The Political Economy Research Institute (PERI) at the University of Massachusetts – Amherst has just released an in-depth economic analysis of Bernie Sanders’ Medicare for All Act of 2017.
The study was authored by Robert Pollin, James Heintz, Peter Arno, Jeanette Wicks-Lim and Michael Ash. It was released at the Sanders Institute Gathering on November 30, 2018.
The study showed that a national Medicare for All system (as outlined in the Act) would reduce health consumption expenditures by around 9.6%.
This means that if the bill were passed, over the first ten-year period the US would enjoy cumulative savings of $5.1 trillion.
The report also proposes the following funding mechanisms for the bill:
• Continuing business health care premiums, but with a cut of 8 percent relative to existing spending per worker. Businesses that have been providing coverage for their employees would thereby see their health care costs fall by between about 8- 13 percent. ($623 billion)
• A 3.75 percent sales tax on non-necessities, which includes exemptions for spending on necessities such as food and beverages consumed at home, housing and utilities, education and non-profits. The researchers include a 3.75 percent income tax credit for families currently insured by Medicaid. ($196 billion)
• A net worth tax of 0.38 percent, with an exemption for the first $1 million in net worth. The researchers state that this tax would therefore apply to only the wealthiest 12 percent of U.S. households. ($193 billion)
• Taxing long-term capital gains as ordinary income. ($69 billion)
Physicians for a National Health Program issued an analysis of the study authored by Stephanie Woolhandler, MD/MPH, David Himmelstein, MD and Adam Gaffney, MD/MPH, calling it “a robust and well-documented projection of the economic effects of a properly structured single payer health care reform.”
While they felt some projected savings in the study may be overstated, they believed that others were understated. Specifically, they felt that projections of hospital administrative savings were too conservative, while projections of provider administrative savings did not consider the time it would take to re-design payment systems and workflows, make changes to EHR software and so forth. Taking these issues into account would likely result in higher costs than projected during the early years of the implementation.
Nevertheless, they felt that overall, the study was “a highly credible economic analysis.”
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