The Sanders Single-Payer Health Care Plan: The Effect on National Health Expenditures and Federal and Private Spending

HEALTH POLICY CENTER RESEARCH REPORT The Sanders Single-Payer Health Care Plan The Effect on National Health Expenditures and Federal and Private Spending John Holahan Lisa Clemans-Cope Matthew Buettgens Melissa Favreault Linda J. Blumberg Siyabonga Ndwandwe May 2016 ABOUT THE URBAN INSTITUTE The nonprofit Urban Institute is dedicated to elevating the debate on social and economic policy. For nearly five decades, Urban scholars have conducted research and offered evidence-based solutions that improve lives and strengthen communities across a rapidly urbanizing world. Their objective research helps expand opportunities for all, reduce hardship among the most vulnerable, and strengthen the effectiveness of the public sector. Copyright © May 2016. Urban Institute. Permission is granted for reproduction of this file, with attribution to the Urban Institute. Cover image by Tim Meko. Contents Acknowledgments iv The Sanders Single-Payer Health Care Plan 1 Background: The Sanders Proposal and Prior Estimates 5 Detailed Methods and Results 7 Acute Health Care for the Nonelderly 7 Acute Health Care for Those with Medicare Coverage under Current Law 13 Long-Term Services and Supports 17 Results 20 Discussion 22 Notes 27 References 29 About the Authors 31 Statement of Independence 34 Acknowledgments This report was funded by the Urban Institute. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders. Funders do not determine research findings or the insights and recommendations of Urban experts. Further information on the Urban Institute’s funding principles is available at www.urban.org/support. The authors are grateful for helpful comments from Stephen Zuckerman and Leonard Burman. IV ACKNOWLEDGMENTS The Sanders Single-Payer Health Care Plan Presidential candidate Senator Bernie Sanders has called for adopting a single-payer health care system in the United States.1 He proposes replacing the programs established under the Affordable Care Act (ACA), as well as preexisting public programs such as Medicaid and Medicare, with the new system. Under his approach, all individuals in the United States would be covered by a single insurance program. Sanders’s plan would eliminate all private spending and replace all private and public coverage programs, except Veterans Health Insurance and the Indian Health Service. Benefits provided under the insurance plan would cover all medically necessary services, and cost sharing would be eliminated entirely. Coverage would include both acute and long-term care. We analyze the effects of Sanders’s approach on spending by governments, households, and employers, using information publicly provided by the campaign and making our assumptions explicit where detailed information is not available. In companion work, the Urban-Brookings Tax Policy Center estimated the revenue effects of the same proposal (Sammartino et al. 2016). Highlights from the revenue analysis, available in its entirety separately, are referenced here. We estimate the impact of the Sanders plan on federal health expenditures and national personal health expenditures. We use three approaches, separately estimating the following changes:  Changes in acute care spending for the nonelderly who would not have Medicare under current law (for simplicity, referred to as “the nonelderly”). This is by far the largest component of the analysis and is estimated using the Urban Institute’s Health Insurance Policy Simulation Model (HIPSM).  Changes in acute care spending on those otherwise enrolled in Medicare. Enhancements to Medicare are estimated using a spreadsheet model and assumptions about the different effects of the proposal.  Changes in spending on long-term services and supports. We use the Urban Institute’s Dynamic Simulation of Income Model (DYNASIM) to estimate the cost of a fully federally financed comprehensive long-term care plan. The overall results are shown in table 1. The underlying assumptions and more detailed results are presented in the following sections. Our central findings of the effects of the Sanders approach are shown in table 1 and include the following:  All American residents would be automatically enrolled in acute care coverage, increasing insurance coverage by an estimated 28.3 million people in 2017, from an uninsurance rate for nonelderly adults of 10.4 percent under current law in 2017. In 2026, the Sanders plan would decrease the number of nonelderly uninsured by 30.9 million, or 11.0 percent of the population, relative to current law. (The uninsurance rate under current law in 2026 is projected to be larger than the rate in 2017 as a result of demographic changes and a slight decrease in the rate of employer-sponsored insurance.) Although the intent is unspecified in the campaign’s materials, this finding assumes that the plan would cover the undocumented population as well as citizens