Single payer? Medicaid reform? Lawmakers debate best ways to cut health care spending

A single-payer health care system would cut U.S. health spending by more than $1 trillion a year and prevent more than 114,000 deaths annually, according to a new analysis from Yale University researchers.

A separate study concluded that Medicaid financing reforms already written into current law will bring costs down for most Americans by reducing upward pressure on prices while increasing availability.

The studies prompted statements of praise from lawmakers. But while physicians and lawmakers debate the merits of those proposals, there’s another concerning number: 10%, the amount that employers expect their health plan costs to rise in 2027. That projection was part of a survey also released this month. As costs go up, patients may skip or delay the care that keeps physician practices financially viable.

Coverage for all

The study, “Projected economic gains and lives saved under universal healthcare in the United States,” was posted on the preprint server medRxiv and has not yet peer-reviewed. It modeled what would happen if the U.S. replaced its multipayer system with single-payer universal coverage under the Medicare for All Act.

The researchers estimated that national health expenditure, $5.3 trillion in 2024, would fall to $4.2 trillion under such a system, a reduction of $1.04 trillion, or 19.7%. The largest sources of savings were:

• Lower prescription drug prices benchmarked to those paid in other high-income countries ($377.5 billion)
• Paying all providers at Medicare rates rather than higher commercial rates ($295.6 billion)
• Reduced administrative overhead from consolidating billing into a single payer ($286.3 billion)
• Reduced fraudulent billing ($285.7 billion)
• Better access to primary care would prevent emergency that would avoid emergency and inpatient care ($100 billion)

Those savings were partly offset by $304 billion in new spending: more use of health services by people who are currently uninsured or underinsured, an added dental benefit and payment for hospital care that currently goes unreimbursed. Even under more conservative assumptions, the researchers found system-wide savings of at least $663.3 billion, or 12.6% of current spending.

The human cost of health care, or lack of it

Along with financial costs, the study projected that universal coverage would prevent 62,863 deaths a year relative to the current system:

• 33,232 among the 27.5 million Americans who were uninsured in 2024
• 29,631 among adults who hold insurance but are considered underinsured because high deductibles and cost-sharing put necessary care out of reach.

The researchers said the underinsured, more than 45 million working-age adults, now account for a mortality burden comparable to that of the uninsured. The study additionally estimated that reversing coverage losses tied to 2025 and 2026 congressional actions would avert another 51,311 deaths a year. The legislative actions include new Medicaid eligibility restrictions, the expiration of enhanced Affordable Care Act (ACA) premium subsidies, reduced assistance for low-income seniors' prescription drug costs, and the suspension of minimum nursing home staffing standards.

Combined, the researchers project 114,174 averted deaths annually if universal coverage were enacted and those retractions reversed.

Political reaction and warnings over retractions

The findings quickly drew a response from Sen. Bernie Sanders, (I-Vermont), ranking member of the Senate Health, Education, Labor and Pensions Committee and the lead sponsor of Medicare for All legislation. He has pushed the proposal in Congress for years without success.

Universal care would eliminate premiums, deductibles, copayments, provider network restrictions and prior authorization requirements.

“This study confirms what we have known for years: Medicare for All saves lives and saves money,” Sanders said in a statement. “In fact, guaranteeing health care as a human right through a Medicare for All, single-payer system would cost $1 trillion less than our current dysfunctional system. It would save working families thousands of dollars a year. And it would prevent over 100,000 Americans from dying unnecessarily each and every year because they cannot make it to a doctor in time.”

Sanders went further, tying the findings to the coverage retractions the researchers cited in their analysis.

“At a time when 15 million Americans are being thrown off the health care they have and 20 million Americans have already seen their premiums double, on average, as a result of Trump's so-called ‘Big Beautiful Bill,’ we need Medicare for All now more than ever,” he said. “The time is now to end the greed of the big insurance and drug companies and pass Medicare for All.”

