Len Nichols, a health economist at George Mason, also worries that cuts to providers as large as the ones Warren envisions would seriously disrupt the system.
“You can do this mathematically. The question is: Can you do it in real life with real people?” says Nichols, who served as the senior health-policy adviser at the Office of Management and Budget in Bill Clinton’s administration. “When you talk about 110 percent of Medicare for hospitals and the same as Medicare for physicians, there are a lot of practices that would have to close up shop, lay people off.”
Nichols believes that the largest and best-run urban hospitals could eventually adapt to Warren’s payment rates if given a long-enough transition period. But he says such cuts would inevitably force a substantial number of less efficient hospitals, particularly those in small-town and rural markets, to close or transition into outpatient-care centers. “The disruption we are talking about here would be severe,” he told me.
Levitt said that lower reimbursement rates could have the positive effect of pressuring hospitals to more tightly control costs. “Part of the difficulty is, these estimates often treat hospital costs as some law of nature,” he said. “For hospitals to survive, they would have to lower their costs. It’s not like that doesn’t happen in other industries. Companies cut back their workforce, trim costs based on market pressures, and sometimes they survive, sometimes they don’t.”
But like Nichols, Levitt predicted that even with reform, such a constraint on revenues would likely increase the number of hospitals that shut down. And as in the Urban Institute study, he believes that the new system could create greater delays in access to care: More people will be seeking coverage, while the lower reimbursement rates may lead to less investment by hospitals and fewer people seeking careers in medicine. “It would be a byproduct of both paying providers less and patients demanding more services,” he said.
Despite all of these concerns, Levitt noted, the reality remains that most countries around the world have established and maintained quality universal-health-care systems that cost less than even Warren’s proposal. And “with better outcomes,” he said.
The problem, of course, is that Warren and other single-payer advocates are not writing on a clean page, but rather seeking to reconfigure an enormously complex structure that consumes one-sixth of the national economy and employs hundreds of thousands of people. “Other countries created their universal systems from a much blanker slate than is being proposed here,” Levitt said.
That means all of the savings Warren is banking on from taking income from doctors, hospitals, and drug companies will be enormously difficult to pass into law.
Even with a $20.5 trillion price tag, Warren’s single-payer plan would represent an increase of more than one-third in total federal spending over the next decade. But holding down the cost even to that level would require, as Blumberg said, “heroic” assumptions about how much savings could be squeezed from every corner of the health-care system. Warren’s plan, by her own projections, would require the federal government to raise nearly 90 percent as much new revenue as the total projected receipts from the federal income tax over the next decade. Without those “heroic” savings, she’d need to raise even more—and likely move beyond the targets for tax increases that she’s identified so far.