New Report: It’s Actually Easy to Pay for Medicare for All

Shutterstock | RomanR

A new report from Gerald Friedman PhD, a professor of economics at the University of Massachusetts Amherst and the Director of the Hopbrook Institute, has found that Medicare for All could save anywhere from $5.5 to $12.5 trillion over the next 10 years, saving us 12-25% when compared to our current healthcare spending.

Even better, it would significantly reduce the expenses of American businesses and workers.

You can read the full report here, and I encourage you to watch the video that summarizes it below, but let’s run through a few of the basics.

Professor Friedman started by going through where Medicare for All could find significant savings:

  • Commercial Insurance administrative costs: While commercial insurance operates at around 20% overhead, Medicare runs significantly more efficiently, only spending about 2% of overhead.
    • Savings: $258 billion.
  • Provider side administrative costs: The complicated billing systems in our multi-payer system means that hospitals and physicians are spending about 20% of their revenue on administration. That’s double what their counterparts spend in single payer countries like Canada.
    • Savings $192 billion.
  • Reducing monopoly prices of drugs, hospitals, and medical devices: Medicare for all would free up Medicare to negotiate drug prices, and have more leverage against regional monopolies in hospitals
    • Savings: $649 billion.

Next, Professor Friedman went through some of the new costs under the system. Here are his estimates for a system with no cost-sharing:

  • Insuring the uninsured: It is projected by CMS that about 9.6% of Americans will be uninsured in 2019.
    • Cost: $70 billion.
  • Increased utilization: Many Americans currently do not access care fearing their high deductibles or copays.
    • Cost: $182 billion.
  • Eliminating Medicare premiums: Current Medicare includes premiums for seniors.
    • Cost: $112 billion.
  • Additional government administration: There will be more staffing and administrative needs when we expand Medicare.
    • Cost: $27 billion.
  • Estimated increase in hospital rates from current Medicare prices: To cover overhead currently supported by overcharging private health insurance over actual marginal cost.
    • Cost: $83 billion
  • Medicaid rate equalization: Medicaid currently pays a lower rate to hospitals and physicians than Medicare.
    • Cost: $45 billion.

Between Medicare, Medicaid, tax subsidies for employers, subsidies for ACA marketplace plans, and other government programs, we already cover most of those additional costs, and there are many ways that we could collect the rest. The report lays out several possible financing models, and this video even lays out one conservative plan. Note, part of what makes this plan conservative is that it includes some cost-sharing. The above estimates cited above contain no cost-sharing. 


No matter how you slice it, business, workers, and patients will be paying less.

With estimates as low as 8.4% of payroll, new taxes on employers would be significantly lower than what they currently pay for commercial insurance. Businesses will be able to invest in raising wages, new jobs, new technologies, or staying competitive in the global market.

Workers will see their take home pay increase, as their portion of premium costs would be significantly reduced, and they’d no longer have to pay out of pocket costs to access health care.

Most importantly, we’ll all have access to healthcare, and no one would ever be afraid of being one serious illness away from bankruptcy.

The question isn’t “How can we afford to pay for Medicare for All” the question is, “How can we afford not to?”