This op-ed was written by NEWSREP guest author, Alex Benson. Part 1 can be read here.

Spending $3.2 trillion a year on a new entitlement program will not save money, even if we zero out all private spending on healthcare.  The claim that spending such a massive sum amounts to savings stems from a misinterpretation of a recent Mercatus Center study, and an inane failure to understand the relevant data.

The Mercatus study does show that “Medicare for All” could save money, by way of lower administrative costs, if we go along with the outlandish assumption that providers will take on average a 40 percent reduction in payouts beginning in the first year of implementation.  The one way this theoretically could happen is if Medicare became the only benefit provider—essentially, if instead of providing Americans with a public option, “Medicare for All” outlawed all private insurance and with its new monopoly had total market power to dictate to providers the terms of their reimbursement.  If we do not assume automatic and immediate 40 percent provider cuts, the cost of the program increases to about $38 trillion over 10 years.

Furthermore, “Medicare for All” assumes substantial reductions in costs by way of transferring administration of healthcare expenditures to the federal government.  These savings are built into the Mercatus study, even as the authors remain extremely dubious as to whether they would emerge in the real world.