The healthcare debate reignited this past week following the release of a new study from the Mercatus Center, a George Mason University research center. After Mercatus crunched the numbers associated with transitioning the U.S. healthcare system to one wherein everyone is covered under Medicare, it determined that federal spending would swell by $33 trillion (yes, with a "t") by 2031.
The eye-catching figure sparked a flurry of back-and-forth between universal healthcare proponents and detractors. Is universal healthcare a bad deal for America? Or could it be the magic bullet that finally stops runaway healthcare costs in their tracks? Let's take a closer look.
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What's the story?
Last September, former presidential candidate Bernie Sanders unveiled the Medicare for All Act, or M4A, a program that would replace copays, coinsurance, and insurance premiums with a Medicare-like system. The new system would cover every dollar spent by Americans on healthcare, including dental and vision care.
Initially, the new program would lower the age to qualify for Medicare to 55 from 65. It would also immediately enroll everyone who is currently covered by Medicare and children under age 18. Americans who are between 18 to 55 would join the program gradually over three years, giving healthcare providers and taxpayers time to adjust to the new scheme.
One decade costs $32.6 trillion
If enacted in 2018, the M4A program would be fully up and running in 2022. And, according to the Mercatus Center, M4A would increase federal spending by $2.5 trillion that year. In the first 10 years, Mercatus estimates that the federal spending increase resulting from M4A would total $32.6 trillion.
For perspective, the proposed total federal budget is $4.4 trillion, and the government's total haul from taxes and other sources of revenue will be $3.42 trillion in fiscal 2019, including $1.6 trillion from income taxes. The U.S. budget deficit is already approaching $1 trillion, and the prospect of a surge in healthcare spending due to M4A, without a corresponding spike in tax revenue, could cause that deficit to skyrocket.
Is it worth it?
The study estimates that Americans' total personal healthcare spending under current policy will be $3.9 trillion in 2022. If M4A is enacted, then the addition of those who are currently uninsured and the elimination of copays and coinsurance would increase that amount by $435 billion.
However, the study also found that the $435 billion increase could be more than offset by $384 billion in savings from lower payments to healthcare providers and $61 billion in savings from lower prescription drug prices. After the put-and-take, Americans would spend $10 billion less on healthcare in 2022, and through 2031, M4A could reduce Americans' total healthcare spending by $2.1 trillion.