Democratic Senate candidates Troy Jackson (Maine) and Abdul El-Sayed (Michigan) have renewed the push for Medicare for All, a signature feature of Bernie Sanders’s presidential campaign a decade ago. Now, as then, the issue has proven an effective vote-winner in Democratic primaries.
But the mechanics of Medicare for All proposals tend to be far less popular than the slogans. For instance, the Medicare for All Act, cosponsored by 117 House Democrats last year, would cap total revenues at each hospital as a core financing mechanism. Evidence from a unique policy experiment in Maryland shows that such revenue caps reduce the number of patients hospitals can treat, while making care costlier for those whom they do treat.
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Americans have many reasons to be dissatisfied with private health insurance. Premiums will rise by 20 percent in some states this year alone. Plans often saddle families with enormous deductibles before paying for care and refuse to pay for services recommended by physicians. Premiums are so high that millions of Americans go without insurance altogether.
The 2010 Affordable Care Act (popularly known as Obamacare) was supposed to bring down insurance costs. When it pushed them higher, many liberals sought to replace private health insurance entirely by making the government the sole purchaser of health care—a proposal they dubbed “Medicare for All.”
Medicare for All advocates argue that private health insurance inevitably creates enormous inefficiencies. They claim that the government could save hundreds of billions of dollars every year by paying less for drugs, hospital care, and insurance administration. These savings could then fund a big expansion of benefits, broadening access to care and picking up costs that are currently borne out-of-pocket.
Much of the appeal of single-payer health care comes from a belief that it would allow the United States to reduce the cost of benefits to levels found in other developed countries. But these systems often look better only when viewed from afar.
In reality, other developed countries deal with many of the same painful trade-offs between cost and access to care that Americans lament. The U.S. health-care system, for all its flaws, allows residents to obtain more cutting-edge medical procedures, without the long waiting lists found in other nations. And catastrophic out-of-pocket health-care costs in most European countries are similar to those found in America.
Those trade-offs make it hard to assess the merits of health-care payment reforms simply by comparing countries. Differences in cost and access to care between countries could be the result of alternative health-insurance arrangements. They could also be influenced by variances in professional wage levels, disease burdens, physician workforces, facility requirements, medical liability, population density, and a host of other relevant factors.
Fortunately, the Maryland policy experiment allows us to identify the precise impact of key single-payer health-care reforms. In 2014, Maryland capped allowed revenues at each hospital in the state and trusted those facilities to ration care for patients. This payment arrangement, known as “global budgeting,” drives much of the savings assumed by single-payer proposals and constitutes Section 611 of the Medicare for All Act.
Unfortunately, global budgeting has had the opposite of its intended effect in Maryland. With total revenues fixed, the state’s hospitals started treating fewer patients and charging more for each patient whom they did treat. Community hospitals have increasingly dumped seriously ill patients on the state’s once-prestigious academic medical centers, like Johns Hopkins, leaving these centers short of funds to deliver the most complex medical procedures. From 2012 to 2023, the state went from performing 61 percent more kidney transplants per capita than the nation to 40 percent fewer. Emergency department waiting times have surged to 153 percent of the national average, substantially higher than any other state. Because Maryland hospitals could maintain total revenues while delivering less care, the cost of common inpatient procedures rose 7 percent to 34 percent more than they did nationwide, depending on the procedure.
Medicare for All may be a popular slogan, but the policies that would be necessary to make it work would not be. A recent poll found that Americans approved of Medicare for All in principle by a margin of 66 percent to 34 percent—but they opposed it, 64 percent to 35 percent, if it would increase their taxes, and by 76 percent to 24 percent if it delayed access to medical tests and treatments.
Public funding, which already accounts for half of America’s health-care spending, was largely intended to fill gaps in private insurance coverage. Further incremental expansions may be justified on that basis. But expanding Medicare to all Americans would mostly raise taxes to cover the costs of wealthier Americans who are already well-insured. It would also force Americans off their current private health-care plans and reduce their access to care. Most Americans would be fiercely opposed to such changes.