February 13, 2016

Single payer figures do add up

At a recent debate, Hillary Clinton said, "So if you’re having Medicare for all, single-payer, you need to level with people about what they will have at the end of the process you are proposing. And based on every analysis that I can find by people who are sympathetic to the goal, the numbers don’t add up, and many people will actually be worse off than they are right now.”

Now for some facts from David Himmelstein Professor of Public Health at CUNY and Lecturer in Medicine at Harvard Medical School Steffie Woolhandler Professor in the CUNY School of Public Health at Hunter College; Lecturer in Medicine, Harvard Medical School

David Himmelman & Steffie Woolhandler, Huffington Post - Professor Kenneth Thorpe recently issued an analysis of Senator Bernie Sanders' single-payer national health insurance proposal. Thorpe, an Emory University professor who served in the Clinton administration, claims the single-payer plan would break the bank.

Thorpe's analysis rests on several incorrect, and occasionally outlandish, assumptions. Moreover, it is at odds with analyses of the costs of single-payer programs that he produced in the past, which projected large savings from such reform (see this study, for example, or this one).

We outline below the incorrect assumptions behind Thorpe's current analysis:

1. He incorrectly assumes administrative savings of only 4.7 percent of expenditures, based on projections of administrative savings under Vermont's proposed reform.

2. Thorpe assumes huge increases in the utilization of care, increases far beyond those that were seen when national health insurance was implemented in Canada, and much larger than is possible given the supply of doctors and hospital beds.

3. Thorpe assumes that the program would be a huge bonanza for state governments, projecting that the federal government would relieve them of 10 percent of their current spending for Medicaid and CHIP -- equivalent to about $20 billion annually. No one has suggested that a single-payer reform would or should do this.

4. Thorpe's analysis also ignores the large savings that would accrue to state and local governments -- and hence taxpayers -- because they would be relieved of the costs of private coverage for public employees.

5. Thorpe's analysis also apparently ignores the huge tax subsidies that currently support private insurance, which are listed as "Tax Expenditures" in the federal government's official budget documents.

6. Thorpe assumes zero cost savings under single-payer on prescription drugs and devices.Nations with single-payer systems have in every case used their clout as a huge purchaser to lower drug prices by about 50 percent. In fact, the U.S. Defense Department and VA system have also been able to realize such savings.

In summary, professor Thorpe grossly underestimates the administrative savings under single-payer; posits increases in the number of doctor visits and hospitalizations that exceed the capacity of doctors and hospitals to provide this added care; assumes that the federal government would provide state and local governments with huge windfalls rather than requiring full maintenance of effort; makes no mention of the vast current tax subsidies for private coverage whose elimination would provide hundreds of billions annually to fund a single-payer program; and ignores savings on drugs and medical equipment that every other single-payer program has reaped.

In the past, Thorpe estimated that single-payer reform would lower health spending while covering all of the uninsured and upgrading coverage for the tens of millions who are currently underinsured. The facts on which those conclusions were based have not changed.


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