Friday, January 29, 2016

Sanders' Numbers on Single Payer Don't Add Up

Just prior to the Democratic debate in Charleston, SC, Bernie Sanders released his "Medicare for All" plan. It focuses mainly on where the revenue will come from to pay for it. When talking about this, it is important to stipulate that the costs for single payer are not additional costs. Almost everyone agrees that reducing administrative overhead and profits in our current health insurance system will save money. But moving from the hodge-podge system we have now of who picks up the tab (individuals, employers, government) to single payer means re-allocating who pays. And that gets complicated. That was the question the Sanders campaign was addressing with the release of his plan.

Before you can decide who pays how much though, you have to determine what the overall cost of a single payer system would be. The folks at Vox asked Kenneth Thorpe - an Emory University health care expert who had worked with Vermont on their single payer plan - to take a look at Sanders' plan. Here's what he found:
Thorpe finds that Sanders's plan would cost an average of $2.47 trillion per year from 2017 to 2026, on top of existing federal spending on health care. Sanders's campaign's analysis, by contrast, estimated an average cost of $1.377 trillion.
You can read a summary of that $1.1 trillion difference in the article by Dylan Matthews. It basically comes down to different assumptions about how much money a single payer system would save. The most striking difference was the original assumption in the Sanders' plan about savings on prescription drugs.
Sanders assumes $324 billion more per year in prescription drug savings than Thorpe does. Thorpe argues that this is wildly implausible. "In 2014 private health plans paid a TOTAL of $132 billion on prescription drugs and nationally we spent $305 billion," he writes in an email. "With their savings drug spending nationally would be negative." (Emphasis mine.) The Sanders camp revised the number down to $241 billion when I pointed this out.
One has to wonder how much thought and research went into the Sanders' plan when they proposed savings on prescription drugs that total more than we currently spend annually.

In response to Thorpe's conclusion that Sanders' plan would require a 20% tax increase, the candidate's policy director Warren Gunnels went after Thorpe in exactly the way I described yesterday.
"That is absolutely absurd, it's absurd, it's outrageous," he said in a phone call. "It's coming from a gentleman that worked for Blue Cross Blue Shield. It's exactly what you would expect somebody who worked for BCBS to come up with.
The truth is that making assumptions about health care savings under a single payer system eventually comes down to making educated guesses. It is clear from the prescription drug savings the Sanders' plan initially assumed that they made some errors. But to write off Thorpe's analysis as simply coming from someone who worked for BCBS (Matthews notes that Thorpe once did a consulting job for them about 10 years ago) is ugly and divisive. He has raised some important questions that need to be addressed if/when Americans want to seriously consider moving to a single payer system. We would all benefit from a reasonable rational discussion of the costs and benefits. The Sanders campaign should welcome such an exchange as a way to move the discussion forward.


  1. So I keep yelling my head off about the need to focus on controlling medical costs, and Sanders' dodgy numbers support me in that. But I've found that Sanders supporters don't want to hear about costs, and I think they realize that, if we work to keep costs down, then that improves our medical system and as such makes single payer slightly less pressing. Therefore controlling medical costs directly is a bad thing in their mind.

    Of course the counter-argument is that single payer will mean the government has the power to negotiate prices and score a really great deal; but why go to all that when regulation is a more direct way to get to cost controls? Why is the free market sacrosanct when it comes to medical costs but everywhere else it's anathema to Bernie's vision?

    I get the feeling they are more interested in passing their pet projects than in helping people. I swear that used to be the near-exclusive province of the Republicans.

  2. I don't understand why Sanders thinks single payer can possibly pass. If the debate was re-opened, it would fail for the same reason it always fails. A very significant percentage of the American public get better health care currently than they would under single payer and their employer is paying for it.

    Bernie wants to increase spending and taxes by trillions. The Republican message writes itself. "Your taxes go up to give you a system where you have to wait to see a doctor. All to give free healthcare to mostly black and brown people. Oh and who wants to significantly increase the power of Washington when even Bernie Sanders admits Washington is corrupt?"

    1. As I like to say, there's no point in electing Bernie, since he'll die of old age before we have a Congress capable of passing single payer.

      But I think the Bernie supporters mindset is something like Calvin (he of "... and Hobbes" fame) once saw a dripping faucet and decided to fix it. Hobbes asked him whether he knows anything about plumbing and Calvin said "What's to know? You take it apart, see what's wrong, fix it, and put it back together." With that in mind, Bernie supporters have so little grasp of what the path to single payer would even look like, they can't see any pitfalls on said path. No visible pitfalls = what could possibly go wrong?

      Whereas the realists' path of having to first elect a willing Congress means a measurable degree of hard work -- several election cycles, occasional losses, actually rolling out of bed on Election Day, and so on.

  3. The goal should be to get everyone covered. Where is Clinton's detailed plan and what does it cost? And the republicans don't even talk about it...except to say they want to get rid of what we already have.

  4. I recently read a comment that said most comparisons of our system with single payer is based on information from before the ACA. With the ACA, single payer doesn't hold up as well.