July, 31 2013, 11:35am EDT
For Immediate Release
Contact:
Mark Almberg, communications director, PNHP, (312) 782-6006, mark@pnhp.org
'Medicare for All' Would Cover Everyone, Save Billions in First Year: New Study
Economist says Canadian-style, single-payer health plan would reap huge savings from reduced paperwork and from negotiated drug prices, enough to pay for quality coverage for all – at less cost to families and businesses
WASHINGTON
Upgrading the nation's Medicare program and expanding it to cover people of all ages would yield more than a half-trillion dollars in efficiency savings in its first year of operation, enough to pay for high-quality, comprehensive health benefits for all residents of the United States at a lower cost to most individuals, families and businesses.
That's the chief finding of a new fiscal study by Gerald Friedman, a professor of economics at the University of Massachusetts, Amherst. There would even be money left over to help pay down the national debt, he said.
Friedman says his analysis shows that a nonprofit single-payer system based on the principles of the Expanded and Improved Medicare for All Act, H.R. 676, introduced by Rep. John Conyers Jr., D-Mich., and co-sponsored by 45 other lawmakers, would save an estimated $592 billion in 2014. That would be more than enough to cover all 44 million people the government estimates will be uninsured in that year and to upgrade benefits for everyone else.
"No other plan can achieve this magnitude of savings on health care," Friedman said.
His findings were released this morning at a congressional briefing in the Cannon House Office Building hosted by Public Citizen and Physicians for a National Health Program, to be followed by a 1 p.m. news conference with Rep. Conyers. Sen. Bernie Sanders, I-Vt., and others in observance of Medicare's 48th anniversary at the House Triangle near the Capitol steps. A copy of Friedman's full report, with tables and charts, is available here.
Friedman said the savings would come from slashing the administrative waste associated with today's private health insurance industry ($476 billion) and using the new, public system's bargaining muscle to negotiate pharmaceutical drug prices down to European levels ($116 billion).
"These savings would be more than enough to fund $343 billion in improvements to our health system, including the achievement of truly universal coverage, improved benefits, and the elimination of premiums, co-payments and deductibles, which are major barriers to people seeking care," he said.
Friedman said the savings would also fund $51 billion in transition costs such as retraining displaced workers from the insurance industry and phasing out investor-owned, for-profit delivery systems.
Over the next decade, the system's savings from reduced health inflation ("bending the cost curve"), thanks to cost-control methods such as negotiated fees, lump-sum payments to hospitals, and capital planning, would amount to an estimated $1.8 trillion.
"Paradoxically, by expanding Medicare to everyone we'd end up saving billions of dollars annually," he said. "We'd be safeguarding Medicare's fiscal integrity while enhancing the nation's health for the long term."
Friedman said the plan would be funded by maintaining current federal revenues for health care and imposing new, modest tax increases on very high income earners. It would also be funded by a small increase in payroll taxes on employers, who would no longer pay health insurance premiums, and a new, very small tax on stock and bond transactions.
"Such a financing scheme would vastly simplify how the nation pays for care, restore free choice of physician, guarantee all necessary medical care, improve patient health and, because it would be financed by a program of progressive taxation, result in 95 percent of all U.S. households saving money," Friedman said.
Friedman's findings are consistent with other research showing large savings from a single-payer plan. Single-payer fiscal studies by other economists, such as Kenneth E. Thorpe (2005), have arrived at similar conclusions, as have studies conducted by the Congressional Budget Office and the General Accountability Office in the early 1990s. Other studies have documented the administrative efficiency and other benefits of Canada's single-payer system in comparison with the current U.S. system.
Friedman's research was commissioned by Physicians for a National Health Program, a nonprofit research and educational organization of more than 18,000 doctors nationwide, which wanted to find out how much a single-payer system would cost today and how it could be financed.
"Funding H.R. 676: The Expanded and Improved Medicare for All Act - How we can afford a national single-payer health plan in 2014," by Gerald Friedman, Ph.D., Department of Economics, University of Massachusetts, Amherst.
Physicians for a National Health Program is a single issue organization advocating a universal, comprehensive single-payer national health program. PNHP has more than 21,000 members and chapters across the United States.
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