Health economists from the University of Massachusetts at Amherst just released a report, which finds that Medicare for All generates national health care savings of more than $5 trillion over ten years. Those savings come with insuring every American, providing excellent benefits, including vision, hearing, dental and prescription drugs, and no premium, deductibles or coinsurance.
The economists project a 19.2 percent savings in national health spending, even assuming a 12 percent increase in use of health care services. In short, improved Medicare for All would bring down annual health care spending to $2.93 trillion from its current level of $3.24 trillion. They found significant savings from lower administrative costs, lower provider rates and lower prescription drug costs. In total, they found that overall spending could fall by about 10 percent.
They estimated that overall spending would decrease by 9 percent from administrative savings; 5.9 percent from lowering prescription drug costs by 40 percent; 2.8 percent savings by putting in place uniform doctor and hospital rates and finally, 1.5 percent savings from a reduction in fraud and waste in the current system.
The biggest winners are middle class households, Your typical middle income family should see its net health care spending fall between 2.6 and 14 percent of their income.
How does the federal government pay for improved Medicare for all? The economists explain that the public sector already pays 60 percent of all health care costs. They suggest one way to pay for the remaining costs is to impose a sales tax of 3.75 percent on non-necessities. They also propose imposing a wealth tax of 0.38 percent on the top 12 percent of households. And they propose treating long term capital gains as short term gains for tax purposes.
They propose that businesses pay an 8 percent payroll contribution; still, they estimate that businesses would see an average of 8 percent savings on employee premiums. People with Medicaid would get a tax credit.
The economists recognize that the transition to Medicare for all needs to address the 1.8 million jobs lost from the transition away from commercial health insurance. And, they propose guaranteeing people’s pensions and providing them two years full pay if they are retiring. For those remaining in the workforce, they propose 100 percent wage insurance for one year and job retraining. The total projected cost is $120 billion over the course of the transition, which is covered by the savings and new sources of proposed revenue.
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