March 9, 2020 | Updates

CRFB: One-Size-Fits-All Government Health Insurance Systems ‘Would Significantly Increase Federal Spending On Health Care’

WASHINGTON – The unaffordable costs of one-size-fits-all new government health insurance systems – namely Medicare for All, Medicare buy-in and the public option – continue to make headlines, as the Committee for a Responsible Federal Budget (CRFB) found that these new government health insurance systems “would significantly increase federal spending on health care” and “would likely add to federal budget deficits.”  Specifically, Medicare for All “alone would leave a $13 trillion hole in the federal budget,” NBC News reports.  

“Either there’s going to be massively higher taxes, a massive reduction in the ambition of what [Senator Bernie Sanders is] proposing or a massive increase in the deficits and debts,” Austan Goolsbee, who was chairman of President Barack Obama’s economic council, said of [Medicare for All].  “It’s got to be one of those three.”

In defense of the cost of his health care plan, Sanders has repeatedly referred to a study by a Yale University epidemiologist … But that study has come under criticism from Washington budget experts, as it doesn’t account for Sanders’ proposed expansion of universal long-term care benefits … It has also been criticized for its assumptions about savings from sharp reductions in fraud and administrative costs.

“This study has been roundly criticized by experts on the left and right,” said Brian Riedl, a senior fellow at the conservative Manhattan Institute in Washington.  A PolitiFact fact check found “mostly false” the study’s claim that Medicare for All would lower overall health costs by $450 billion a year.  “Many of the study’s assumptions are flawed and experts uniformly told us it overestimates the potential savings,” PolitiFact says.

Meanwhile, after Medicare for All proponents pushed the misleading claim that every study says that Medicare for All would save money.  Independent fact checkers at The Associated Press rated the statement “[n]ot true.”  A “study by the left-leaning Urban Institute, for example, found that total health care spending in the U.S. would increase by $7 trillion over a decade under a Medicare for All-like single-payer plan, even making allowances for savings from lower prices and administrative costs,” Reason adds.  And as The Washington Post notes, “one study – or even many – cannot easily estimate the impact of overhauling one-sixth of the U.S. economy.”

At the end of the day, “Medicare for all would be an enormous expansion of government spending, and would almost certainly require large tax increases,” The New York Times reports.  A growing body of research shows “that federal spending on health care would increase by roughly $34 trillion under a single-payer plan similar to Medicare for All,” CNN reports.  The Committee for a Responsible Federal Budget (CRFB) finds that “fully offsetting the cost would require higher taxes on the middle class” and wouldrequire the equivalent of tripling payroll taxes or more than doubling all other taxes.”  Senator Sanders previously acknowledged that Americans making more than $29,000 per year would “pay more in taxes” for Medicare for All.

  • “No matter how you cut the numbers, there is absolutely no way to pay for Medicare for all without tax increases – or spending cuts – on the middle class,” Marc Goldwein of CRFB told POLITICO“There’s no question it hits the middle class,” Kenneth Thorpe, Chairman of the Health Policy and Management Department, Emory University told The Washington Post.
  • “Although [Medicare for All’s supporters] have frequently stressed that the middle class would see overall costs go down, a wide range of experts … say it is impossible to make those guarantees based on the plans that the candidates have outlined so far … ‘It’s impossible to have an ‘everybody wins’ scenario here,’ said Kenneth Thorpe, chairman of the health policy department at Emory University … ‘There’s no question it hits the middle class,’ he added.  John Holahan, a health policy expert at the nonpartisan Urban Institute agreed: ‘Even though high-income people are going to pay a lot more, this has to hit the middle class’… ‘Most of the proposals to move to Medicare-for-all would involve substantial tax increases that would affect most people,’ said Katherine Baicker, an economist at the University of Chicago who specializes in health policy.  ‘These are going to be big tax increases.’ … ‘I think it seems likely under most proposals taxes would have to go up substantially unless you dramatically cut the health care you’re getting,’ she added,” The Washington Post reports
  • And, “economists say that most taxpayers would pay more in taxes than they would save from having the federal government absorb the cost of health-care premiums,” The Post also reports.  Additionally, “71% of households with private insurance would wind up paying more than they would under the current system,” Kenneth Thorpe, chairman of the health policy and management department at Emory University, told The Wall Street Journal.

Meanwhile, a recent study by Tom Church, Daniel L. Heil, and Lanhee J. Chen, Ph.D. of the Hoover Institution with support from the Partnership for America’s Health Care Future reveals that the public option – often branded a “moderate” alternative to Medicare for All – “could require tax increases on most Americans, including middle-income families” and could “add over $700 billion to the 10-year federal deficit, with dramatically larger losses in subsequent years.”

According to the study, “a politically realistic public option would add over $700 billion to 10-year deficits.  By 2049, the plan would increase long-run debt projections by 30 percent of GDP or require tax increases equal to nearly 20 percent of projected income tax revenue.  These tax increases may affect even middle-income taxpayers, raising their marginal income tax rates by several percentage points.”  This would make the public option “the third largest line item on the federal budget, behind only Medicare and Social Security.”

In addition to burdening American families with unaffordable new costs, the study adds that “a public option would significantly disrupt the healthcare market.  Widespread enrollment would pose significant challenges to private insurers and healthcare providers, compromising access to care.”  



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