‘Medicare-for-all’ is worse than the CBO says it is (much worse)
This week, the House Budget Committee hosted three representatives from the Congressional Budget Office to discuss their new report analyzing the prospects for a single-payer health care system in America.
Democrats used the CBO report as an excuse to plug their preferred plans for reform. “It’s not a question of if, it’s a question of when our country has single-payer health care,” said Rep. Pramila Jayapal, the chief sponsor of a “Medicare-for-all” bill in the House, echoing Budget Committee Chairman John Yarmuth of Kentucky.
Republicans touched on something the report didn’t delve into — the astronomical costs of single-payer.
There’s a reason any mention of cost is notably absent from the CBO report. Democrats specifically asked for a report without it. They’re aware that the American public is unlikely to get behind their plan to outlaw private health insurance and launch a government takeover of the U.S. healthcare system.
Even though the report is silent on “Medicare-for-all”‘s 14-figure price tag, the CBO still raised plenty of questions about the feasibility of a single-payer system.
Indeed, the cost of single-payer may be less interesting than how it will be financed. The CBO suggested that a putative single-payer system could be funded by a combination of premiums, out-of-pocket payments, and taxes.
Notably, the two “Medicare-for-all” proposals on the docket — spearheaded by Sen. Bernie Sanders in the upper chamber and Rep. Jayapal in the House — set premiums and out-of-pocket payments at zero. Sanders’s bill maintains limited cost sharing for prescription drugs; Jayapal’s doesn’t even do that.
According to Emory University health economist Kenneth Thorpe, more than 70 percent of working Americans who have private insurance would wind up paying more for health care under a version of “Medicare-for-all” very similar to the one Sanders has introduced in the Senate.
That estimate may be low. As CBO Deputy Director Mark Hadley mentioned in this week’s hearing, the report found that the elimination of cost-sharing would increase usage of health services — and thereby drive up government spending even further. That could necessitate additional taxes.
Whether that pressure is enough to compel them to cut their working hours or leave the practice of medicine entirely “would depend on various components of the system, such as provider payment rates,” the CBO said.
In other words, incentives matter. As the CBO puts it, “Studies have found that increases in provider payment rates lead to a greater supply of medical care, whereas decreases in payment rates lead to a lower supply.”
“Medicare-for-all”, of course, envisions huge pay cuts for doctors and hospitals. It would reimburse doctors and hospitals at Medicare’s rates, which are 40 percent less than those paid by private insurers. The CBO concludes that “such a reduction in provider payment rates would probably reduce the amount of care supplied and could also reduce the quality of care.”
That would lead to “longer wait times, and overall less quality,” as Rep. Dan Crenshaw, a Republican from Texas, said during this week’s hearing. A former Navy SEAL, Crenshaw knows of what he speaks — he’s been a patient in the single-payer Veterans Health Administration.
The VA has been rocked by scandal for years. In 2014, at least 40 veterans died waiting for care at the Phoenix VA. Many were on a “secret” waiting list. A recent analysis found that VA hospitals have longer wait times compared to other hospitals. According to an audit of 2017 data by the VA’s Office of Inspector General, one in five new patients waited more than 30 days for an appointment.
In his testimony this week, CBO Deputy Director Hadley emphasized that single-payer could be “complicated, challenging, and potentially disruptive” — and “involve significant changes for all participants” in the healthcare system.
For the CBO, that’s strong language — and unlikely to be helpful to “Medicare-for-all”‘s advocates.