"Free Stuff": Medicare for All Cost Pegged at $32.6 Trillion for 10 Years

Cost estimates for "free stuff" are pouring in. The sticker price for "Medicare for All" is shocking.

"Medicare for All" sounds great. And every unthinking socialist wants it. But here's the deal: ‘Medicare for All’ Would Cost $32.6 Trillion Over 10 Years.

Sen. Bernie Sanders' "Medicare for all" plan would boost government health spending by $32.6 trillion over 10 years, requiring historic tax hikes, says a study released Monday by a university-based libertarian policy center.

That's trillion with a "T."

The latest plan from the Vermont independent would deliver significant savings on administration and drug costs, but increased demand for care would drive up spending, according to the analysis by the Mercatus Center at George Mason University in Virginia. Doubling federal individual and corporate income tax receipts would not cover the full cost, the study said.

The Mercatus analysis estimated the 10-year cost of "Medicare for all" from 2022 to 2031, after an initial phase-in. Its findings are similar to those of several independent studies of Sanders' 2016 plan. Those studies found increases in federal spending over 10 years that ranged from $24.7 trillion to $34.7 trillion.

As is typically the case, Bloomberg did not have the courtesy or decency to link to the study. Inquiring minds may wish to consider the Mercatus Center study on the Costs of a National Single-Payer Healthcare System

I am not at all surprised by the estimated cost but I do have a question: How do we afford $3.4 trillion a year for 10 years of "free" stuff?

And Medicare is just a start. There are proposals for free college tuition and free universal pre-kindergarten among other things.

For details, please see Finding "Inspiration" in Socialist Bernie Sanders Wannabees.

Mike "Mish" Shedlock

Comments (49)
No. 1-15
hmk
hmk

3.4 trillion USD is what we currently spend, i.e. 20% of GDP. It is a wash money wise. If they wanted to save money they should look at the best current model of universal healthcare and do what the Japanese are so good at. Copy and improve. The best way to finance it would be a VAT, that way all would pay in even the welfare parasites and those working under the table.

shamrock
shamrock

As an anecdote, I was in Toronto a month ago and overheard a conversation from the table next to us. The gist of it was this woman had gotten blood drawn and tested but couldn't get anyone to read the results. So she was discussing the bribe she needed to pay a nurse to look at the lab results for her. Nice.

Realist
Realist

The US already spends more than twice as much (per capita) on health care compared to almost every other developed nation, and you don't even cover everyone. Yet you refuse to look into how other countries accomplish superior health care for less than half the cost. I imagine that you will eventually arrive at a single payer system, but only after you have exhausted every other stupid possibility.

Ron Cataldi
Ron Cataldi

Nice, Koch-funded study saying no more crumbs for the little people. Big surprise.

themonosynaptic
themonosynaptic

So currently healthcare is 19% of our $18.5T economy. Over 10 years that is $35T - so we are getting a price cut!

And your problem is?

Jojo
Jojo

Cost calculations depend on the actual cost of healthcare over the years. If the total cost is too expensive, then a way has to be found to lower the cost of health care because every person should be given whatever healthcare they need at low to no cost. PERIOD.

No one asked to be born. Healthcare can not be available only to wealthy people who can afford to pay exorbitant prices! That will be a recipe for another revolution where the wealthy will wind up hanging from trees or worse.

There was a good article on medical costs Monday over at the NY Times. The comments (currently 130) are very good:

Sigmund Fraud
Sigmund Fraud

I have read extensively on national health care systems. It appears to me that Mish is correct and Bernie Sanders is wrong: if costs for health care approach zero, demand for care will approach infinity. All the socialized medicine systems have rationing quietly built in. Without rationing, their costs would be uncontrollable. There is no health care system that actually provides unlimited free health care for all.

The Canadian rationing system is quite amusing. In order to control costs they have a limit for the fiscal year, which usually begins in July. When the cost limit is reached, toward the end of the fiscal year, all elective, non-urgent treatment is halted until the beginning of the next fiscal year. The result is that Canadian outpatient clinics shut down in the spring and many Canadians go to the US for their elective care during the last months of the fiscal year.

