MOSTLY FALSE - “[A recent study] said ‘Medicare for All’ will lower health care
costs in this country by $450 billion a year and save the lives of 68,000
people who would otherwise have died.” — Vermont Sen.
Bernie Sanders in remarks made Feb. 25, 2020, during the South Carolina
Democratic primary debate
Updated
at 11:03 a.m. ET on Feb. 26: This story was updated to include information we
received after the story was posted about recent studies the Sanders’ campaign
referenced regarding the costs of single-payer. This update does not change the
rating.
Defending
his signature health plan — a single-payer system known as “Medicare for All”
that would move all Americans to government-funded coverage — Vermont
Sen. Bernie Sanders argued that the massive health care expansion would
actually save the system hundreds of billions of dollars.
Sanders’
figures come from a study published Feb. 15 in The Lancet, a British medical
journal.
This
story also ran on PolitiFact. This story can be republished
for free (details). “It said ‘Medicare for All’ will
lower health care costs in this country by $450 billion a year and save the
lives of 68,000 people who would otherwise have died,” Sanders said at the Feb.
25 Democratic presidential debate.
The
price tag of Medicare for All has been fiercely debated, and previous analyses
have suggested that the proposal would increase health spending, not decrease
it. But Sanders is relying on the Lancet paper — which has the lowest cost
estimate for the plan, in the neighborhood of $17 trillion over 10 years — to
argue that the suite of financing mechanisms he has proposed would more than
cover the cost of his health bill. (Funding would include taxes on high
earners, a new payroll tax and 4% income premiums for the majority of
families.) Most other estimates place the cost between $30 trillion and $40
trillion over a decade, which would make paying for it far more difficult. So
we decided to take a closer look.
We
reached out to one of the study’s authors but did not hear back.
A
spokesperson for the Sanders campaign said the paper is “similar to 22 other
recent studies that have also shown that moving to a single-payer healthcare
system will cost less than our current dysfunctional healthcare system.” (We
asked for those 22 other studies but, as of publication, hadn’t received them.
However, an independent researcher provided us with this related analysis after
this story’s initial publication.)
But
other independent experts were skeptical of the Lancet study’s estimate —
arguing it exaggerates potential savings, cherry-picks evidence and downplays
some of the potential trade-offs.
“I
don’t think this study, albeit in a prestigious, peer-reviewed journal, should
be given any deference in the Medicare for All debate,” said Robert Berenson, a
fellow at the Urban Institute who studies hospital pricing.
So,
Savings?
Largely,
the Lancet paper is more generous in its assumptions than other Medicare for
All analysis, noted Jodi Liu, an economist at the Rand Corp., who studies
single-payer plans. To the researchers’ credit, she said, they acknowledge that
their findings are based on uncertain assumptions.
For
instance, the researchers calculate $78.2 billion in savings from providing
primary care to uninsured people — $70.4 billion from avoided hospitalizations
and $7.8 from avoided emergency room visits. But previous evidence suggests
that the logic is suspect at best.
When states
expanded Medicaid under the Affordable Care Act, providing new insurance to
people who had previously lacked coverage, avoidable hospitalizations and
emergency room visits didn’t disappear because people could suddenly use
preventive care, noted Ellen Meara, a professor at the Harvard T.H. Chan School
of Public Health. That evidence doesn’t appear anywhere in the Lancet paper.
“The
notion that we’re going to get rid of all these avoidable visits — that’s not
been borne out,” she said.
The
researchers also assume that a Medicare for All system would pay hospitals at a
maximum of Medicare rates.
That’s
tricky. In 2017, the nonpartisan Medicare Payment Advisory Commission estimated
that, on average, a hospital has a -9.9% margin on
a patient insured through Medicare. (Private pay helps make up that
difference.) Some hospitals certainly would be able to swallow this cost. But
others would struggle to stay afloat, said Adrianna McIntyre, a health policy
researcher at Harvard University.
Given
the political influence hospitals, in particular, carry in Congress — where
most members are sensitive to their concerns — passing a plan offering such a
low payment rate would be politically challenging.
Sanders’
bill doesn’t specify the rates at which hospitals would be paid.
Beyond
the lower payments, the researchers also suggest hospitals would spend less
money on overhead, having to navigate only a single insurance plan. That change
accounts for $219 billion in their estimated savings.
