Quantifying Medicare for All, Harris-style

I n the New York Times last week, political scientist Jacob Hacker called Vice President Kamala Harris’s Medicare for All proposal something she should embrace as “a central part of her 2024 campaign.” Harris has long favored the dramatic expansion of the role of the federal government in health care, supporting the Medicare for All Act as a member of the Senate and proposing her own version of single-payer health care while campaigning for the Democratic nomination in 2019.

Our new report, published by the Center for Health and Economy of the American Action Forum, estimates that the 2019 Harris plan would, if implemented by 2028, increase federal spending by $44 trillion over the next decade. The plan would also cover 11 million illegal aliens and eliminate the private coverage of around 180 million Americans.

While then-senator Harris endorsed a series of large tax increases that would add up to $1.7 trillion annually as “good options” to pay for her proposal, these would cover less than half of the new spending. Ultimately, the Harris plan would have to be financed by adding yet more debt to a total that is already alarmingly large and shows no signs of falling.

Our estimated cost includes $1.8 trillion in new spending on health coverage for 11 million illegal aliens. During a 2019 primary debate, Harris raised her hand to indicate that her health plan would cover undocumented immigrants. When asked, in an interview, to elaborate, she stated that her policy would be to not discriminate in the provision of public safety, education, and health benefits to immigrants regardless of legal status. Therefore, our estimates treat undocumented immigrants just like any other enrollees in the Harris plan. Given that a significant portion of the nation’s current uninsured are present in the country illegally, this is a crucial provision to obtaining Harris’s stated goal of universal coverage.

Other components of the 2019 Harris plan included eliminating the current private coverage that 160 million Americans receive through their employers, repealing the Affordable Care Act and Medicaid, and moving all these individuals along with those currently uninsured onto Medicare. While candidate Harris did suggest that enrollees would continue to have the option of obtaining coverage through private health plans that contract with Medicare, the role of private insurance would be greatly diminished. Our estimates include administrative savings due to these changes, but those savings would pale in comparison to the other elements of the proposal.

The 2019 Harris plan would mostly eliminate premiums and cost-sharing — meaning that coverage would be fully paid by taxpayers. This “free” coverage to enrollees is a popular talking point among most single-payer proponents, but it would be a significant and costly departure from even the current Medicare program. Cost-sharing and network design are mechanisms to steer patients to more-efficient providers and discourage low-value or high-cost care. In fact, most of the foreign systems that Medicare for All purportedly imitates utilize cost-sharing that, as a percentage of health spending, is higher than current levels in the United States. Our estimates project a considerable drop in the productivity of health spending for this reason, meaning that under the model that Harris was proposing, health spending would yield less value than before. This is, to say the least, troubling given current estimates that show that 30 percent of all health spending is already wasteful.

We could not estimate the costs of some other components of Harris’s plan. The cost of covering dental, hearing, and vision services could be astronomical without any patient cost-sharing. However, our model covers only traditional medical benefits, and these services have been outside of that scope.

Furthermore, our projections assume increased access to providers, such as doctors, hospitals, and clinics, for those previously uninsured, on Medicaid, or enrolled in narrow network plans. However, if there is no increase in provider supply to meet what could be a massive influx of demand, this may not materialize and would likely necessitate explicit forms of rationing (such as the “waiting lists” notoriously associated with Britain’s National Health Service) among those currently enjoying broad access to the health care they need.

Finally, our estimates assume that the new program is fully phased in by 2028. It is true that then-senator Harris had proposed a longer implementation timeline, but delaying the effective date is a classic Washington gimmick for hiding the true cost of a new program. The purpose of our estimate is to approximate the size of this potential undertaking — which is best done by estimating its cost assuming full implementation.

The Harris version of Medicare for All was not seriously vetted during the 2019 primary, and it is a vision of government-provided health program on a scale that does not exist anywhere in the world. As demonstrated by our projections, the costs would be extremely high, and the plan was, in our view, short of realistic regarding the details of how it might be paid for. To be fair, more details would probably have emerged had she continued with her campaign. While it may be in the political interest of the vice president now to move away from her previous proposal, it (and her earlier Senate co-sponsorship) undeniably provides insight into her policy preferences, which would likely shape the agenda pursued by a potential Harris administration.

Stephen T. Parente is a professor of finance and an associate dean of global initiatives at the Carlson School of Management at the University of Minnesota and the former chief economist for health policy at the White House’s Council of Economic Advisers from 2019 to 2020. Theo Merkel is a senior fellow at the Paragon Health Institute and the Manhattan Institute and was a health-policy adviser at the White House’s National Economic Council from 2019 to 2020.