Could Medicare for All be Financed Entirely by Cutting Defense Spending?
Last week, The New York Times published an op-ed entitled “We Don’t Need to Raise Taxes to Have ‘Medicare for All’.” In it, Lindsay Koshgarian, Director of the National Priorities Project at the Institute for Policy Studies, argues that a Medicare for All plan – as championed by several 2020 presidential candidates – could be fully paid-for by eliminating certain spending within the defense budget rather than raising taxes.
While there is certainly room to reduce defense spending, and we appreciate the ideas put forward by the author, they only add up to a total of $320 billion in savings per year. By most estimates, that would cover just over one-tenth of the cost of Medicare for All, and even based on the (far out of the mainstream) study cited by the author, it would cover just over one-quarter.
In fact, totally eliminating defense and related spending would only cover about one-quarter to one-third of the cost of Medicare for All under reasonable estimates. As we've shown before, new tax revenue would indeed be needed to finance Medicare for All.
Medicare for All Would Cost $3 Trillion Per Year, Not $300 billion
Koshgarian claims that “$300 billion per year over the current system…is estimated to cover Medicare For All.” To support this claim, she links to a study from the Political Economy Research Institute (PERI) at the University of Massachusetts Amherst. However, that link includes a letter that says Medicare for All will require $13.5 trillion in additional financing over ten years. That’s an average cost of $1.35 trillion per year, nearly five times as large as Koshgarian’s claim.
Importantly, the PERI study is an outlier – all other estimates show costs to be much higher. Based on a range of third-party estimates, a potential Medicare for All plan would increase federal government expenditures by anywhere from $25 trillion to $36 trillion over ten years, with the average cost at about $30 trillion or about $3 trillion per year. A new study from the Urban Institute estimates that Medicare for All would cost $2.8 trillion in Fiscal Year (FY) 2020 and $32 trillion over ten years (which is the combination of $34 trillion of new spending offset by $2 trillion of revenue).1
In other words, $300 billion per year in defense savings would likely cover just over one-tenth of the cost of Medicare for All.
One possibility is that Koshgarian's $300 billion is only meant to cover the marginal cost of providing coverage to those currently underinsured and uninsured. If so, her estimate is consistent with the findings of the PERI study (which again, finds much lower costs than other studies). However, in this case new revenue (or mandatory premiums) would be necessary to cover the much larger cost of providing health insurance to those who currently have private insurance.
As we've explained before, the majority of new expenditures associated with Medicare for All represent the cost of essentially eliminating premiums and cost sharing for those currently paying for health insurance.
Even Eliminating Defense Spending Wouldn't Pay for Medicare for All
Koshgarian identifies approximately $320 billion in annual savings that could be achieved through cuts to the defense budget, including $90 billion from closing half of all U.S. military bases located abroad, $66 billion from ending all war funding, and $43 billion from canceling all nuclear programs and decommissioning nuclear weapons. These savings would likely cover just over one-tenth of the cost of Medicare for All.
In fact, eliminating the entire defense budget would only cover one-quarter of Medicare for All's cost – including all other defense-related spending would bring that percentage up to one-third. In fact checking the fourth Democratic primary debate, we showed that eliminating military spending would only cover three to four months of the annual cost of Medicare for All.
While there are defense savings to be identified, Medicare for All’s approximate $30 trillion cost over ten years would not be fully covered even by eliminating all defense spending, let alone making targeted spending cuts.
Claim: Medicare for All Could Be Financed Entirely by Cutting the Defense Budget
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1 The Urban Institute study includes a range of cost estimates for Medicare for All that vary between $27.5 trillion and $35 trillion, contingent on provider payment levels, administrative costs, and state contributions.