This paper critically evaluates the estimates of the cost of Medicare for All (M4A) in the USA. Six studies that estimate the 1-year total cost of M4A in the USA are reviewed. These studies find that M4A would increase national health spending by as much as 16.9% or decrease it by 20.0%, representing a range of estimates that generates uncertainty and confusion regarding what to expect if M4A were implemented. To develop more comparable estimates, the national health spending in each study’s comparison year is used as the baseline. Estimates of the change in national health spending under M4A for each report are broken down into five important components of costs and the percentage change from baseline is calculated. The assumptions regarding these cost components are evaluated for each study, and errors and inconsistencies identified. Using data from the literature and findings that are consistent across the reports where they exist, errors and inconsistencies are corrected, and new estimates of the cost components and the overall change in national health spending are calculated. After eliminating one of the reports as having methods that are too opaque to adjust and being an implausible outlier, and adjusting the findings of the remaining five reports, this paper finds that M4A would generate savings from 2.0 to 5.1% of baseline national health spending, averaging 3.9%. M4A would cost about 4% less than current national health spending, and eliminate the uninsured, expand coverage, and likely improve the health of Americans.
This is a preview of subscription content, access via your institution.
Buy single article
Instant access to the full article PDF.
Tax calculation will be finalised during checkout.
The term “national health spending” is used in this paper as a general term to represent all the definitions of spending used by these studies. National health expenditures are defined by the Centers for Medicare and Medicaid Services to include personal health expenditures (hospital services, physician and dental care, home health care, nursing home care, prescription drugs, durable medical equipment, and other non-durable medical products) plus administrative costs of insurance and government public health activities, plus spending on health sector investment, non-commercial health research, and new structures and equipment. Health consumption expenditures are defined as personal health expenditures plus administrative costs of insurance and government public health activities. Even though the definitions of spending in the baseline year might vary from study to study, the studies become comparable by focusing on the percentage changes in this spending. The error caused by comparing non-uniform baselines is minimized in that way.
Katz C, Quealy K, Sanger-Katz M. Would ‘Medicare for All’ save billions or cost billions? New York Times. 2019.
Thorpe K. An analysis of Senator Sanders single payer plan. Atlanta: Emory University; 2016.
Blahous C. The costs of a national single-payer healthcare system. Arlington: George Mason University; 2018.
Pollin R, Heintz J, Arno P, Wicks-Lim J, Ash M. Economic analysis of Medicare for All. Amherst: University of Massachusetts; 2018.
Pollin R. Letter to Senator Bernie Sanders. Unpublished letter. Amherst (MA): University of Massachusetts. 2019.
Friedman G. Yes, we can have improved Medicare for All. Amherst: University of Massachusetts; 2019.
Holahan J, Clemans-Cope L, Buettgens M, Favreault M, Blumberg LJ, Ndwandwe S. The Sanders single-payer health care plan. Washington, DC: Urban Institute; 2016.
Liu JL, Eibner C. National health spending estimates under Medicare for All. Santa Monica: RAND Health Care; 2019.
Galvani AP, Parpia AS, Foster EM, Singer BH, Fitzpatrick MC. Improving the prognosis of health care in the USA. Lancet. 2020;395:524–33.
Sullivan K. How to think clearly about Medicare administrative costs: data sources and measurement. J Health Polit Policy Law. 2013;38:479–504.
Woolhandler S, Himmelstein D. Single-payer reform: the only way to fulfill the President’s pledge of more coverage, better benefits and lower costs. Ann Intern Med. 2017;166:587–8.
Brill S. Pill: why medical bills are killing us. Time Magazine. 2013.
Anderson GF, Reinhardt UE, Hussey PS, Petrosyan V. It’s the prices, stupid: why the United States is so different from other countries. Health Aff (Millwood). 2003;22:89–105.
Farrell D, Jensen ES, Kocher B, Lovegrove N, Melhan F, Mendonca L, et al. Accounting for the cost of US health care: a new look at why Americans spend more. Washington, DC: McKinsey Global Institute; 2008.
Organization for Economic Cooperation and Development. Health at a glance 2019: OECD indicators. Paris: OECD Publishing; 2020.
Cai C, Runte J, Ostrer I, Berry K, Ponce N, Rodriquez K, et al. Projected costs of single-payer healthcare financing in the United States: a systematic review of economic analysis. PLoS Med. 2020;17:e1003013.
The author thanks Gordon Mosser, Kip Sullivan, James F. Hart, Mark H. Brakke, Ronald J. Jankowski, and four anonymous reviewers for helpful comments on an earlier version of this review. Any errors or oversights remain the sole responsibility of the author.
This research was not supported by any external funding.
Conflicts of interest
John A. Nyman has no conflicts of interest that are directly relevant to the content of this article
About this article
Cite this article
Nyman, J.A. Cost of Medicare for All: Review of the Estimates. Appl Health Econ Health Policy (2021). https://doi.org/10.1007/s40258-021-00636-6