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Can Medicare For All Reduce the Cost of Care?

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Published June 9, 2020

Supporters of Medicare for All claim that it would lower health care costs, but they fail to recognize that these low costs rely heavily on “cross-subsidies” with private insurance. Adopting a Medicare for All system could result in enormous negative impacts in access to and quality of health care. Policy makers should be skeptical of the savings promised by Medicare for All and acknowledge their inevitable consequences.

Discussion Questions:

  1. What would happen if a single-payer, Medicare for All–type program were created in the United States?
  2. Are there non-single-payer solutions to improving the health care system?

Additional Resources:

  • Read “The Sobering Implications of Health Care Reform,” by Lanhee Chen via Defining Ideas. Available here.
  • Listen to “Lanhee Chen: Democrats Push Single-Payer Health Care Plan” via Townhall Review. Available here.
  • Listen to “Why the Health Care Wars Just Won’t End” with Lanhee Chen. Available here.
View Transcript

Supporters of Medicare for All argue that it would lower health care costs, because as the single payer, the government could force doctors and hospitals to accept lower payments than they earn now.

After all, Medicaid and Medicare already pay healthcare providers at lower rates than private insurance does. Why not just move the two-thirds of Americans with private insurance onto a single payer system like Medicare for All?

The problem is that since doctors and hospitals earn less for treating Medicare or Medicaid patients, they frequently charge more to people with private insurance.

This “cross-subsidy” makes it seem like lower Medicare and Medicaid reimbursement rates could save the country billions of dollars.

But widely cutting payments would have an enormous negative impact on the health care industry.

Doctors would find their salaries slashed, and many hospitals, particularly in rural areas, could go out of business.

The result would be fewer health care providers, longer wait times, and lower quality health care.

There are many other ways to lower the cost of health care. But policymakers should be skeptical of proposals that promise to provide savings without acknowledging inevitable reductions in both access to providers and the quality of care.