PERI 2018

Economic Analysis of Medicare for All

Authors: Jodi L. Liu
Published: November 30, 2018
Financed by: National Nurses United
Legislation analyzed: The Medicare-for-All Act of 2017 (S. 1804 , 115th Congress)

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Summary

Relative to the estimated spending under the ACA in 2017 and prior to adjusting for the “other savings and costs,” coverage of all legal residents and low cost sharing in the comprehensive scenario increased national health care expenditures by $435 billion and increased federal health care expenditures by $1 trillion. The overall lower generosity of the catastrophic scenario reduced national health care expenditures by $211 billion and federal expenditures by $40 billion relative to the ACA, while still providing all legal residents with some level of coverage. The design of both sets of scenarios can be modified: I adjusted the plan generosity and the tax levels in the comprehensive scenarios to address the financing deficit, and I estimated options for voluntary private insurance to supplement the catastrophic plan as variations to the catastrophic scenarios. The financing plans in both sets of scenarios could be designed such that average household spending on health care as a share of income would be more progressive than spending under the ACA.

The mean estimate of the net effect of the “other savings and costs” (i.e., administrative costs, drug and provider prices, and implementation costs) on national health care expenditures was $556 billion in savings, with a range from over $1.5 trillion in savings to $140 billion in costs. If a single-payer system was able to achieve substantial administrative savings and lower prices, expenditures could be reduced significantly.