One of his signature proposals is to move the country’s health care system to a government-run, single-payer system. Last week, Hillary Clinton nodded in that direction, suggesting that she would be open to allowing Americans older than 50 to buy into the government Medicare program that currently covers those 65 and older.
But also last week, a detailed analysis of the Sanders health care plan from researchers at the Urban Institute showed that it would probably cost the government double what the campaign proposed. It is the second credible analysis to suggest that the Sanders plan costs more than advertised. (The other comes from the Emory health policy professor Kenneth Thorpe.)
If you look around the world, lots of countries have single-payer systems. And all of them pay substantially less for health care than we do in the United States. I am reminded of this often, in the comments by readers in some of my articles. So how could a single-payer system here still be so expensive?
One reason is that the Sanders plan covers far more than typical insurance plans in the United States — or abroad. The Sanders plan would charge no premiums, require no out-of-pocket spending and would pay for services like dental care and long-term nursing home stays. Those things boost the total price tag.
But imagine a universe where we had a single-payer health plan that was more like normal insurance. Perhaps it would be a true “Medicare for all,” where everyone has exactly the insurance that the federal government currently provides to older people and the disabled.
That Medicare-for-all plan would still cost more than single-payer plans in other countries. Here’s why: Medicare pays doctors and hospitals higher prices than single-payer systems do in other countries.
“The big thing is that providers here make quite a bit more money than they do anywhere else, and in order to get in the ballpark of where these other countries are, you’d have to reduce payment rates to physicians to much, much lower levels,” said John Holahan, one of the authors of the Urban analysis. “That’s just hard to do.”
The Organization for Economic Cooperation and Development, which looks at a group of developed countries, has found that the United States pays substantially higher prices for doctors, hospital stays and prescription drugs than the rest of the group. Medicare pays less than the United States average, but not enough less to make up that difference.
Making the American health care system significantly cheaper would mean more than just cutting the insurance companies out of the game and reducing the high administrative costs of the American system. It would also require paying doctors and nurses substantially lower salaries, using fewer new and high-tech treatments, and probably eliminating some of the perks of American hospital stays, like private patient rooms.
The average family physician in the United States earns $207,000, according to the Medscape Physician Compensation Report. General practitioners in Britain, which has a single-payer system, earn an average pay of around $130,000. The gaps in pay for specialists are even bigger.
The Urban Institute report assumes that the Sanders plan would cut pay for doctors substantially, but not by half. That’s a reasonable assumption.
We also pay more for drugs than the rest of the world, but many experts think that a single-payer health plan could push down drug prices because drug companies earn such high profit margins. The Urban analysis assumes that the country could quickly get to prices 25 percent lower than what Medicare pays. (That change assumes a political revolution, of course, because the pharmaceutical companies are an extremely effective lobby.)
The Sanders campaign and its academic allies dispute some of the Urban Institute’s assumptions. A critique of the Urban analysis from David Himmelstein and Steffie Woolhandler, professors of public health at the City University of New York, argues, for example, that drug prices could be pushed even lower. And the Sanders team says that the researchers overestimated the costs associated with administering the government program. But it doesn’t argue that the prices paid to medical providers could be cut more sharply.
The same problem exists for other attempts to reduce health spending in the United States. Efforts by the Obama administration to pay doctors and hospitals differently are designed to squeegee some waste out of the system, by eliminating extra care that may not help people’s health. But it has done little to change the prices paid for medical care. That means that its best hope is to “bend the cost curve,” or reduce the rate that health spending grows.
Republican proposals to make health care into more of a free market also tend to assume that they will slow spending growth, not actually reduce it.
The Sanders plan would require a huge reorganization of the country’s health care system. Overnight, it would put the private insurance industry out of business, along with many other businesses that support it. It would shift billions of dollars of spending from individuals, workers and states into the federal budget. Doing that might well reduce some of the country’s health care spending that is going toward insurer profits and paper-pushing.
But more than 80 percent of the dollars we currently spend on health care actually go toward health care. And making big cuts all at once to doctors and hospitals could cause substantial disruptions in care. Some hospitals would go out of business. Some doctors would default on their mortgages and student loans. Even if the country decided that medicine should become a more middle-class profession — not an obvious outcome, given the substantial public support for the medical professions — it would be difficult to get there at once.
All of that means that bringing a government-run, single-payer health care system could achieve many of the goals of its advocates: more equity, lower complexity and some reductions in cost. But the United States would probably continue to have the most expensive health care system in the world. And we’d have to raise taxes high enough to pay for it.
An Upshot article on Tuesday about the expense of instituting a single-payer health care system in the United States misstated the average salary of general practitioner doctors in Britain, which has a single-payer system. The average salary is around $130,000, not between $81,000 and $122,000.