Guest columnist Gerald Friedman: Who says we can’t afford Medicare for All?

  • The percentage of U.S. adults without health insurance surged upward in 2018. Dreamstime​​​​​​/TNS

Published: 2/4/2019 9:05:28 AM

Richard Fein’s Jan. 28 column raises important questions about Medicare for All in Massachusetts. It is unfortunate, however, that my colleague failed to consult much of the relevant documentation addressing many of the questions.

To begin with, the central question is not whether we can afford a better and cheaper health care system, but whether we can continue to pay for the current system with all its inefficiencies and inequities. A raft of studies from scholars on the political right and center have shown that a Medicare for All system would cost less than the current fragmented insurance system even while providing universal coverage to every resident. It is not just proponents of Medicare for All who believe that billions can be saved. The right-wing, Koch-brothers-funded Mercatus Center found a Medicare for All system would over 10 years lower health care spending by over 3 percent, $2 trillion in savings, even while covering every American without co-pays or deductibles. The RAND Corporation studied a proposed single-payer system for New York state and supported my findings that it would lower spending even while providing universal access and universal coverage, and dramatically increasing employment and economic activity in the state. Studies have similarly concluded that single-payer systems would save money even while providing better health care in Oregon (RAND), Ohio (Friedman), Washington (Friedman), California (PERI), among many others. No serious study has ever found that single-payer would raise total costs.

The savings to be realized from Medicare for All come from reducing undesirable expenses and illicit profits, and by reducing the cost of illness and premature death. A single state agency buying prescription medications and medical devices for everyone in Massachusetts should be able to negotiate drug prices down to the level paid in comparably sized bodies, such as Norway or the Veterans Administration in the United States. This would save over $4 billion. Reducing the cost of administering the insurance system down to the level of the Social Security Administration would save a further $6 billion. Reducing the administrative cost of billing and insurance-related activities within provider offices down to the Canadian level would save another $10 billion.

These savings would be achieved without any reduction in physician compensation or in payments to hospitals net of billing and insurance-related expenses. They leave more than enough to provide health insurance to all residents of Massachusetts, including the over 200,000 still left outside of our coverage system. And they would be enough to allow full access to those without adequate health insurance, eliminating co-pays and deductibles so that everyone can fill prescriptions when needed and see a doctor when sick. Thousands of our fellow Massachusetts residents die unnecessarily each year because of lack of health care; we should add the costs of their funerals, as well as their pain and suffering and lost productivity, to the real cost of the current system and the savings to be achieved from Medicare for All.

Finally, there is the question of taxes. Of course, a state-funded health insurance program will require new taxes. The issue is whether these new public taxes paid to the Commonwealth will on balance save people money by eliminating larger sums in what are effectively “private taxes” paid to health insurance companies in the form of premiums, co-pays, and deductibles plus the additional charges assessed by monopolistic pharmaceutical companies. By lowering the total cost of health care in the Commonwealth, Medicare for All will mean that we pay less for health care, and additional public taxes will be less than the private taxes currently assessed by the private health insurance industry and pharmaceutical companies. We can save people money while providing better health care. Really: What are we waiting for?

Richard Fein did not ask the one critical question: If we can afford the current system with all its waste, who can say that we can’t afford a better and more efficient system?

Gerald Friedman is a professor of economics at the University of Massachusetts Amherst.


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