RAND score of Jayapal's Medicare for All

4/15/2019 01:16:00 PM

Rep. Pramila Jayapal has introduced a new Medicare for All bill. Like most of the other "Medicare for All" bills, this bill would not just extend Medicare to everyone, but also radically reform it by eliminating all-cost sharing and expanding what's covered. RAND estimates the program would increase healthcare spending by 1.8 percent, which is not very much, but they also imply that waiting times would increase:

We also include a supply constraint that results in unmet demand equal to 50 percent of the new demand. If there were no supply constraint, we estimate that total health expenditures would increase by 9.8 percent to $4.20 trillion.

This all makes plenty of sense. But as I always say, the most important part of these proposals is how they answer the question: "How will prices be determined?"

Although Jayapal's bill calls for reform in how CMS sets prices—something not in previous versions of Medicare for All—RAND did not believe the bill offered enough details to score the pricing reforms, and instead assume CMS initially continues to use the current price-setting process. Like Urban Institute's analysis of a previous Medicare for All bill (but unlike Mercatus), RAND does not believe that under the current process Medicare prices would follow current trajectory. Instead, they believe CMS would raise reimbursements to hospitals by 24 percent and to physicians by 7 percent. This is not enough to fully offset the loss of higher reimbursements from private insurers, but it does mean that on averagte hospitals are not looking at a huge cut.