by Adam Gaffney, David Himmelstein, Steffie Woolhandler – leaders of Physicians for a National Health Program, a nonprofit organization that supports single-payer health care reform.

Subject CBO Report: “How CBO Analyzes the Costs of Proposals for Single-Payer Health Care Systems That Are Based on Medicare’s Fee-for-Service Program” Dec. 2020

“Overall, the CBO report provides one of the most detailed explorations to date of the economics of single-payer financing. As we have noted, it makes many sound assumptions, particularly about payer- and provider-side administrative savings. At the same time, it adopts some unfavorable assumptions about the structure of single-payer reform (including some that conflict with key provisions of the Medicare for All bills in Congress), projects excessive windfalls for some providers, and asserts clinically nescient portrayals of “unmet demand.” Nonetheless, the bottom line of the CBO analysis—that universal coverage can be affordably achieved even as benefits are expanded and cost sharing all but eliminated—should reinvigorate debate over such reform.”

Global Budgeting not Considered

Additionally, the fee-for-service hospital financing modeled by the CBO differs from what is envisioned in the Medicare for All bill in the House of Representatives. The House bill proposes paying hospitals, nursing homes, and other institutional providers using “global budgets,” that is, lump sums to cover all of their operating activities.

Substantial savings for state & local governments

Finally, while the CBO projects reductions in health spending in four out of five single-payer scenarios, as noted, it projects substantial increases in federal spending that would replace all private insurance premiums and nearly all out-of-pocket health care costs. Yet, there are also substantial savings for state and local governments with single-payer reform. The CBO’s brief mention of the savings likely to accrue to these governments (and their taxpayers) omits probable savings from no longer having to bear the costs of public employees’ health insurance (projected to total $318 billion in 2030), as well as about $162 billion in savings on other health programs. These, together with savings on Medicaid (which the CBO does remark on), would bring state and local governments’ total savings from single payer to about $800 billion in 2030 alone, reductions that provide important context for the CBO’s estimates of increased federal government expenditures.

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