This AP “fact check” is utterly slanted. Why is that?
[Sanders] said studies from experts on the political left and the right project $2 trillion to $5 trillion in savings over 10 years, but that’s questionable.
...
Sanders’ figure of $5 trillion over 10 years in health cost savings comes from a study by the Political Economy Research Institute at the University of Massachusetts-Amherst. The lead author has been a political supporter of Sanders’ and the study was unveiled at an event hosted by a think tank founded by the senator’s wife.
Sanders also cites a savings estimate of $2 trillion over 10 years taken from a study from the libertarian Mercatus Center at George Mason University in Virginia. But the author of that study now says that Medicare for All advocates are mischaracterizing his conclusions.
The AP simply dismisses the savings cited in the PERI analysis by suggesting to the reader that the study is biased from the get-go. On the other hand, the AP informs the reader that the widely reported savings cited in the Mercatus study were mischaracterized, according to its author. So when presented with a less rosy scenario regarding savings, the AP takes the author’s view at face value: they don’t dismiss it, they don’t remind the reader that libertarians are philosophically opposed to public-sector programs, they don’t mention that the study was paid for by the ultra-conservative Koch brothers.
The PERI authors invited numerous experts in the field, listed below, to submit reviews of their analysis. The reviews submitted so far are available on the PERI website, along with the study itself, where the AP could easily have found them.
- Donald Berwick, President Emeritus and Senior Fellow, Institute for Healthcare Improvement and former administrator of the Centers for Medicare & Medicaid Services;
- Richard Freeman, Herbert Ascherman Professor of Economics at Harvard University;
- Sandro Galea, Robert A. Knox Professor and Dean of the Boston University School of Public Health;
- Adam Gaffney, Instructor in Medicine at the Harvard Medical School and a pulmonary and critical care doctor at the Cambridge Health Alliance;
- Alison Galvani, Director, Center for Infectious Disease Modeling and Analysis and Burnett and Stender Families’ Professor of Epidemiology, Yale School of Public Health;
- David Himmelstein, Distinguished Professor, School of Urban Public Health at Hunter College and M.D., Columbia University College of Physicians and Surgeons;
- William Hsiao, K.T. Li Professor of Economics at the Harvard University T.H. Chan School of Public Health;
- James G. Kahn, Professor Emeritus at the University of California-San Francisco Institute for Health Policy Studies;
- Theodore Marmor, Professor Emeritus of Political Science, Management and Public Policy, Yale University;
- Thomas Rice, Distinguished Professor, Department of Health Policy and Management, Fielding School of Public Health, University of California-Los Angeles;
- Jeffrey Sachs, University Professor at Columbia University, Quetelet Professor of Sustainable Development at Columbia's School of International and Public Affairs and Professor of Health Policy and Management at the Columbia School of Public Health; and
- Stephanie Woolhandler, Distinguished Professor of Public Health and Health Policy at the CUNY School of Public Health at Hunter College and Adjunct Clinical Professor at the Albert Einstein College of Medicine.
The reviews submitted provide a range of opinions and caveats regarding the PERI study, as would be expected regarding any economic analysis. These experts have noted parts of the analysis which may be overestimating savings and other parts which may be underestimating savings. But the AP doesn’t bother to report any of these expert opinions. Rather, the AP just dismisses the PERI study outright as biased, while presenting other views without question, such as the conclusions of a Rand study, which, according to Donald Berwick, below, may be overestimating the increase in utilization of health care services.
If the AP is really interested in rooting out biased views on Medicare for All, the very first thing they need to do is look in the mirror.
Here are some of the comments Berwick submitted:
I believe that the model they are using overestimates the additional costs of Medicare for All, over and above those our nation currently pays for health care.
First, although utilization does differ among those now uninsured, underinsured, and insured, I believe it to be true that most of the people in the first two categories sooner or later do end up in care, and those who are ill often experience higher costs than if they had entered sooner.
Second, many who choose to forgo insurance now are younger and in better health, as they acknowledge, and I doubt that universal coverage will boost their use of care substantially.
Third, in the case of Massachusetts, which has achieved nearly universal coverage, although there was a temporary increase in total medical expenditures when the relevant law was passed, we saw nothing approaching the 12% you estimate in your review.
Fourth, although eliminating all copayments and deductibles will increase utilization if we believe the Rand Health Insurance Study, I wish to note that that element is neither essential nor inevitable in a Medicare for All framework (even though it is part of Senator Sanders’s plan). It is also the case that nations (such as Scotland and England) where care is “free at the point of service” do not witness the uncorking of insatiable demand that some economists predict if copayments and deductibles were to be eliminated in the US. This finding is encouraging enough that at least a modern experiment testing that possibility is warranted, with policies to be adjusted later based on results.
Here are the concluding paragraphs from Woolhandler, Himmelstein, and Gaffney’s joint response:
Overall, the PERI estimate incorporates some assumptions likely to overstate new costs associated with the implementation of a single payer program, and others likely to understate these costs. Given this caveat, we believe it prudent to anticipate that health care expenditures (as a share of GDP) in the first year of a single payer reform would remain at roughly the same level as in the year prior to the reform - still a substantial saving as compared to current, relentlessly rising trends. In the medium term we expect that health care's share of GDP would gradually fall.
It should also be pointed out that the PERI group's projections are based on a reform that emulates Canada's simple payment system, such as that envisioned in the current version of the House single payer bill - H.R. 676. That approach would abandon per-patient hospital billing in favor of global budget payment, and would fund hospital capital investments through direct government grants rather than from hospitals' operating surpluses, or debt financing that is ultimately paid back from operating surpluses. Retaining Medicare's current payment strategy - as in the current version of the Senate single payer bill - S. 1804 - would sacrifice some of the savings on hospital administration, and leave in place significant incentives for overuse, as well as financial gaming.
In sum, the PERI team is to be congratulated for producing a highly credible economic analysis of the likely result of implementing a Canadian-style single payer reform in the U.S.
Here are a couple paragraphs from Rice’s review:
While I have not had the time to review your specific calculations, I do agree with you that the Medicare for All Act would, if enacted, result in substantial administrative savings for a number of reasons, including fewer tasks for insurers and the need for far fewer personnel in hospitals and physicians’ office who currently deal with billing, eligibility, and so on. While I have never conducted research specifically on administrative costs, I found your estimate of a 4.9% decline in total U.S. health care costs as a result of administrative simplification to be a reasonable one, and in line with the experience of other high-income countries.
I am not convinced, however, that the price reductions will be as large as you have calculated. I do agree that one of the major reasons that the U.S. is an outlier with regard to health expenditures is that unit prices of medical care, procedures, and prescription medicines are so high. The report assumes, perhaps unrealistically, that hospital and physician prices ultimately would be set at Medicare levels, which would mean that providers would receive more for patients currently covered by Medicaid and less for patients currently covered by private insurance than they currently do. Moreover, it projects that brand name drug prices will be reduced by an average of 50% so that they are comparable with those paid in other countries, and that dental prices would fall by 22%. My reason for skepticism comes from thinking about the political and institutional obstacles involved in reducing aggregate provider payments. One thing behavioral economics teaches us is how loss aversion manifests itself: providers will use all of their political clout to keep remuneration as close to current levels as possible. As an illustration, given that hospitals currently receive approximately 75% more from private insurers than from Medicare, an immediate decrease to Medicare payment rates would likely lead, in their minds, to unacceptably large disruptions.