by Joseph Antos – @joeantos
The Peter Peterson Foundation reminded us on Tuesday that America’s fiscal outlook has worsened, with the 2016 deficit expected to climb to $544 billion–$105 billion more than last year. Over the next decade, budget deficits will total $9.4 trillion, with interest costs alone totaling $5.8 trillion. Imagine what would happen if Bernie Sanders, with his $28 trillion health plan, were elected.
That’s the additional federal spending necessary to finance Sanders’ “Medicare for All” plan, but only if his plan saves $6.3 trillion over the next decade. All this is spelled out in a memorandum written by Gerald Friedman, a professor at the University of Massachusetts. Extrapolating from the Centers for Medicare and Medicaid Services’ (CMS) projections of national health spending, Friedman claims that the Sanders plan would cost $40.9 trillion between 2017 and 2026. That includes $6.3 trillion in savings from the single payer program. It also assumes that out-of-pocket spending would decrease by an additional $153 billion because some services would be deemed not medically necessary, and thus not covered by the national health plan.
If we take those numbers at face value, the Sanders plan would reduce the average growth of national health spending well below historical rates. According to the CMS actuaries, health spending grew 3.6% in 2013, the slowest one-year rate in the 56 year history of the national health accounts. However, health spending is beginning to pick up with the improving economy, increasing by 5.5% in 2014. Sanders assumes an unprecedented slowdown in health spending, averaging about 3.3% a year over the next decade.
This is all the more unbelievable because the Sanders plans appears to fling open the doors to the Treasury. “Medicare for All” is far more generous than Medicare or private health plans. It would eliminate all cost-sharing requirements, making all services free to the patient. With no out-of-pocket costs, patients will no longer question the value of an additional test or office visit, which would bend the cost curve the wrong way. Sanders would also cover all of Medicare’s benefits plus vision, hearing, and dental care, as well as long-term and palliative care. If his plan is really as generous as claimed, health spending would skyrocket.
Bernie Sanders deserves credit for one-upping Barack Obama. The President claimed to give everyone affordable coverage and save families $2,500. Sanders says he’ll give everyone unlimited access to every provider in the country and all conceivable health services that are provided now or will be invented in the future — saving middle-class families $5,807. Don’t expect to spend that money any time soon.
The health care nirvana outlined by Sanders will never happen. If he was able to enact his plan, the only way to make the finances work is to cut payments to every doctor and hospital in the country. That would drive people away from the medical profession, and the flow of new cures would dry up. Patients would face long waits for appointments, with bribes necessary to move closer to the head of the line. Officially health care costs would be reduced compared to the current trend, but only because health care would be increasingly unavailable. That’s not Medicare for all. That’s a broken VA health system for all.
Joseph Antos is the Wilson H. Taylor Scholar in Health Care and Retirement Policy at the American Enterprise Institute