Single-Payer Health Plan Studies Give Fuel to the Left and Right

In the House, Democrats launched a caucus called Medicare for All in July, and a bill to expand the government health program for seniors to everyone has more than 120 co-sponsors. In the Senate, 16 Democrats have signed on to a Medicare-expansion bill from Sanders, including many politicians seen as potential contenders for the party's 2020 presidential nomination.

In New York, health care is a key issue that Cynthia Nixon is using to try to win over voters in her challenge to two-term Gov. Andrew Cuomo in the Democratic primary. Nixon supports the New York Health Act, while Cuomo has said he believes the federal government should take the lead. Nixon, who trails in the polls, spent Monday on Twitter answering questions and promoting the single-payer plan.

The Mercatus study found that Sanders's plan would require about $32.6 trillion in new federal funding over its first decade of full implementation, or more than 10% of the U.S. economy. The plan would actually shrink total U.S. health-spending slightly, even as roughly 30 million more people gained health insurance. The Sanders plan also eliminates out-of-pocket costs, such as copays and deductibles. The savings come from reducing payments to hospitals and doctors as well as from cutting administrative costs.

The RAND study, of the New York Health Act, found that implementing the single-payer plan would reduce health care spending by about 2% over the first decade, mainly due to lower administrative costs, reduced drug prices and somewhat slower growth in payments to doctors and hospitals. Meanwhile, because the plan is projected to be financed with progressive taxes, the majority of households will see their health care spending fall, boosting their take-home pay.

Still, RAND found that in 2022, the first year of the analysis, $139 billion in additional taxes would be needed. The state is currently projected to collect $89 billion in tax revenue that year. Essentially, the plan replaces consumer out-of-pocket spending and insurance premiums with taxes.

The New York Health Act passed the Assembly this year, but the Senate is controlled by Republicans, meaning the bill probably wouldn't gain its support. The study was funded by the New York State Health Foundation. Neither RAND nor the foundation has a position on the bill, and the groups said the goal was to provide an independent, nonpartisan evaluation.

— Read Take Single-Payer Health Care Proposals Seriously: Sally Pipes, on ThinkAdvisor.

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