Universal health would cut U.S. provider revenue 21%, researchers predict

Moving the United States to a purely government-run, single-payer healthcare system could save 114,000 lives per year, reduce spending by more than $1 trillion per year, and reduce physicians’ and hospitals’ revenue by about 21%, according to the authors of a new universal health system analysis.

In a paper based mostly on government healthcare spending data from 2024, Abishek Pandey, a Yale public health analyst, and four colleagues predict that eliminating all private health insurers, health plan administrators and health plans could have cut administrative overhead by $286 billion.

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If healthcare providers had kept all of the overhead savings, that might cut the net impact of a “Medicare for All” system to $296 billion, or 11% of their income.

Pandey’s team also predicted a “Medicare for All” system would reduce spending on prescription drugs by 51%.

Pandey’s team modeled the effects of the kinds of “Medicare for All” bills that have been introduced by Rep. Pramila Jayapal, D-Wash., in the U.S. House and by Sen. Bernie Sanders in the U.S. Senate.

Sanders, an independent from Vermont who caucuses with the Democrats and is now the highest-ranking Democrat on the Senate Health, Education, Labor and Pensions Committee, promoted the study in a press release posted last week on his section of the committee’s website.

“Guaranteeing healthcare as a human right through a ‘Medicare for All’, single-payer system would cost $1 trillion less than our current dysfunctional system,” Sanders said in a comment about the Pandey team’s study.

The “Medicare for All” system: The current Jayapal and Sanders “Medicare for All” bills would establish a system that would be nothing like the current U.S. commercial health insurance system or the current version of the Medicare program.

Both the commercial health insurance system and Medicare use deductibles and other cost-sharing provisions to hold down use of care.

The Medicare system, largely for people ages 65 and older, as well as those with severe disabilities, lets private companies provide Medicare Advantage plans and Medicare supplement insurance policies.

The “Medicare for All” system would ban cost-sharing provisions, and it would prohibit private companies from covering any item covered by the public healthcare program.

The system would also limit doctors and hospitals to getting the payment rates now provided by the traditional Medicare program. Employer health plans and other commercial health plans now typically pay rates equal to about 200% to 300% of the Medicare rates.

The backdrop: Talk about “Medicare for All” proposals was hot before 2016, but cooled late that year, after voters in Colorado rejected a state Medicare for All ballot measure.

No Republicans and few top contenders for the Democratic nomination other than Sanders have been strong supporters of the kind of single-payer system Sanders has proposed.

One consideration for Democrats is that some unions that have been strong sources of support for Democrats run their own health plans and believe a “Medicare for All” program would be worse for their members than the current union plans.

But candidates who believe in expanding the role of government in healthcare finance have performed well in some Democratic primaries this year. Many of those candidates are strong supporters of the Medicare for All proposals.

This article was originally published on BenefitsPRO, a sister site of HR Executive. For more content like this delivered to your inbox, sign up for BenefitsPRO newsletters here.

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