UMass Amherst economist Gerald Friedman shared his latest economic analysis of a single payer health care bill at an event on Wednesday.
By Dusty Christensen
In the United States, people die, on average, at a much younger age than in other wealthy countries, despite the fact that Americans pay far more per capita for health care.
The reason for those grim statistics, according to University of Massachusetts Amherst economist Gerald Friedman, is the privatized U.S. health care system. In Massachusetts, he says the consequences of that for-profit system can be seen clearly, despite the fact that the state has close to universal health care coverage.
“Even in Massachusetts, there are parts of the Commonwealth where people do not go to the doctor because they can’t afford it and they die at higher rates,” Friedman said. In Massachusetts counties where a higher proportion of people report that they can’t afford to see a doctor, age-adjusted mortality rates are significantly higher, he said. “The major factor is not whether people have health insurance, it’s whether their health insurance actually allows them to go to the doctor.”
Friedman was speaking Wednesday at an event organized by the advocacy coalition Mass-Care, which is working to try to transition Massachusetts from the current “multi-payer” system of employer-based and government insurance to a “single-payer” government system that would provide universal health coverage to everybody in the state. Friedman was presenting his latest economic analysis of a bill that would do just that: An Act Establishing Medicare for All in Massachusetts (H.1239 and S.744).
Speaking ahead of the event, state Rep. Lindsay Sabadosa — a Northampton Democrat who is one of the bill’s cosponsors — told The Shoestring that many people in the state can’t afford to get the health care that they need. She described the current system of paying for health care as “confusing and difficult,” leaving patients and health care providers to navigate a complex system just to determine whether insurance is going to cover something.
“It leads to headaches, it leads to financial distress for people,” she said. “With single-payer, you eliminate all of those headaches.”
Friedman’s calculations show that if the current health care system in Massachusetts, which costs around $110 billion, were expanded to include all residents and Medicaid prices raised, the state would spend some $135.5 billion. However, there would be some $48.4 billion in savings under a single-payer system because of the ability to reduce billing expenses, administrative costs, drug and medical device prices, and fraud, Friedman said.
Using those figures, the single-payer system would cost $87.1 billion. And given the existing revenue in the system of $66.3 billion, some $23 billion in new revenue would be required to fund the newly created Massachusetts Health Care Trust. Under the proposed legislation, that would be accomplished through payroll taxes based on ability to pay as well as taxes on non-payroll income like capital gains, dividends and interest.
Friedman said that there will ultimately be “winners and losers” if Massachusetts switches to a single-payer health care system. Among the winners, he said, would be low- and middle-income people who currently pay a “tax” to private insurance companies in the form of premiums. However, under the current system, premiums are just “lump sum” payments not based on a person’s income, Friedman noted, whereas under the Medicare for All bill, taxes would be based on income levels. That would mean that most people will pay less than they currently do.
“Millionaires are going to be shouldering the load,” Friedman said. “Which is fine with me. They can afford it.”
Municipal budgets would also win under the new system, Friedman said. In 2021, he said, they would have collectively saved some $1.8 billion in costs from providing health care to town employees. Those savings would ease pressures on city and town finances, he said.
“Maybe Amherst would fix the goddamn potholes in the roads,” he joked.
Those losing out under a new single-payer system would include the pharmaceutical and medical-device industries, highly paid specialists and insurance companies, but also some hospital networks like Massachusetts General Hospital, Friedman said.
“Those losses will be concentrated in the urban elite hospitals,” Friedman said. He said that those hospitals currently maintain high billing rates through “financial manipulation” and being able to dictate prices to insurance companies. Other rural and safety-net hospitals will gain from the change, he noted.
Poorly paid staff might be hurt in the process, which is why the bill includes funding for job retraining and unemployment insurance adjustments, Friedman said.
During a question-and-answer period, a business owner pointed out that small businesses that don’t provide health care for their workers currently would face difficulties paying the new taxes under the bill — something Friedman conceded.
“It’s a real issue because if we’re going to succeed politically we need to address the legitimate needs of small businesses,” Friedman said. He said during his presentation, though, that small businesses that do currently provide health care to their employees are in the “worst position now” because of the high rates they pay under the privatized system — bills that would likely go down under the single-payer model.
Jon Weissman of Western Mass. Medicare for All, who sits on the Mass-Care board, noted that Mass-Care is putting together a business committee to discuss such challenges.
As to whether Massachusetts could itself stand up to the powerful pharmaceutical and medical-device companies, Friedman said he thinks the state can do it.
“We’re big enough,” he said. “The [U.S. Veterans Affairs Department] does, and the VA is no bigger than us.”
Dusty Christensen is an independent investigative reporter based in western Massachusetts. He can be reached at firstname.lastname@example.org. Follow him on Twitter: @dustyc123. Image: Gerald Friedman.
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