Sen. Bernie Sanders’ Medicare for All plan would provide considerable health benefits for Americans, according to a new report from the Penn Wharton Budget Model, but its economic and budgetary impact is far less certain, with much depending on how it is financed.
The Penn Wharton analysis finds that by 2060, Sanders’ universal health plan would add nearly two years to average life expectancy in the U.S., grow the population by 3%, boost worker productivity through better health and reduce the share of the population that is seriously ill by two percentage points.
The estimated economic cost of the plan varies widely, though, depending on how it is paid for. Penn Wharton modeled three financing options: premiums, payroll taxes and deficit spending.
- If Medicare for All is paid for by issuing more debt, Penn Wharton projects a roughly 24% reduction in GDP by 2060, relative to the baseline, due largely to the crowding out of private investment and a smaller capital stock.
- Payroll financing would have more modest negative effect, producing a 15% smaller economy.
- Using premiums, however, would have no negative effect on GDP growth, producing a 0.2% larger economy in 2060.
Similarly, the plan’s effect on the national debt depends on its financing. Deficit financing would nearly double the national debt by 2060. Using payroll taxes would increase the debt by 4.3%, while a premium model would shrink the debt by about 12.7%.
A bottom line that’s a moving target: The Penn Wharton analysts have good reason to be uncertain about the plan’s ultimate cost, since Sanders has refused to provide details, citing the inherent complexity of health care spending and the politic surrounding it. In response to a question from "CBS Evening News" anchor Norah O'Donnell last week about how much Medicare for All would cost, Sanders said, "You don't know. Nobody knows. This is impossible to predict."