University of Massachusetts economist Gerald Friedman calculates savings resulting from ‘Medicare for All’



Last modified: Wednesday, January 20, 2016

AMHERST — Presidential candidate Bernie Sanders’ “Medicare for all” plan, unveiled Sunday hours before the televised Democratic debate in South Carolina, got a seal of approval from University of Massachusetts Economics Professor Gerald Friedman, who has argued for such a plan for decades.

Friedman wrote a 2013 paper for the non-profit organization Physicians for a National Health Program stating that such a plan would both save money and lead to higher-quality care.

Familiar with this work, Sanders’ campaign asked Friedman to run numbers on the candidate’s plan. The result was that Friedman found that a family of four making $50,000 in annual wages would pay $466 more in taxes but would save $4,955 annually from elimination of health insurance premiums and $1,318 in deductibles, making for a total savings of $5,807 under Sanders’ proposal.

Friedman also wrote that employers would save money. An employer now pays $12,591 for the average employee’s family plan, according to a report by the Kaiser Family Foundation. That would be reduced to $3,100 in the form of a 6.2 percent income-based health premium, saving employers $9,491 per employee, Friedman wrote.

“In every other country in the world, they have something like what Sanders is talking about — Medicare for all — so I see no reason why we can’t do it,” Friedman said Monday.

Friedman is not employed by the Sanders campaign, and said Monday he has donated both to Sanders and his chief rival for the Democratic nomination, former Secretary of State Hillary Clinton.

During Sunday’s debate, Clinton said adopting such a plan would involve another protracted political fight such as the one that accompanied the passage and implementation of the Affordable Care Act, otherwise known as Obamacare.

“I do not want to see Republicans repeal it and I do not want us to start over with a contentious debate,” Clinton said. “I want us to defend and build on the Affordable Care Act and improve it.”

Economist and New York Times columnist Paul Krugman wrote in support of Clinton’s position Monday. At the same time, he said that Obamacare, which relies on Americans paying for health care through private insurers, has shortcomings, and that a system similar to what Sanders is proposing would be superior if the country was starting from scratch.

“Obamacare is ... more expensive than it should be, and will probably always cause a significant number of people to fall through the cracks,” Krugman wrote. “The question for progressives — a question that is now central to the Democratic primary — is whether these failings mean that they should relitigate their own biggest political success in almost half a century, and try for something better.”

Krugman argued that the entrenched interests of private insurers would make for powerful opposition to Sanders’ plan, and that misinformation on ultimate savings for middle class families would be rampant. He also said that such a system would cause disruption on families that already have good coverage through their employers.

“Is there any realistic prospect that a drastic overhaul could be enacted any time soon — say, in the next eight years? No,” he wrote.

Republican reacts

John Andrulis of Northampton, a professor emeritus of economics at Western New England University in Springfield and a prominent Republican, implied that Krugman is right.

Andrulis, who said he is not an expert in health care economics, said a “Medicare for all” plan seemed like a big government undertaking which he does not favor. “I’m not in favor of expanding government control over the medical industry,” he added.

At the same time, Andrulis said he does favor replacing Obamacare with a simpler voucher system for those who could not afford to buy insurance.

Andrulis said he would not vote for Sanders or Clinton under any circumstances, but said he was even less likely to vote for Republican front-runner Donald Trump. He said he has not made up his mind which Republican candidate he supports.

Friedman said Monday he has read and respects Krugman’s argument, but ultimately is unmoved.

“I think in the long run we can’t do anything else but a single-payer system,” Friedman said. “The system we have is unsustainable. We can’t control costs and we can’t create better health outcomes through a fragmented private insurance industry.”

Private insurers have economic incentives to drive away sick people and deny claims, which is what a portion of their bureaucracy is designed to do, Friedman said. At the same time, insurance companies individually are too small and weak economically to control prices of provider services like drugs or hospital fees. That is the reason American health care is twice as expensive as it is in most of the rest of the world, he said.

Krugman and Clinton’s position will lead to rising health care costs that will generate huge inequality, Friedman said. He said adopting a system such as the one proposed by Sanders would endanger the income of rich health-care executives or elite hospitals, and Clinton and Krugman know that.

“But if we don’t, they will drive us all bankrupt,” Friedman said.

Dave Eisenstadter can be reached at deisen@gazettenet.com.


 


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