A competing diagnosis: Medicaid payment reforms

This month, the U.S. Department of Health and Human Services’ (HHS) Office of the Assistant Secretary for Planning and Evaluation (ASPE) released its own research report, “An Overview of State-Directed Payments and Medicaid Provider Taxes: History and Potential Effects of the Working Families and Tax Cut Legislation on Health Care Costs.” ASPE analysts reached a different conclusion about what is driving up health care costs and what would bring them down.

States tax hospitals and other providers, then use that revenue to draw down additional federal Medicaid matching funds and pay providers supplemental amounts on top of standard Medicaid rates. Researchers examined those Medicaid provider taxes and state-directed payments and found that these arrangements have grown sharply in recent years.

State-directed payments to Medicaid managed care organizations rose from $43 billion in 2021 to $144 billion in 2025. By 2025, the average service covered by such a payment was reimbursed at 186% of the Medicare rate.

The researchers argued that because these higher Medicaid payments make Medicaid patients more profitable to treat, providers have an incentive to devote more capacity to Medicaid care. For patients with commercial insurance or Medicare, capacity goes down and prices go up. That mechanism, the report notes, is distinct from traditional “cost-shifting” theories, for which it says the evidence is mixed.

The Working Families Tax Cut Act, actually the same legislation as the One Big Beautiful Bill Act, caps those Medicaid payments closer to Medicare rates and limits new provider taxes. Once those rules are phased in, the ASPE researchers projected the changes would cut prices paid by non-Medicaid payers by up to 3.5%, generating savings from $100 billion to $175 billion a year, or $502 billion to $875 billion in savings from 2025 through 2034.

Federal health spending overall would fall by $419 billion to $748 billion over the same period. That could also mean lower commercial insurance premiums and greater enrollment in employer and marketplace coverage, the researchers said.

‘Abuse’ in the system

Rep. Brett Guthrie (R-Kentucky), chairman of the House Energy and Commerce Committee, and Rep. Morgan Griffith (R-Virginia), chairman of the committee's Health Subcommittee, cited the ASPE report in a statement defending the law.

“Despite Democrat rhetoric, evidence continues to show that our Working Families Tax Cuts will protect patients by not only restoring the long-term security of the Medicaid program, but also lowering costs for patients,” the lawmakers said in the statement. “It's no secret that the abuse of provider tax schemes and state directed payment arrangements had become an open-ended checkbook for states to shift more and more costs to the federal government, driving unsustainable and unaccountable growth in the Medicaid program.”

Rising costs, delayed care

While Washington argues over which long-term policy path would lower health care costs, employers are bracing for another year of steep increases in the nearer term. A survey of 112 corporate and single-employer plan sponsors, found a median expected increase in medical plan costs of 10% heading into the 2027 plan year, according to “Health Care Costs Pulse Survey: 2027 Cost Trend.” The figures were published by the International Foundation of Employee Benefit Plans (IFEBP).

Asked to name the single biggest driver of that increase:

• 32% of respondents pointed to catastrophic claims.
• 21% pointed to specialty or high-cost prescription drugs.
• 14% said utilization tied to chronic health conditions or mental health concerns.

Additional cost pressure is coming from medical provider costs, utilization due to an aging workforce, and stop-loss insurance premiums.

Among the employers citing prescription drugs as a top concern, 67% named GLP-1 medications as a primary factor. Autoimmune and inflammatory disease therapies followed at 54%, cancer drugs at 42% and cell and gene therapies at 21%.

Passing costs along to patients

Employers said they are responding largely through cost-sharing changes, such as higher deductibles, coinsurance and premium contributions, which 19% named as the initiative expected to have the biggest impact in 2027, followed by plan-design changes, such as dependent eligibility audits and formulary changes, at 15%.

For primary care physicians, that trend carries a direct financial consequence, not just a policy one. The Yale researchers, in explaining why underinsurance raises mortality risk, pointed to cost-related forgone care. Patients who hold coverage but face high deductibles and cost-sharing don’t get care they cannot immediately afford, or wait longer to get care. A visit that doesn't happen is not just a missed opportunity for early diagnosis and preventive care; it is also a visit a practice never bills for.