because the government-run system would be able to negotiate for lower prices. Other progressives also touted that finding.
But Blahous said that the savings in the study do not come from lower drug costs or lower overhead.
“That particular table is a projection of what happens if you cut provider payments by 40 percent [compared to] what they are getting,” he said.
If it’s assumed that providers instead get reimbursed at current law levels, Blahous explained, “not only would federal costs be greater, but national medical spending would be higher as well.”
Sanders’ bill would reimburse doctors and hospitals at Medicare rates, which are 40 percent below private insurance. The study said it couldn’t know how providers will react to the losses, or whether certain health services will be reduced, or the quality of such services.
“My study was clear that actual costs would be higher,” Blahous said.
The study does assume there would be some additional savings from negotiating lower prices, citing estimates from Sanders’ original bill that Medicare for All would save approximately $846 billion from 2022 to 2031.
“There are limits to the potential effectiveness of this approach to lowering healthcare costs,” the study said. “Generics have prices 75 to 90 percent lower than those of brand-name drugs, but they already make up roughly 85 percent of all prescription drugs sold.”
It added that prescription drugs only account for 10 percent of total national health expenditures.
Mercatus’ cost estimates don’t reflect other potential effects of Medicare for All, “such as lessened pharmaceutical innovation,” the study added.
Sanders’ office did not respond to a request for comment on the $2 trillion figure.
Blahous said that he has no problem with Sanders referencing the study to make his case for single payer, but “there is some misunderstanding on what the study says.”
Washington Examiner · by Robert King · August 12, 2018