Rationing in Canada is obvious. In the English and Dutch systems rationing is not openly discussed and is more covert. In such systems the GP is the "gatekeeper" charged with denying care to patients and telling them to forgo expensive treatment and to suffer their illness stoically - the famous British "stiff upper lip." They also use "rationing by queue:" If you want an expensive treatment you must wait in line, and some percentage of patients will withdraw or die before they receive treatment.

LawrenceBird
LawrenceBird

@mish If you downloaded the study you would see that they projected a net savings You can't just look at the spending increase on the federal side, you also have to look at the reductions on the personal side. And what does it say about the current system that such a nationalization is on a par with estimates of national health care spending yet covering millions more while also giving many already covered individuals more robust coverage?

BBS
BBS

We already have socialized medicine. If you go to the hospital in critical condition you are treated whether you can pay or not - socialized medicine. What we need to do is find a more cost effective way to provide the care that we are already providing to all citizens. I agree that we cannot provide all medical services to all citizens, but obviously we can provide a basic level of care to all citizens because we already do.

JonSellers
JonSellers

Mish, I paid about $18,000 in income taxes last year, and my employer paid an average of $22,000 in medical expenses per employee. If my employer stopped offering medical care and just handed me the $22k, I'd happily accept a doubling of my income tax.

The question is why is government able to provide healthcare so much more cost effectively than the private sector in the USA (I don't claim this for every country, just ours)? And my answer is that for a market to work effectively their must be price and quality transparency for the consumer. And the medical community has effectively lobbied the federal and state governments to insure this doesn't happen.

My solution. Require all physicians to publicly advertise a per hour rate for their services (not price based on activity). And one price for all, with the only exceptions being $0 price for charity activities. Secondly, either have the federal government set the price for hospitals for locations where a hospital is a monopoly, or require hospitals to set a price as "per day" of staying there. Again, no pricing based on activities.

And insurance should be limited to hospital stays only.

All of this is regulation, but it is regulation in the interest of creating a competitive market that would restrain pricing. The current system doesn't do that an pricing has become absurd. Either we take an approach to push healthcare into basic market economics, or we will get a socialist system. And it will be conservatives to blame for that, for not dealing with the basics.

Cocoa
Cocoa

I met a German analyst that was here to look at Kaiser Permanente for the summer. The European model is a train wreck as well. Both US HMO/Medicaid/Private system costs us money and provides bad service. The Socialized medicine model is bankrupt as well. Thats why they are interested in the vertical model of Kaiser. Kaiser is getting more popular because it is totally vertical. They have everyone and everything in one building. The Doctors are paid less, but the paperwork costs are lower so thats a wash. They have a lot of younger more innovative doctors for the cost. The monthly payment is pretty reasonable and you do not need a gateway doctor to send you to different specialists and services(a colossal waste of everyone's time.) you just go to another floor of the building. And Kaiser makes money FYI

gliderdude
gliderdude

Why would anyone trust a libertarian outfit for analysis of expenses of a social program? Mish, can you put this into perspective? Add some "color" as they say. Of whatever trillions per decade the expense is, what is the projected expense per decade using our current system? Doubt that looks so flattering as America is widely acknowledged to be the most expense medical care on planet earth, even more than those crazy socialists spend in Europe. Do you have data showing otherwise?

ReadyKilowatt
ReadyKilowatt

So if healthcare is a right does that mean a doctor (or any healthcare worker) can be compelled to provide treatment?

We fought a war over compelled labor (at least that was one of the issues). The people in favor of it lost.

Hansa
Hansa

So no price controls are involved in Medicare For All? Insulin will still cost $500 here instead of $4 in Chile? A band-aid will still cost $10 in a U.S. hospital instead of 12¢ OTC? Small wonder MFA would cost $35T. All the arch-criminals raping the middle class with medical insurance still get theirs.

marulo
marulo

The only solution to the healthcare mess involves a reduction in demand for healthcare services. For too long, this sector has been able to offer margin gains with no tie back to value created and it has successfully created demand for just about every service and pill possible. How to you reduce demand? Simple. Make people pay for their own medical service. When you do, people will stop wasting money indiscriminately and as they do, demand for healthcare will plummet. That will, in turn, stop the insanity of price increases. There really is no other way.