Even with the aff’s ‘savings’, it still costs too much.

Because of the research teams’ different assumptions, the two sets of findings are not directly comparable. The Urban Institute team’s 10-year estimate of the increase in federal spending would be higher, closer to $40 trillion, if we had estimated program costs over the same period as the Mercatus Center. The additional federal costs would be $2.9 trillion lower ($3.6 trillion lower using the later budget window) if we had not assumed expansion of long-term care services. These two adjustments would move the Urban Institute estimates of a 10-year increase in federal costs to roughly $36 trillion dollars, which would be even lower if we had assumed a phase-in period. The Urban Institute estimates would also be lower if we had assumed hospitals would be paid at Medicare rates, instead of reimbursing hospitals at the level of their costs. The Urban Institute assumed that prescription drugs would be paid for at levels midway between Medicare and Medicaid rates; it is not clear from the Mercatus Center analysis how they derived their prescription drug cost savings. The Urban Institute analysis may also have estimated larger increases in health care utilization because the currently insured would have comprehensive first-dollar coverage under the reform (Blahous 2018, 9; Holahan et al. 2016, 10). The two research teams have made similar assumptions on the level of administrative costs associated with the single-payer plans, and thus their estimated savings from lower average administrative costs seem similar. Both teams’ estimates indicate that federal spending on health care (Medicare, Medicaid, tax subsidies, and other federal payments) would more than double under the Sanders proposal. It would also increase total federal government spending, both mandatory and discretionary, by about 50 percent in 2022 (Blahous 2018) and 60 percent in 2017 (Holahan et al. 2016). 4 The studies’ estimates of national health expenditures also differ. The Urban Institute estimates that, under Sanders’s presidential campaign plan, national health spending would have increased by $450.5 billion in 2017 (without long-term services and supports), or by about 13 percent. The Mercatus Center study estimates $93 billion in health savings in 2022, or a 2.0 percent decrease in spending, E S T I M A T I N G T H E C O S T O F A S I N G L E-P A Y E R P LA N 3 though savings would decrease once the plan was fully phased in. The difference between a 13 percent increase and a 2 percent decrease in national health spending is largely attributable to the studies’ different assumptions about hospital payment rates and the Mercatus Center’s use of a phase-in schedule. And, although the Mercatus Center study assumed Medicare provider payment rates in its central estimates, the report includes estimates with higher assumed payment rates too. Charles Blahous, author of the Mercatus Center study, has said that, although he used Medicare hospital and physician payment rates as specified in the MFA bill, he believes the payment rates would be significantly higher in practice.5 The Mercatus Center paper does provide alternative estimates of the effects of MFA with higher payment rates that yield a $219 billion increase in national health expenditures in 2022. This compares with the Urban Institute’s estimated increase in National Health Expenditures of $450.5 billion in 2017, noted above. Although the studies’ findings are not directly comparable as published, after taking different assumptions into account and making adjustments for them, the estimates of the impact on both federal and national health spending are not substantively different. A health reform that provides such a large increase in coverage with very broad benefits and essentially no cost-sharing requirements will lead to higher levels of national expenditures, even when private sector provider payment rates are reduced to the level of provider costs. Reducing provider payment rates further risks creating provider supply shortages and impeding access to necessary medical care. Having the federal government take responsibility for national health spending would mean an extremely large impact on the federal budget, although it would create substantial private sector savings by eliminating employers’ and households’ premium and direct spending on care. Lowering provider payment rates to the levels suggested in the Urban Institute analysis would still best be phased in over a considerable period to minimize disruption to the health care system. Even the payment rate cuts assumed in the Urban Institute study could be politically infeasible to implement. If so, estimates in both studies could significantly understate the federal and system-wide costs of this reform. Rather than significant, abrupt reductions in provider payment rates, a more practical goal may be to put a system in place that would focus more on slowing the rate of growth in per capita health care spending to approximate the growth in per capita gross domestic product. Once that goal is reached, further savings could be achieved by modest, incremental reductions in provider payment rates. If that can be achieved, increases in economic output would not be disproportionately devoted to increasing health spending. Per capita health spending in the US could remain considerably higher than that of other nations, but the difference would decrease over time.