Bill Owens: Single Payer System, What Are The Numbers?

Nov 9, 2018

The opponents of the single payer system estimate the cost based upon the Mercatus study at $32.6 trillion over ten years or $3.26 trillion per year.  This number has been presented in a vacuum, leading one to conclude that this a totally new cost with no offsets. Actually, it is simply “fake news” and is a misrepresentation by omission leaving the public unable to debate the cost. Please bear with me as I provide a recitation of numbers to set the discussion on a balanced course.  In 2016, according to the Center for Medicare Services (CMS), the federal government and private expenditures included the following:  (a) Medicare, $672 billion; (b) Medicaid, $565 billion; (c) Private insurance, $1.123 trillion; (d) Out-of-pocket expense, $352 billion; and a number which impacts the medical cost spectrum is uncompensated care in the amount of $123 billion.  CMS projects the cost of total healthcare (regardless of who’s paying) in 2026 to be $5.7 trillion per annum.

In order to do an appropriate comparison, one has to add up the current expenditures which total $2,712,000 Trillion versus the projected $3.2 trillion per year by Mercatus, leaving a gap of $500 billion. 

The debate about “Medicare for all” is really a euphemism for a single payer system, and given the fact that there have been ongoing significant increases in healthcare costs, there are clearly reasons to look at ways to gain some level of control over those costs.  It is also important to note that the $2.7 trillion number assumes no growth in 2017 and 2018, which we all know is not the case, so it is likely that both numbers would increase, and the question is – would they increase at the same rate and in the same amounts so as to leave the relative spread the same?

The failure of opponents to provide comparative data and surprisingly the failure of proponents to do the same, leaves me somewhat both baffled and disturbed.  The development of a plan which would provide care for all is certainly, in my view, a worthy goal.  There have been enumerable attempts to control healthcare costs including the ACA, which has, in fact, not done the job (I voted for that bill when in Congress, but strongly urged many changes to it as we saw it unfold and not accomplish in intended goals).  We need to be have a meaningful discussion about how the cost factors can be woven together to produce a “plan” resulting in better care while containing cost. The other side of the aisle is unwilling to take steps to improve care as they focus solely on costs, nor have they been clear with the public that the repeal of Obama Care would eliminate healthcare for millions, increase costs for providers as they would have to deliver care to people who had no insurance, and most of the proposals they have offered failed to properly explain what the downsides and risks of their proposals are- large deductibles and copays. 

Insurance companies may be upset by a single payer program since it would eliminate a profitable market for them.  We know that Medicare has many private supplemental plans that are offered by the insurance industry, including essentially a replacement for Medicare.  There is no reason not to structure Medicare for all in the same fashion that the current Medicare system is structured with the possible exception of having to provide some additional supplemental coverage for those who could not afford a supplemental plan, so that might be dealt with using a means tested system.  This would be easy to verify through an individual’s tax returns, and if, in fact, an individual misrepresented their economic status, that could be used to impose appropriate penalties.  In this instance, we would need to include all income of the taxpayer as part of this calculation, including wages, Social Security, dividends, interest (both taxable and non-taxable), capital gains, and Schedule C income. 

It is obvious that we need to have a discussion that is based upon facts, not what amounts to scare tactics indicating that people’s taxes would have to be doubled, when in fact the spread is $500 million, which converts to nothing close to the doubling of taxes.  Further, it is my belief that if properly administrated, we could lower the cost to the federal government over time, and improve the healthcare of our citizens along the way. 

This would take a great deal of work, study, analysis, and the current nemesis, compromise.

Mr. Owens is a former member of Congress representing the New York 21st, a partner in Stafford Owens in Plattsburgh, NY and a Senior Advisor to Dentons to Washington, DC.

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