‘Medicare for All? How Are We Gonna Pay for That? With THIS Money’ Post

On December 12 2019, the Facebook page “Fully Automated Luxury Gay Space Communism” shared the following screenshot of a retweet opining that a $738 billion expenditure for defense (and a Space Force) could be used to fund Medicare for All:

In a December 11 2019 tweet, Politico reported that Congress “overwhelmingly passed a $738 billion compromise defense policy bill that would create a Space Force as the newest military service.” @BillCorbett retweeted the tweet, proposing that discretionary spending on a Space Force could be re-appropriated to fund Medicare for All:

Medicare for All? How are we gonna pay for that??

With THIS money. ⬇️

There it is, right there, the money that could be used to give people decent healthcare.

THERE IT IS, FUCKERS.

To start, the claim fell squarely across the line between opinion and verifiable fact; the United States could appropriate more of its budget to a universal health care system like Medicare for All, but budgetary appropriations are to a large degree a matter of partisan opinion. Politicians like Sen. Bernie Sanders (I-Vermont) and Democratic Reps. Alexandria Ocasio-Cortez and Ilhan Omar advocated a shift in spending to Medicare for All and similar investments; fellow Democrats like Pete Buttigieg seemed to oppose that initiative:

The tweet above didn’t suggest that the $738 billion 2020 defense budget would, alone, fund Medicare for All — it appeared to merely say that some or all of those funds could be diverted from initiatives like a Space Force to universal health care. Even if such a comparison were attempted, variables such as average household spending on health insurance and wildly variable out-of-pocket expenses made such a comparison virtually irrelevant.

Finally, the sum would benefit from context against government spending projections and trends. A $738 billion “compromise defense policy bill” mentioned by Politico in the retweeted tweet referenced the National Defense Authorization Act (NDAA) for fiscal year 2020:

The $738 billion bill would authorize $635 billion for the base Pentagon spending and $23.1 billion for nuclear weapons programs under the Energy Department as well as $71.5 billion for war operations. It also would authorize another $5.3 billion in emergency disaster recovery for military bases damaged by extreme weather.

The NDAA’s appropriations amount to only a portion of the federal budget for fiscal year 2020; a version proposed by the White House in March 2019 (FY 2020 began on October 1 2019) totaled “a record $4.746 trillion.” Sixty percent of that $4.746 trillion went to a category of spending which included Medicare and Medicaid as well as Social Security:

The government expects to spend $4.746 trillion [in fiscal year 2020]. Almost 60% pays for mandated benefits such as Social Security, Medicare, and Medicaid.

According to a breakdown of the proposed FY 2020 budget of $4.746 trillion, Medicare and Medicaid combined totaled more than a trillion dollars (and Social Security cost $1.102 trillion):

Medicare will cost $679 billion in FY 2020. It subsidizes health care for those over age 65.

[…]

Medicaid costs will be $418 billion in FY 2020. Medicaid provides health care to those with low incomes.

A trillion is a thousand billion or a million million. As such, Medicare’s $679 billion projected cost added to Medicaid’s $418 billion projected cost totaled $1.097 billion. We were unable to locate costs to maintain the Affordable Care Act (often referred to as the ACA or, more colloquially, Obamacare) provisions in 2020, and additional issues such as the $938 billion estimated cost of waste (a quarter of healthcare spending) in the current healthcare system further obscured the real costs of the current system in 2019 and 2020:

Administrative complexity accounted for the most waste, at $265.6 billion annually. Below that was waste due to pricing failure, which costs $230.7 billion to $240.5 billion annually. Failure of care delivery accounts for $102.4 billion to $165.7 billion annually. Overtreatment or low-value care results in $75.7 billion to $101.2 billion in waste annually. Waste related to fraud and abuse costs between $58.5 billion and $83.9 billion annually. Finally, failure of care coordination generates $27.2 billion to $78.2 billion in waste annually.

A clear factor in estimating current spending on healthcare involved individual taxpayer costs, which again, varied widely. Among those costs were premiums, deductibles, co-payments, prescription drugs, uncovered services, uncovered medications, and other expenses borne solely by individual Americans.

Sanders’ campaign website page for Medicare for All maintains that the United States spends far more of its National Gross Domestic Product (GDP) on health care costs than other countries, and that many Americans in turn receive substandard health care (or for about 30 million people, no health coverage at all):

Today, more than 30 million Americans still don’t have health insurance and even more are underinsured. Even for those with insurance, costs are so high that medical bills are the number one cause of bankruptcy in the United States. Incredibly, we spend significantly more of our national GDP on this inadequate health care system — far more per person than any other major country. And despite doing so, Americans have worse health outcomes and a higher infant mortality rate than countries that spend much less on health care. Our people deserve better.

According to the U.S. Census, 27.5 million people were uninsured in 2018 [PDF]; Sanders’ number appeared to be rounded to 30 million. The World Bank provides annual estimates of the cost of GDP per country compared to the cost of healthcare.

Sanders site says the United States spends “significantly more of our national GDP on this inadequate health care system — far more per person than any other major country.” According to the World Bank’s most recent figures for 2016, that claim is true. The United States spent 17 percent of its GDP on healthcare in 2016, compared to Switzerland (12.3), Germany (11.1), Sweden and Japan (10.9), Canada (10.5), and the United Kingdom (9.8.)

