Many in the left-wing media are abuzz over a Mercatus Center at George Mason University study that purportedly shows that Bernie Sanders’ “Medicare for All” legislation would actually save billions in healthcare spending.
Among them is the Greensboro News & Record, who declared with glee in their recent editorial:
“On Monday, an analysis produced by the conservative George Mason University-based Mercatus Center reported the surprising — perhaps accidental — conclusion that a “Medicaid for All” program could insure 30 million more Americans, eliminating out-of-pocket expenses, while saving Americans $2 trillion over 10 years.”
First off, the study was about “Medicare for All”, not Medicaid.
But more importantly, the leftists citing this study as somehow supportive of Medicare for All (M4A) obviously did not read it. In reality, it does not paint the M4A proposal in a very flattering light.
For starters, the study itself shows that M4A would cost $32.4 trillion over the next ten years, and place “unprecedented strain on the federal budget.” The study further notes that “It is likely that the actual cost of M4A would be substantially greater than these estimates.”
The alleged $2 trillion in “savings,” however, comes from calculations that assume provider reimbursements would all be adjusted to Medicare rates – which are about 40% lower than average reimbursement rates for private insurers. Does anybody honestly think that medical care providers are going to accept a 40% drop in reimbursement rates from a significant share of their patients? Of course not.
Such a dramatic drop in revenue for providers would be devastating. The Mercatus study references a Centers for Medicare and Medicaid Services (CMS) study that simulated M4A and found that “by 2019, over 80 percent of hospitals will lose money treating Medicare patients.”
Naturally, the response would be either a dramatic decrease in medical care providers, or M4A would have to significantly increase the reimbursements – driving total costs thru the roof.
Using even somewhat more reasonable reimbursement rate assumptions, the study notes, “would substantially increase the total projected costs of M4A.”
Then there is the case of increased demand for medical care services. Expanded coverage would cause an increase in demand for medical services between 11 and 16 percent (depending on one’s current coverage), according to the study.
Coverage does not equal access. As the Mercatus study points out, an Urban Institute study concluded that, even if the M4A plan had higher reimbursement rates than set out in the proposal, “not all increased demand could be met because provider capacity would be insufficient.”
Many states already face significant doctor shortages, just imagine the lack of access to care under a M4A plan that significantly increases demand while simultaneously putting up to 80 percent of hospitals out of business?
Supporters of single-payer healthcare jumped the gun on this one, trying to convince people that Sander’s plan would somehow save money, without having any negative impact on access to care. They should have actually read the study first, because it actually helps paint a picture of what a disaster the plan would be.