Single-Payer Health Care a ‘Major Undertaking,’ CBO Says

(Bloomberg) -- Creating a single-payer health-care system in the U.S. would be a “major undertaking that would involve substantial changes” to medical coverage, according to a report issued by the Congressional Budget Office.

The nonpartisan agency that evaluates the potential budgetary, economic and other effects of legislative proposals didn’t assess any specific bill. Congressional Democrats have put forward a number of measures that would expand or overhaul government health programs.

“The transition toward a single-payer system could be complicated, challenging and potentially disruptive,” the CBO said on Wednesday. That disruption could be minimized by phasing in changes gradually, according to the report.

Adopting universal health coverage “would significantly increase government spending and require substantial additional government resources,” the office said. Total medical spending in a single-payer system “might be higher or lower than under the current system,” depending on the particulars of how it’s designed, the CBO said.

The report is likely to give both opponents and supporters of Medicare for All ammunition. But with a split Congress and a Republican in the White House, much of the debate over the law is posturing ahead of the 2020 election, when political control will be up for grabs.

Even as a hypothetical, the possibility of major changes to the U.S. health-care system has been enough to rattle health stocks. Insurers, drug companies, hospitals and physicians would likely see the fundamentals of their businesses rewritten.

“Policy makers would need to consider how quickly people with private insurance would switch their coverage to the new public plan,” the report said, as well as “what would happen to workers in the health insurance industry if private insurance was banned entirely or its role was limited.”

Spending Projections

Other estimates have projected that Medicare for All would increase government spending while reducing private expenditures. A 2019 estimate by the Rand Corp., a nonprofit research group, estimated that one version of Medicare for All would more than triple federal spending to $3.499 trillion in 2019, though total health-care expenditures would be almost unchanged.

Mindful of how far-reaching the proposal would be and wary of handing the Trump administration a politically contentious issue to campaign on, top Democrats have been cautious about giving Medicare-for-All legislation significant stage time. But more progressive members of the caucus have pushed the issue, both on the campaign trail, where many are running for the party’s presidential nomination, and in the House, where they helped take back the majority.

Senator Bernie Sanders of Vermont, a leading contender for the 2020 Democratic nomination, introduced a Medicare-for-All bill in the Senate that has garnered support from four of his colleagues also seeking the Democratic nod: Kamala Harris, Cory Booker, Kirsten Gillibrand and Elizabeth Warren. In the House, Representative Pramila Jayapal, a Washington Democrat, has proposed a similar measure.

The House Rules Committee held a hearing on Tuesday on Jayapal’s bill. Kentucky Democrat John Yarmuth, chairman of the House Budget Committee, requested the CBO report. Yarmuth said the panel will hold a hearing this month on Medicare expansion proposals.

Yarmuth said he hoped the report would accelerate a switch to a single-payer system, an idea he described as inevitable. Despite progress increasing coverage in the last decade, “we must do more, which is why I believe it is no longer a matter of if we will have a single-payer health care system in our country, but when,” he said in an emailed statement.

Representative Steve Womack of Arkansas, the top Republican on the budget committee, said in a statement that the report “illuminates several consequences of Democrats’ one-size-fits-all health care approach, such as higher premiums, out-of-pocket expenses, and taxes.”

Business Impact

Health-care stocks have rebounded slightly after losing $150 billion in market value in a week last month over worries about the policy.

Humana Inc. Chief Executive Officer Bruce Broussard said on a call Wednesday that his company won’t support any legislation that eliminates private insurance. The “holistic view” private insurance offers “is critical to the long-term success of the program and the ability to offer greater benefits and more security for individuals,” he said.

Single-Payer Health Care a ‘Major Undertaking,’ CBO Says

Even Medicare for All supporters say a bill won’t become law anytime soon.

“It’s not going to happen” this year, Representative Debbie Dingell, a Michigan Democrat, told a health-care conference in Washington on Tuesday.

She said she’s focused on stabilizing the Affordable Care Act, protecting patients with pre-existing conditions and lowering drug prices.

“The Affordable Care Act didn’t happen overnight,” Dingell said.

©2019 Bloomberg L.P.