Iceland’s healthcare to GDP spending was 8.3 percent, less than half that of the United States. In many of those countries (such as Germany, the United Kingdom, and Japan, healthcare is also free at the point of delivery — meaning that citizens are not charged anything by providers. That again leads to a variable in an attempted contrast of outlays due to the amount of money paid at the point of service in co-payments and related costs such as premiums and deductibles.

In formulating a comparison, it would be helpful to put a price tag on Medicare for All. And as with the individual outlays (such as co-pays, deductibles, or yearly premiums), those figures are variable to the point that they are nearly meaningless.

According to the non-partisan Committee for a Responsible Federal Budget (CRFB) examination, there’s no real terra firma when it comes to breaking out the cost of Medicare for All. Buckle up:

Representative Pramila Jayapal (D-WA), a co-chair of the Medicare for All Caucus, released a bill [in February 2019] that would adopt a single-payer system, where the federal government replaces private health insurance companies as the sole provider of most health care financing. While we are not aware of any estimates of this particular proposal, similar proposals have been estimated to cost the federal government roughly $28-32 trillion over a decade.

[…]

The proposal is broadly similar to Senator Sanders’s proposed single-payer plan introduced during the 2016 Presidential campaign. While the campaign itself estimated that plan would cost the federal government about $14 trillion over a decade, most other estimates that we are aware of are at least twice that high.

At the time, for example, the Committee for a Responsible Federal Budget estimated roughly that the plan would cost $28 trillion through 2026 (we estimated the Sanders plan in particular would also raise $11 trillion of revenue, leading to $17 trillion of net costs). All other estimates come to similar conclusions.

For example, economist Kenneth Thorpe estimated that single-payer health care would cost the federal government $24.7 trillion through 2026, excluding the costs associated with long-term care benefits (likely about $3 trillion). The Urban Institute estimated a $32 trillion cost over the same period, including those long-term care benefits. The Center for Health and Economy (H&E) produced an estimate that the American Action Forum calculates would cost the federal government $36 trillion through 2029.

In that grouping of estimates, the cost in trillions was measured in decade-long terms. CFRB cited a ten-year estimate of $28-32 trillion, or $2.8 to $3.2 trillion per year; a 2016 plan estimate issued by Sanders’ campaign in 2016 (through 2026) totaled $14 trillion, or $1.4 trillion annually. Going back to the budget estimates of Medicare and Medicaid in FY 2020 at $679 billion and $418 billion respectively, the then-current outlay for those two programs alone was $1.097 trillion.

Sen. Elizabeth Warren estimated a ten-year cost of $20 trillion in new federal spending for Medicare for All, or $2.05 trillion annually — funded in part by employer-supplied contributions. Sanders did not cite a cost for Medicare for All in an undated document, instead tacking costs to an estimated $3.2 trillion annual total spending on healthcare. In that document, Sanders’ proposes revenue totaling several times the current total expenditure.

In September 2019, PolitiFact pointed to a debate exchange between former U.S. Vice President Joe Biden and Sen. Sanders over the cost of Medicare for All. Biden, who opposed the plan, claimed it would cost $30 trillion over ten years (or $3 trillion a year). Sanders did not dispute that figure, instead saying the cost of the current system without Medicare for All would cost $50 trillion over the same period:

“Joe said that Medicare for All would cost over $30 trillion,” Sanders said. “Status quo, over 10 years, will be $50 trillion.”

[…]

But if it’s a better deal for citizens depends on the other number Sanders put out there, the $50 trillion cost for keeping the system as it is.

That’s not federal health care spending. That’s the government’s estimate of total health care spending across the board, both public and private, over the coming decade. (It’s actually $47 trillion by 2027.)

As the site noted, the federal government estimated total health care costs through 2027 at nearly $50 trillion, citing a slightly higher proportion of GDP than the World Bank’s latest 2016 figures, a rise to 17.7 percent (or 17.9 percent, [PDF]). As PolitiFact indicated, the costs were “both public and private,” estimated at $47 trillion. But the highest estimate of $38 trillion (versus the campaign’s lowest estimate of $14 trillion in 2016) involved Medicare for All’s abolishment of co-payments, deductibles, and other point of delivery expenses for Americans.

If we split the down the middle the estimate of $14 trillion over ten years with $38 trillion over ten years, we get $26 trillion, or $2.6 trillion per year in government spending. In 2018, all spending on healthcare between the government and individuals was estimated at $3.6 trillion, rising to $6 trillion by 2027 — both figures provided by Centers for Medicaid and Medicare Services (CMS) for 2018. (That figure was similar to even the highest estimate of $38 trillion over 10 years, or $3.8 trillion per year.)

The tweet we started with said that the $738 billion appropriation for defense (and, of course, the Space Force) could fund Medicare for All, and fairly there was no indication that sum alone would cover that cost. Although we found no solid projection for the cost of Medicare for All, it seemed to range from $1.4 trillion to $3.8 trillion when ten year estimates were averaged out over a year. Adding the $738 billion to the $1.097 trillion bill for Medicaid and Medicare totaled $1.8 trillion, more than the Sanders’ campaign 2016 estimate for a ten-year cost — but lower than most projected costs broken down to annual amounts. Without a consensus on at least a tight range of Medicare for All costs, any such comparison was largely speculative — but total healthcare spending was about $3.6 trillion in 2018, lower than almost all estimated Medicare for All annual costs.