‘Seems Like a Good Policy!’ CBO Shows Medicare for All Could Cover Everyone for $650 Billion Less Per Year

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    • #385218
      eridani
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      • Total Posts: 10,257

      https://www.commondreams.org/news/2020/12/11/seems-good-policy-cbo-shows-medicare-all-could-cover-everyone-650-billion-less-year

      What Bruenig found most noteworthy is the CBO’s findings on administrative costs:

      Medicare for All advocates have historically pointed towards the 2% administrative costs of traditional Medicare as what we should expect in a Medicare for All system. Critics of this view have typically argued, among other things, that Medicare’s low administrative costs are a mirage driven by the fact that their per-enrollee administrative costs are being divided by disproportionately large per-enrollee healthcare utilization.

      This rebuttal never really made any sense. Private Medicare Advantage plans have a similarly sick and elderly enrollment population, but manage to spend a whopping 13.7% of their revenue on administrative expenses. The CBO’s analysis, which starts with the current Medicare administrative costs and then determines how each element of those costs would go up or down in a single-payer system, seems to put this claim to bed once and for all.

      Indeed, the CBO finds that the current Medicare administrative costs that are often touted by advocates are actually higher than the administrative costs you would expect in a single-payer system because a large share of those costs are tied up in tasks like eligibility determination and collection of Medicare Part B premiums that would no longer exist in a Medicare for All system.

      What this means, Bruenig said, is that other studies estimating the effects of a single-payer system on administrative costs are “missing hundreds of billions of dollars of savings per year.”

      Jesus: Hey, Dad? God: Yes, Son? Jesus: Western civilization followed me home. Can I keep it? God: Certainly not! And put it down this minute--you don't know where it's been! Tom Robbins in Another Roadside Attraction

    • #385219
      eridani
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      • Total Posts: 10,257

      https://www.cbo.gov/system/files/2020-12/56811-Single-Payer.pdf

      CBO projects that federal subsidies for health care in 2030 would increase by amounts ranging from $1.5 trillion to $3.0 trillion under the illustrative single-payer options—compared with federal subsidies in 2030 projected under current law—raising the share of spending on health care financed by the federal government. National health expenditures in 2030 would change by amounts ranging from a decrease of $0.7 trillion to an increase of $0.3 trillion. Lower payment rates for providers and reductions in payers’ administrative spending are the largest factors contributing to the decrease. Increased use of care is the largest factor contributing to the increase.

      Health insurance coverage would be nearly universal and out-of-pocket spending on health care would be lower—resulting in increased demand for health care—under the design specifications that CBO analyzed. The supply of health care would increase because of fewer restrictions on patients’ use of health care and on billing, less money and time spent by providers on administrative activities, and providers’ responses to increased demand. The amount of care used would rise, and in that sense, overall access to care would be greater. The increase in demand would exceed the increase in supply, resulting in greater unmet demand than the amount under current law, CBO projects. Those effects on overall access to care and unmet demand would occur simultaneously because people would use more care and would have used even more if it were supplied. The increase in unmet demand would correspond to increased congestion in the health care system—including delays and forgone care—particularly under scenarios with lower cost sharing and lower payment rates.

      Comment by Don McCanne of PNHP:  As stated in the Abstract, “In this paper, CBO describes the methods it has developed to analyze the federal budgetary costs of proposals for single-payer health care systems that are based on the Medicare fee-for-service program.” Since their reports are provided for Congress, the emphasis is on federal spending rather than on our total national health expenditures. There should be no surprise that they do predict an increase in federal spending since the design of a single payer system does precisely that; it shifts health care spending to the federal government since financing is primarily through the tax system.

      They do indicate that total national health expenditures would not change much when compared to our current spending, estimating somewhere between a decrease of $0.7 trillion to an increase of $0.3 trillion. They may have underestimated the savings in that, though they do credit the savings from the reduction of the administrative waste of the private insurers, they do not seem to quantify the very large savings from the reduction of the administrative burden placed on the health care delivery system, though they do acknowledge it as being a source of improved efficiency in the system. A recent systemic review by Christopher Cai, James Kahn and colleagues of twenty economic analyses of single payer indicate that they would all result in long-term net savings.

      In indicating that increased demand would produce “increased congestion” in the health care system, they seem to underestimate the ability of the system to self-correct by giving a lower priority to services that are not of much benefit, though queue management is still important in any system.

      Some of the experts consulted previously have been criticized for some of their assumptions in their single payer work, and others are experts in the aged and long term care and are not noted for their single payer work. There is also a notable absence of other academics who have long-standing reputations for their credible contributions to the single payer literature. In spite of that, this CBO report is still very useful in that it does what it says it does; it provides a description of CBO’s methods of analyzing single payer and thus would be helpful in understanding future single payer reports from them.

      Jesus: Hey, Dad? God: Yes, Son? Jesus: Western civilization followed me home. Can I keep it? God: Certainly not! And put it down this minute--you don't know where it's been! Tom Robbins in Another Roadside Attraction

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