Benedic Ippolito explains for the American Enterprise Institute that a recent $32.6 trillion, 10-year cost estimate for U.S. Sen. Bernie Sanders’ health care proposal depends on politically contentious cost controls.
Single-payer health care is back in the news this week thanks to a new cost estimate of Senator Bernie Sanders’ “Medicare For All” proposal. While federal spending is predicted to skyrocket, supporters found vindication in its prediction of lower overall health care spending — a finding that hinges critically on the report’s assumption (favorable to the Sanders plan) of aggressive and successful federal cost controls. …
… In particular, how does such an expansive insurance plan with no cost sharing lower total health care spending?
The proposed answer is simple, but highly consequential. In an effort to be as favorable to the Sanders plan as possible, [Mercatus Center researcher Charles] Blauhous’ primary estimates assume the federal government would successfully impose a provision requiring providers to accept Medicare payment rates for treating all patients. That represents about a 40 percent reduction from what privately-insured patients currently pay. Assuming this reduction in the prices paid by some 175 million privately-insured Americans nets the proposal over $5 trillion in 10 years.
The desire to reduce health care prices makes sense — our relatively high prices are largely the reason American health care is so expensive. But the sheer size and consequences of these proposed price reductions, if attempted, would raise political and economic hurdles.
