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The Fiscal Consequences of Medicare for All

Statement of Charles P. Blahous Before the U.S. Senate Committee on the Budget

“Let me first summarize the findings of my 2018 study before proceeding to discuss how its results differ from what an updated study might find. My study found that the additional federal costs of enacting Medicare for All would likely be somewhere in the range of $32.6-$38.8 trillion over its first ten years of full implementation, which at the time the study was conducted would have been 2022-2031. The $32.6 trillion projection was presented in the paper as a lower-bound estimate, representing an unlikely scenario in which the provisions of M4A that are intended to lower costs all produced the full amount of their potential savings, without regard for any accompanying adverse effects this might have on healthcare access, timeliness or quality. Alternatively, if after M4A’s enactment, historical patterns of federal government behavior remained more consistent with past practice, the new federal costs would be closer to $38.8 trillion over the first ten years.”

“We have no experience with enacting permanent federal cost increases of this magnitude, which renders these numbers especially difficult for many people to conceptualize. To provide context, the study translated them into a share of GDP. The $32.6 trillion estimate equated to an addition to federal budget costs of roughly 10.7% of GDP in 2022, gradually increasing to 12.7% of GDP in 2031, and growing further afterward. If instead, new federal costs were $38.8 trillion over ten years, federal obligations would be increased by 12.6% in 2022 and by 15.1% in 2031, also growing larger over subsequent time. To illustrate the qualitative size of the cost increase, the study noted that even under the lower-bound estimate of $32.6 trillion, a doubling of all currently projected federal individual and corporate income taxes would be insufficient to finance the added federal costs of enacting M4A.”

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