A Medicare for all plan would save money and lives, says a recent study published in Lancet, one of the most prestigious medical journals in the world. Alison Galvani, of the Yale University School of Public Health and her colleagues, examined the Medicare for All Act, as introduced by Senator Bernie Sanders, which proposes a single-payer system of universal health care for every American.
The study concluded that Sanders’ national single-payer health-care system would save tens of thousands of lives and hundreds of billions of dollars each year. First, the single-payer plan would cut expenditures by an estimated 13 percent. Savings could be achieved by applying the existing Medicare fee schedule across all hospital and clinical services. These services constitute more than a third of health-care expenditures in the United States.
Another way expenses would be cut is by reducing administrative overhead. Administrative overhead costs associated with providing health insurance comprise 12.4 percent of spending for insurance companies compared with 2.2 percent for Medicare. Significantly, under single-payer, there would be no insurance companies and the associated high salaries of their CEOs.
Another significant cost savings would occur through price negotiations with pharmaceutical companies. In 2017, $469 billion was spent on pharmaceuticals in the United States, fuelled by prices that are higher than in any other country and which continue to increase more steeply than inflation. For example, a vial of insulin costs approximately $300 in the United States, compared with $30 in Canada. Incredibly, legislative rules prohibit price negotiations for pharmaceuticals, supplies, or equipment. By contrast, the negotiating authority is a fundamental component of the Medicare for All Act.
The Lancet study demonstrates that a single-payer health-care system would cost $3.034 trillion annually, $458 billion less than was spent totally for health care in 2017. Even after accounting for the increased costs of covering more people, their hard data analyses estimated $59 billion savings on hospital care, $23 billion on physician and clinical services, $217 billion on overheads, and $177 billion on prescription drugs.
A primary concern of many people about a single-payer plan is the amount of taxes needed to pay for it, especially since there will be no premiums to pay. The study shows that the amount of new taxes paid would be less than the amount of out of pocket expenditures.
Many Americans get their health insurance through employer plans. Currently (in 2017), employers paid $586 billion for employee premiums, which is equivalent to a 12.3 percent tax rate. Under the Medicare for all Act, that amount would be reduced to $436 billion. Currently, the average American household pays $5,847 per year in premiums and out-of-pocket spending (copays, etc.). The Act would reduce that amount to $3,748 per year in taxes and any out-of-pocket expenditures.
Despite spending more on health care than any other country, the United States ranks below 30 countries on many public health indicators, including preventable deaths, infant mortality, maternal mortality, and overall life expectancy. A significant reason for this situation is that 78 million Americans do not have adequate health insurance. The Yale team calculates that the Medicare for All Act would save over 68,000 lives each year.
The bottom line is that single-payer universal health care has the potential to improve the quality, cost-effectiveness, and accessibility of medical services. Americans view Medicare as an essential program that works well. If Medicare can succeed for older people who use health-care services most frequently, it is reasonable to expect that extending coverage to all Americans would only be more feasible and less costly per person.
