How To Make Healthcare Savings Sound Scary

This week, the libertarian, Koch-funded Mercatus Institute attempted to shoot down Senator Sanders Medicare-For-All proposal by arguing it costs ELEVENTY GAJILLION TRILLION DOLLARS $32 trillion over ten years. Sounds scary! Of course, the headlines neglected something very important (boldface mine):

The report’s methods are pretty straightforward. Blahous starts with current projections about how much the country will spend on health care between 2022 and 2031. From there, he adds the costs associated with higher utilization of medical services and then subtracts the savings from lower administrative costs, lower reimbursements for medical services, and lower drug prices. After this bit of arithmetic, Blahous finds that health expenditures would be lower for every year during the first decade of implementation. The net change across the whole 10-year period is a savings of $2.054 trillion.

When talking about Medicare for All, it is important to distinguish between two concepts: national health expenditures and federal health expenditures. National health expenditures refers to all health spending from any source whether made by private employers, state Medicaid programs, or the federal government. It is national health expenditures that, according to the report, will decline by $2.054 trillion.

Federal health expenditures refers to health spending from the federal government in particular. Since the federal government takes on nearly all health spending under Medicare for All, federal health expenditures will necessarily go up a lot, $32.6 trillion over the 10-year period according to Blahous. But this is more of an accounting thing than anything else: rather than paying premiums, deductibles, and copays for health care, people will instead pay a tax that is, on average, a bit less than they currently pay into the healthcare system and, for those on lower incomes, a lot less.

And the $34 trillion under the current system is probably too small a figure (boldface mine):

In 2016, the United States spent $3.4 trillion on healthcare; projected over ten years—and assuming costs don’t rise, as they’re expected to—that’s $34 trillion. By 2025, the current for-profit healthcare system is expected to cost a staggering $5.5 trillion per year.

The Mercatus estimate also might be overstating the long-term costs of Sanders’ plan. While snarkily dinging them on the numbers is fun (‘BREAKING: Libertarians show government-run healthcare is less expensive than private healthcare’), there really is no excuse now, on fiscal grounds, to not have Medicare for All.

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