May 1, 2019 | Updates

High Costs, Tax Hikes, Lower Quality Care: Hearing Lays Bare ‘Medicare For All’s’ Impacts


WASHINGTON – In the U.S. House Committee on Rules yesterday, Medicare for all’s high costs, unaffordable middle class tax hikes, and threats to Americans’ access and quality of care were laid bare.  Here are some key moments from yesterday’s hearing on legislation to destroy the foundations of American health care and start over from scratch with a one-size-fits-all health care system run by Washington.

On High Costs & Unaffordable Tax Hikes:

Charles Blahous, Mercatus Center: “Medicare for all would add somewhere between $32.6 trillion and $38.8 trillion in new federal budget costs over the first 10 years.  The $32.6 trillion estimate is a lower bound estimate.  It essentially assumes every cost containment provision in the bill saves as much as possible.  If instead things play out more consistently with historical trends, the new federal cost would be $38.8 trillion … Obviously such enormous numbers are very difficult to grasp.  We’re talking about 11 to 13 percent of our GDP in 2022, rising to 13 to 15 percent of GDP in 2031, being added to the federal ledger.  And we simply do not have historical experience with permanent government expansion of this size.  So, to provide a sense of the magnitude, the study notes that doubling all currently projected individual and corporate income taxes would be insufficient to finance even the lower bound estimate of $32.6 trillion.  Now, to be clear, these would not be the total costs of Medicare for all, these would be the federal government’s net new costs above and beyond currently projected federal health obligations.  Total federal spending on Medicare for all in the first 10 years would be somewhere between $54.6 trillion and $60.7 trillion.

Rep. Joseph Morelle (D-N.Y.): “There are a number of concerns and I have a number of questions regarding the financing of this system … But if you could talk about how the financing would work in some detail and if you have thoughts about income taxes, payroll taxes, other forms of taxes or premiums to meet that spend?”

Dean Baker, Center for Economic and Policy Research: “[T]o my view, I think a payroll tax would have to be a very big part of the picture… ”

Grace-Marie Turner, Galen Institute: “…[W]hen people learn that Medicare for all would mean much higher taxes and losing the coverage they have now, support plummets.  What happened recently in Colorado and Vermont when they tried and failed to create their own single-payer systems, I think is important to study.”
On Eliminating Every American’s Existing Coverage:

Rep. Tom Cole (R-Okla.): “How many people would lose the current health insurance that they have if we did something like [HR1384]?”

Grace-Marie Turner: “Well, everybody would lose the current health coverage they have – 173 million Americans with job-based health insurance.  But those on [Affordable Care Act] ACA coverage, people on Medicare, people on Medicaid, the Children’s Health Insurance Program (CHIP) – all would be folded in to the … new Medicare for all program.”

Rep. Cole: “…[I]f you like your plan, you like what you have, would you have any option at all to keep it?”

Grace-Marie Turner: “Only if you’re in the [U.S. Department of Veterans Affairs] VA or Indian Health Services.”

Rep. Debbie Lesko (R-Ariz.): “Would this bill take away the current health care plans negotiated by, let’s say, the teachers’ unions?

Grace-Marie Turner: “Yes, it would.  And I think one of the issues that would be on the table is: what about the compensation that they have forgone in order to get those benefits?  I think that’s going to be something that could be very, very disruptive and something that would be a particular concern because they make considerable sacrifices in their take-home pay in order to get these generous health benefits.”

On Restricting Access & Subjecting Patients To A Lower Quality Of Care:

Rep. Cole: “In my district we’ve lost a number of rural hospitals in recent years … it suggests to me that the impact wouldn’t be equal all across the country … I think rural areas in particular would really take a pretty hard hit unless something was done to change the rates.  Is that fair?”

Charles Blahous: “I think that’s fair, and just to add additional perspective on this from the vantage point of my study, my main reason for flagging this issue is primarily just to help with understanding of the numbers.  We have a set of cost estimates that would arise if you assume that these very dramatic payment reductions were implemented right from the get-go, right in the very first year.  But if you look at the historical patterns of Congressional behavior, you do not see a willingness to impose sudden cuts for providers or anything close to that magnitude and if you think those historical patterns of Congressional behavior were to continue the cost estimate for the legislation would be much, much higher.  It would be more in the area of $38 trillion rather than $32.6.”

Rep. Michael Burgess, M.D. (R-Texas): “What happens to a patient, do they have to just wait until the next budget cycle if there is one of these new CAR-T therapies or new sickle cell therapy?  They just have to wait until the next budget?”

Turner: “Well, that’s what we see in Europe.  We see that … access to the most innovative and oftentimes the most effective medicines are absolutely restricted.  As I said earlier … we have access to about 96 percent of new medicines over the last 11 years in the United States.  In France, they only have access to about half.  In Singapore, only 18 percent.  So, they do provide chemotherapy, for example, but it is likely not likely to be the newest and best chemotherapy drugs and then the innovation is crippled because – and we see in Europe – that they used to have a robust pharmaceutical medical development [and] medical device industry – has actually shrunk because of payment policies in Europe.  We are now the medicine chest for the world…”

Rep. Burgess: “If current Medicare and hospital provider rates are mandatory rates … that’s going to have an impact on patient access.  Correct?

Turner: “Actually, the [Centers for Medicare and Medicaid Services] CMS actuaries said that … it would cause many hospitals to either cut back dramatically on services, … on operations, on services offered and some would have to close, physicians’ offices … So yes … This is the CMS actuary looking at the impact … they simply couldn’t keep their doors open.




Rep. Burgess: “So, Ms. Turner, in the first quarter of last year alone, Britain’s national health service canceled 25,000 surgeries.  Is this a problem for a one-size-fits-all system?

Turner: “It’s a problem when you have a strict global budget and hospitals make decisions about canceling or delaying surgeries and people do have – are impacted.  And once again, they get access to fewer of the new treatments.  If you’re in the private system, you do have access to more of the new treatments, better surgeons.  If you’re in the public system, you may not even know it but you will have fewer options.”

Rep. Burgess: “So this thing that we’re building, no one has ever seen a system that is this big … Is that a fair statement?”

Turner: A fair statement, and while I do think you have to worry about centralized decisions over access to care.  In the [United Kingdom] UK, just recently a commission to help determine the benefits that are available decided that cataract surgery was not a high priority.  And so cataract surgery was significantly limited.  If you have cataracts and you can’t see, that should not be an optional benefit … But when you have centralized government bureaucracies deciding what services are available, I just don’t think that’s something that Americans are going to tolerate.”



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