Author: Gerald Friedman, Professor of Economics, University of Massachusetts at Amherst.
gfriedma@econs.umass.edu
Legislation Analyzed: An Act Establishing Medicare for All in Massachusetts, 193rd & 194th Sessions (taxes are identical in both versions)
Updated: April 26, 2023 & March 13, 2025
Latest Legislative Testimony: 11/14/2023 & 10/26/2021
Prof. Friedman's Projection for 2025
The Act would lower health care spending by $37.36 billion, net, in the first year alone, about 30% of current spending, while saving lives, expanding care, reducing physician and nurse burnout, and ensuring the solvency of community hospitals.
The net savings would come from two areas:
Reduced Spending: $48.42 billion
Improvements: -$11.06 billion
= Net Savings: $37.36 billion
Savings of over $48.42 billion, about 38% of current spending, would come from reduced burdensome billing expenses, administrative waste in the insurance industry, monopolistic pricing of drugs and medical devices and in hospitals, and fraud. Details below.
A portion of the savings, $11.06 billion, would be used to finance system improvements - expanding coverage to the uninsured, removing barriers to access, and correcting the underpayment of Medicaid services.
In the first year alone, the proposed Act would bring down total health care costs from $126.78 billion currently to $89.42 billion.
Current “System”: $126.78 billion
Net Savings: -$37.36 billion
= Single Payer System: $89.42 billion, about 30% less than current spending.

In Massachusetts, the current actuarial value of private health insurance plans is only 80%; including Medicaid and Medicare raises the statewide actuarial value to 87%. Raising the Medical Loss Ratio to the level of traditional Medicare, 98%, would save Massachusetts $13 billion.
Providers would save an additional $10.5 billion on administrative costs. Savings from provider administration will be captured by the Health Care Trust through lower reimbursement rates leaving physician incomes secure. Physicians will benefit from higher Medicaid reimbursements as well as higher utilization, especially from those now uninsured or under-insured.
Lowering hospital prices to Medicare rates with an increase in these rates of 10% would save nearly $11 billion dollars in 2021. Massachusetts hospitals are currently stashing away $1.6 billion in reserves in the Cayman Islands and other tax havens. Eliminating monopoly profits in this way would reduce hospitals ability to accumulate reserves, to reimburse investors in the case of for-profit hospitals, and would compel them to lower their often-inflated managerial salaries and ambitious investment plans. We anticipate saving another seven percent ($2.2 billion) from eliminating monopoly pricing among some elite physicians
Bulk purchasing pharmaceutical drugs would provide another area of savings. A single agency negotiating prices for seven million residents, just like the Veterans Administration, should negotiate dramatically lower prices. Bringing prices down by 45%, less than the savings achieved by the Veterans Administration, would save over $8 billion; similar bargaining over the price of medical equipment would save nearly another billion dollars.
While the largest savings would go to working households earning less than $75,000, over 98% of Massachusetts households would spend less on health care under the Act than they do now.
The Massachusetts Health Care Trust would be financed with existing Federal and State revenue (Medicare, Medicaid, and other programs, over $66 billion) plus four new taxes that replace and are much lower than current insurance premiums, co-pays, deductibles, and other out-of-pocket payments (over $30 billion). Each tax has a $20,000 exemption.
- Employers will pay 7.5% of payroll (8% if employing 100 or more).
- Employees will pay a 2.5% tax on wages and salaries. Employers could agree to pay this tax without it being income to employees.
- The self-employed will pay 10% of income.
- Certain unearned income (e.g., capital gains, dividends, and interest) will be taxed at 10%.
Total raised would be $96.96 billion, more than enough to cover the cost of a single-payer health care system.
Existing Revenue: $66,335,000,000
New Revenue: $30,620,000,000
Total: $96,955,000,000
We can fund universal health care in Massachusetts!