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No, Blahous’ Study Didn’t Find Medicare for All Would Lower Health Costs




Never forget the worst-case scenario! Last year, a study by Charles Blahous was widely cited on the Left as evidence that Medicare for All would lower national health care costs. Blahous himself has said numerous times that his study supports no such conclusion. In his latest commentary, he offers this analogy to explain to explain whence the confusion comes:

Q: How much would it cost my mother to buy my cell-phone data for me instead of continuing to pay it for myself? I think she’s better than I am at negotiating a good deal.

A: Well, if she buys it and allows you to use it for free, your usage will typically go up. Even if she’s the brilliant negotiator that you say, it’s going to cost her at least another $33 a month on top of her current expenses. Most likely her extra costs would be between $33-$39, possibly more.

Q: But then it wouldn’t cost me anything, right? Don’t you have to think of it in terms of how much money everyone in the family, together, would pay? If she bought it, how much would my family as a whole be paying?

A: Well, she was already paying $22 each month, so altogether the family would pay at least $55, probably between $55-$61, again possibly more.

Q: But otherwise we’d pay $57. So, you’re saying we’ll save $2 a month because of her superior negotiating skills?

A: No, I didn’t say anything about her negotiating skills; you did. Her actual history shows a tendency to overspend. I’m just saying that even under your assumption, it’s going to cost the family at least $55, probably somewhere between $55-$61. It’s actually highly unlikely it would be as low as $55.

Q: Great, so you’re saying we’ll save $2!

Basically, what some advocates have done is the equivalent of the above. They’ve done this by taking my study’s lower-bound federal cost estimate and converting it into a claim of savings relative to currently projected national health spending. The study does indeed emphasize the lower-bound estimate, but it does so only by way of explaining that the federal costs of M4A would be at least $32.6 trillion over 10 years, and more likely substantially higher.

[Charles Blahous, “No, My Study Didn’t Find Medicare for All Would Lower U.S. Health Costs by $2 Trillion,” Economics 21, June 4]


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