Hospital Expenditures Under Global Budgeting and Single-Payer Financing: An Economic Analysis, 2021–2030.

The article analyzes the economic impact of adopting global budgeting—a hospital payment system used in Canada and the U.S. Veterans Health Administration (VHA)—within a single-payer Medicare-for-All (M4A) framework in the United States. It finds that U.S. hospitals currently provide substantial low-value care, incur high administrative costs, and generate profits unevenly, while many rural and safety-net hospitals face financial distress, indicating inefficiencies and inequities in hospital financing. Modeling a transition to global budgets, which provide lump-sum payments to hospitals and eliminate operating profits while funding capital expenditures through public grants, the study projects a 10-year reduction in non-federal hospital spending from $17.2 trillion under current law to $14.7 trillion under single-payer reform, primarily due to $2 trillion in administrative savings and $520 billion in foregone profits. Although clinical operating budgets would increase to accommodate higher utilization and quality improvements, overall hospital costs—including payer administration and capital spending—would decline, requiring an estimated $3.6 to $5.4 trillion in additional federal revenue over ten years. The analysis highlights that global budgeting could enhance funding equity and administrative efficiency, but acknowledges uncertainties related to political influences, hospital-level funding shifts, and the optimal level of hospital spending.