For the Record: What National Healthcare Would Cost?

Recently in response to a previous post regarding a proposal for “Medicare for All”, a reader suggested that national health insurance may be a fine idea but it would cost too much. Although we replied to the reader in an appropriate comment we have to conclude that this objection is frequently made. Much of the argument about healthcare is, like other political arguments, more likely founded on assumptions than facts. We would like to set our opinion aside and merely report on the findings of others who have expertise. So can we afford a Single-Payer Healthcare Program in the United States?

GENERAL ACCOUNTING OFFICE of the U.S. GOVERNMENT (July 1991):

“If the US were to shift to a system of universal coverage and a single payer, as in Canada, the savings in administrative costs [10 percent of health spending] would be more than enough to offset the expense of universal coverage”

CONGRESSIONAL BUDGET OFFICE (December 1991):

“If the nation adopted…[a] single-payer system that paid providers at Medicare’s rates, the population that is currently uninsured could be covered without dramatically increasing national spending on health. In fact, all US residents might be covered by health insurance for roughly the current level of spending or even somewhat less, because of savings in administrative costs and lower payment rates for services used by the privately insured. The prospects for con-trolling health care expenditure in future years would also be improved.”

CONGRESSIONAL BUDGET OFFICE (April 1993):

“Under a single payer system with co-payments …on average, people would have an additional $54 to spend…more specifically, the increase in taxes… would be about $856 per capita…private-sector costs would decrease by $910 per capita.

CONGRESSIONAL BUDGET OFFICE (December 1993):

S491 (Senator Paul Wellstone’s single payer bill) would raise national health expenditures above baseline by 4.8 percent in the first year after implementation. However, in subsequent years, improved cost containment and the slower growth in spending associated with the new system would reduce the gap between expenditures in the new system and the baseline. By year five (and in subsequent years) the new system would cost less than baseline.

NATIONAL COALITION ON HEALTHCARE (August 2005):

This fiscal analysis of the impact of four scenarios for health care reform found that the single payer model would reduce costs by over $1.1 trillion over the next decade while providing comprehensive benefits to all Americans.

GERALD FRIEDMAN, PROFESSOR OF ECONOMICS (April 2012):

“While providing superior health care,” the Expanded and Improved Medicare for All Act (HR 676), “would save as much as $570 billion now wasted on administrative overhead and monopoly profits.

State Studies

Various States have considered establishing their own Single Payer Healthcare programs, the following findings were made by some of these States:

NEW MEXICO (November 1994):

The study concluded that a single-payer system with modest cost-sharing was the only plan that would cover all the uninsured and save over $150 million per year (estimates given for 1998). Such a plan could be financed with a payroll tax of 7.92 percent (employer 80 percent/employee 20 percent) and a 2 percent tax on family income. If patient cost sharing was eliminated, the single payer program would cover all the uninsured for a net increase in costs of $9.1 million.

MARYLAND (June 2000):

A single-payer system in the state of Maryland could provide health care for all residents and save $345 million on total health care spending in the first year, according to a study by the D.C. based consulting firm Lewin, Inc.

VERMONT (August 2001):

“Our analysis indicates that the single payer model would cover all Vermont residents, including the estimated 51,390 uninsured persons in the state, while actually reducing total health spending in Vermont by about $118.1 million in 2001 (i.e., five percent). These savings are attributed primarily to the lower cost of administering coverage through a single government program with uniform coverage and payment rules”

RHODE ISLAND (November 2002):

Solutions for Progress studied two models of single payer reform one with consolidated financing alone, and one with consolidated financing combined with “professionalism within a budget.” They found that without health care reform, Rhode Island’s costs would continue to rise, while both models of single-payer could provide universal coverage while saving an estimated $270 million in the first year.

MISSOURI (October 2003):

Missouri Foundation for Health conducted a study on “health care expenditures and insurance in Missouri”. A single payer health care plan in the state of Missouri would reduce overall spending by about $3 billion.

DR. DON McCANN in re COLORADO:

Once again, fiscal analysis shows that the models of reform that build on our highly flawed, fragmented system of financing health care actually increase health care spending while falling far short on the goals of reform. In contrast, the single payer model would provide truly comprehensive care for absolutely everyone while significantly reducing health care spending.

KANSAS (December 2007):

The Kansas Health Policy Authority hired the consulting firm of Schramm-Raleigh to do a fiscal analysis of five options for expanding coverage. They found that single payer (“the Mountain plan”) would cover all the uninsured and reduce state health spending by $869 million annually. The other plans would cover a portion of the uninsured and would raise costs between $150 million to $500 million in the state.

NEW YORK (July 2009):

The New York State Department of Health and Department of Insurance contracted with the Urban Institute to compare 4 options for health reform in the state, including single payer (“Public Health Insurance for All”). The results of the two-year study showed that single payer was the only plan that would cover everyone and was the most effective plan at controlling costs. The report found that the savings from single payer would substantially increase over time. By 2019, the Urban Institute analysis showed that single payer would save $20 billion annually compared to the present system. Single payer would cost $28 billion less annually than an individual mandate plan and $19 billion less annually by 2019 than an expansion of Family Health Plus.

MINNESOTA (2012):

Lewin estimated that single payer would save employers currently offering coverage an average of $1,214 per worker, and save an average of $1,362 for families.  Employers not currently providing coverage would pay an additional $1,963 per worker annually.  Single payer could be financed with existing sources of taxpayer funding for health care (including subsidies from the ACA) combined with an average 7.2 percent effective payroll tax on employers, a 3 percent income tax on family adjusted gross income, and cigarette ($1.00/pack) and alcohol taxes (5 cents per drink).

_______________________________________________

Time and time again, in State after State and on the Federal level, studies indicate that changing our existing healthcare finance system into a single payer publicly funded program will assist more people and cost less than the existing  system.

SOURCE: http://www.pnhp.org/facts/single-payer-system-cost

 

 

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