Thursday, February 21, 2019

PolitiFact's Magic Math on 'Medicare For All' (Updated)

Would you believe that PolitiFact bungled an explainer article on the Democratic Party's Medicare For All proposal?

PolitiFact's Feb. 19, 2019 PolitiSplainer, "Medicare For All, What it is, what it isn't" stumbled into trouble when it delved into the price tag attached to government-run healthcare (bold emphasis added):
How much would Medicare for All cost?

This is the great unknown.

A study of Medicare for All from the libertarian-oriented Mercatus Center at George Mason University put the cost at more than $32 trillion over 10 years. Health finance expert Kenneth Thorpe at Emory University looked at Sanders' earlier version during the 2016 campaign and figured it would cost about $25 trillion over a 10-year span.

Where would the money come from?

Sanders offered some possibilities. He would redirect current government spending of about $2 trillion per year into the program. To that, he would raise taxes on income over $250,000, reaching a 52 percent marginal rate on income over $10 million. He suggested a wealth tax on the top 0.1 percent of households.
PolitiFact introduces the funding issue by mentioning two estimates of the spending M4A would add to the budget. But when explaining how Sanders proposes to pay for the new spending PolitiFact claims Sanders would "redirect current government spending" to cover about $20 trillion of the 25-to-32 trillion increase from the estimates.

Superficially, the idea sounds theoretically possible. If the defense budget was $2 trillion per year, for example, then one could redirect that money toward the M4A program and it would cover a big hunk of the expected budget increase.

But the entire U.S. defense budget is less than $1 trillion per year. So what is the supposed source of this funding?

We looked to the document PolitiFact linked, sourced from Sanders official government website.

We found no proposal from Sanders to "redirect current government spending" to cover M4A.

We found this (bold emphasis added):
Introduction

Today, the United States spends more than $3.2 trillion a year on health care. About sixty-five percent of this funding, over $2 trillion, is spent on publicly financed health care programs such as Medicare, Medicaid, and other programs. At $10,000 per person, the United States spends far more on health care per capita and as a percentage of GDP than any other country on earth in both the public and private sectors while still leaving 28 million Americans uninsured and millions more under-insured.
Nothing else in the linked document anywhere near approaches PolitiFact's claim of $2 trillion per year "redirected" into M4A.


It's a Big ($2 trillion per year) Mistake

We do not think Sanders was proposing what PolitiFact said he was proposing. The supposed $2 trillion over 10 years, or $20 trillion, cannot help pay for the $25 trillion cost Thorpe estimated. Nor can it help pay for the $32 trillion cost that Charles Blahous (Mercatus Center) estimated.

Why? The reason is simple.

Both of those estimates pertained to costs added to the budget by M4A.

In other words, current government spending on healthcare programs was already accounted for in both estimates. The estimates deal specifically with what M4A would add to the budget on top of existing costs.

Need proof? Good. The expectation of proof is reasonable.

Mercatus Center/Blahous
M4A would add approximately $32.6 trillion to federal budget commitments during the first 10 years of its implementation (2022–2031).
Clear enough? The word "add" shows that Blahous is talking about costs over and above current budget commitments to government health care programs.

Page 5 of the full report features an example illustrating the same point:
National health expenditures (NHE) are currently projected to be $4.562 trillion in 2022. Subtracting the $10 billion decrease in personal health spending, as calculated in the previous paragraph, and crediting the plan with $83 billion in administrative cost savings results in an NHE projection under M4A of $4.469 trillion. Of this, $4.244 trillion in costs would be borne by the federal government. Compared with the current projection of $1.709 trillion of federal healthcare subsidy costs, this would be a net increase of $2.535 trillion in annual costs, or roughly 10.7 percent of GDP.

Performing similar calculations for each year results in an estimate that M4A would add approximately $32.6 trillion to federal budget commitments during the period from 2022 through 2031, with the annual cost increase reaching nearly 12.7 percent of GDP by 2031 and continuing to rise afterward.
The $1.709 trillion in "federal healthcare subsidy costs" represents expected spending under Medicare, Medicaid and other federally supported health care programs. That amount is already accounted for in Blahous' estimate of the added cost of M4A.

Kenneth Thorpe

Thorpe's description of his estimate doesn't make perfectly clear that he is estimating added costs. But his mention of the Sanders' campaign's estimate of $1.377 trillion per year provides the contextual key (bold emphasis added):
The plan is underfinanced by an average of nearly $1.1 trillion per year. The Sanders campaign estimates the average annual financing of the plan at $1.377 trillion per year between 2017 and 2026. Over the same time period, we estimate the average financing requirements of $2.47 trillion per year--about $1.1 trillion more on average per year over the same time period. 
When we look at the estimate from the Sanders campaign we find that the $1.377 trillion estimate pertained to added budget costs, not the gross cost of the plan.

Friedman's Table 1 makes it plain, listing 13,773 (billions) as "added public spending":


It's magical math to take the approximately $27 trillion in "continued government spending" to pay down the $13.8 trillion in "new public spending." But PolitiFact seems to suggest Sanders would use current spending to pay for his program's new spending.

Again, we do not think that is what Sanders suggests.

The liberal bloggers at PolitiFact simply botched the reporting.

Our Eye On Corrections

We think this PolitiBlunder clearly deserves a correction and apology from PolitiFact.

Will it happen?

Great question.

As part of our effort to hold PolitiFact (and the International Fact-Checking Network) accountable, we report PolitiFact's most obvious errors through the recommended channels to see what happens.

In this case we notified the author, Jon Greenberg, via Twitter about the problem. We also used Twitter (along with Facebook) to try to draw PolitiFact's attention to the mistake. When those outreach efforts drew no acknowledgement we did as PolitiFact recommends and emailed a summary of the problem to "truthometer@politifact.com."

Should PolitiFact continue to let the error stand, we will report the error to the International Fact-Checking Network (under the auspices of the Poynter Institute, just like PolitiFact) and track whether that organization will hold PolitiFact to account for its mistakes.

We will update this section to note future developments or the lack of future developments.


Update Feb. 27, 2019

A full week after we started informing PolitiFact of the mistake in its Medicare PolitiSplainer, the bad reporting in the financing section remains unchanged.


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