But again,
that ignores some of the reality of how hospitals work. While a single-payer
system would undoubtedly cost less to administer — requiring a smaller back-end
staff, for instance — it would not eliminate the need for expensive items like
electronic health records, which coordinate care between hospitals.
“The
assumptions are unrealistic,” said Gerard Anderson, a health economist at Johns
Hopkins University in Baltimore. “You are never going to save that much money
from the various providers.”
The
Cost-Sharing Question
Medicare
for All would enroll all Americans in coverage far more generous than what most
experience now — eliminating virtually all cost sharing associated with using
health care.
That’s
a major change, researchers told us. Previous evidence suggests that such a
shift would encourage consumers to use health care more than they currently
do.
The
Lancet paper acknowledges that — but only partially. It allows that people who
are uninsured or “underinsured” — that is, who have particularly high levels of
cost sharing now — would use more medical care under Sanders’ system than they
currently do. It factors that into the price tag.
But its
estimate does not account for people who already have decent or adequate
insurance and who would still be moving to a richer benefit, and therefore be
more likely to use their insurance.
“It
drastically underestimates the utilization increases we would expect to see
under Medicare for All,” McIntyre said. “People have different views on whether
the increased utilization is good or bad,” she added — it makes the program
more expensive, but also means more people are getting treatment.
Other
Estimates?
Context
is helpful, too. Other estimates — namely, a projection by the Urban Institute
— of Medicare for All have suggested it would increase federal health spending
by about $34 trillion over 10 years. But the elimination of other health
spending would make the overall change smaller.
To
implement the Sanders proposal, national health spending — public and private
dollars, both — would increase by $7 trillion over a decade, Urban said. And
Medicare for All would be bringing new services: more insurance for more people,
and more generous coverage for those already covered.
Urban’s
estimate of $7 trillion more in spending over 10 years is far removed from the
study’s estimate of $450 billion less annually. And, experts said, relying on
the latter figure isn’t a good idea.
SOURCES:
Bernie 2020, “How Does Bernie Pay For His Major Plans,”
Feb. 24, 2020.
The Lancet, “Improving the Prognosis of Health Care in the
USA,” Feb. 15, 2020.
JAMA, “Association
of Medicaid Expansion With 1-Year Mortality Among Patients With End-Stage Renal
Disease,” Dec. 4, 2018.
Medicare Payment Advisory Commission, “2019 Report to the
Congress,” March 15, 2019.
University of
Michigan, “Medicaid and Mortality: New Evidence from Linked
Survey and Administrative Data,” Aug. 17, 2019.
Email
interview with Gerard Anderson, professor at Johns Hopkins Bloomberg School of
Public Health, Feb. 19, 2020.
Email
interview with Robert Berenson, fellow at Urban Institute, Feb. 19, 2020.
Email
interview with Jodi Liu, associate policy researcher at the Rand Corp., Feb.
19, 2020.
Telephone
interview with Ellen Meara, professor of health economics and policy at the
Harvard T.H. Chan School of Public Health, Feb. 25, 2020.
Telephone
interview with Adrianna McIntyre, health policy researcher at Harvard
University, Feb. 25, 2020.
“I
think they need more work to prove” the savings, Meara said. “They’re not being
complete, and by not being complete, they’re not being honest.”
It’s
also worth noting that the study’s lead author was also an informal unpaid
adviser to the Sanders staff in drafting its 2019 version of the Medicare for
All bill, according to the paper’s disclosures section.
The
‘Lives Saved’
Experts
agree that expanding access to health insurance would probably reduce early
mortality. But the 68,000 figure is another example of cherry-picking, Meara
said.
The
figure is based on a 2009 paper. It doesn’t acknowledge a body of research that came afterward,
including multiple studies that examined how expanding Medicaid affected
mortality — and maybe offered less dramatic numbers.
“When
they so clearly are cherry-picking, when they clearly have all the information
on studies in front of them, it’s concerning,” Meara said. “It’s a situation
where you’re going to overpromise and underdeliver.”
Our
Ruling
Sanders
said a recent study suggested Medicare for All would save $450 billion annually
and save 68,000 lives.
That
study does exist. And it cites some evidence. But many of its assumptions are
flawed, and experts uniformly told us it overestimates the potential savings.
It cherry-picks data in calculating mortality effects.
This
statement has some truth but ignores context that would create a dramatically
different impression. We rate it Mostly False.
Shefali
Luthra: ShefaliL@kff.org, @Shefalil
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