Republican candidates have been trying to “repeal and replace” Obamacare for years. Now, Democrat presidential candidate Bernie Sanders is attempting to co-opt the movement. But whereas Republicans have in mind to utilize market forces to expand competition, reduce prices and improve quality, Sanders has a much different idea in mind: replace the entire U.S. health care system with a universal, government-run one.
Moving to a so-called “single payer” system is easier said than done, and Sanders was bashed relentlessly for failing to provide any details about his plan. In response, Sanders released an eight page white paper, of which about two pages actually contain any meaningful substance. And even those two pages fail to provide the slightest hint of an answer to some of the biggest questions about the move to government-run healthcare.
Here are just a few:
1. How will people get care?
Sanders is promising a lot of care. Specifically, his plan says his plan provides “comprehensive coverage for all Americans” that spans “the entire continuum of care.” Sounds nice, but it’s much more complicated than that. For instance, if the plan is truly “Medicare for All,” as the title suggests, then government will be the only payer for any and all health care services. Private health insurance simply won’t exist anymore. The problem with that, as any hospital CFO would tell you, is that they use the prices they negotiate with private insurers to cross subsidize their Medicare and Medicaid business, for which their margins are lean. If hospitals are barely making due now (as evidenced by the raft of closures and consolidations) then how will they cut it with just Medicare patients?
There are only two answers: (1) Many hospitals won’t survive, leaving many patients to drive hours for care, and (2) Sanders will increase Medicare rates, which will drive up the cost of the bill. If Sanders has a better answer, he owes it to voters to explain it.
2. What kind of care will people get?
Here again the plan promises everything, but explains nothing. According to the white paper, the “Medicare for all” plan would cover everything, with nothing excluded. Specifically, the plan promises that patients “will be able to get the care they need without having to read any fine print or trying to figure out how they can afford the out-of-pocket costs.”
But that isn’t remotely like Medicare, which requires premiums and co-pays from its enrollees, and doesn’t cover certain things, namely, long-term care. And it’s not even close to the reality of single-payer. As Ezra Klein (no conservative himself) writes for Vox:
The real way single-payer systems save money isn’t through cutting administrative costs. It’s through cutting reimbursements to doctors, hospitals, drug companies, and device companies.
But to get those savings, the government needs to be willing to say no when doctors, hospitals, drug companies, and device companies refuse to meet their prices, and that means the government needs to be willing to say no to people who want those treatments. If the government can’t do that — if Sanders is going to stick to the spirit of “no more fighting with insurance companies when they fail to pay for charges” — then it won’t be able to control costs.
How does Sanders plan resolve this dilemma? Once again I see only a limited pool of answers: (1) A government entity is created to determine when the government gets to say ‘no,’ (but based on what?) or (2) the cost of the plan skyrockets.
3. How will taxpayers pay for all of this?
Despite not having answers to the two big, preceding questions, the Sanders plan assumes $10 trillion in savings over the first 10 years of the plan. As Kaiser Family Foundation president Larry Levitt told Ezra Klein, “That’s tremendously aggressive cost containment, even after you take the administrative savings into account.” Even Gerald Friedman, the man responsible for coming up with the number, doesn’t really have a clue. “The pleasure of being an academic is I can just spell things out and leave the details to others,” he told the New York Times. “The details very quickly get very messy.”
Well that’s, um, discouraging. But even with that deceptive, unrealistic number the Sanders plan still raises taxes by $15 trillion over ten years.
The plan hits that figure by raising taxes by 2.2 percent on all income, implementing a 6.2 percent “income-based premium” for employers, raising marginal rates on incomes above $250,000, raising the rate on capital gains, hiking the estate tax, and cap tax deductions.
Of course, even those numbers vastly underestimate the revenue that will inevitably be needed to fund Sanders’ plan. After all, if Sanders really doesn’t believe that the government will ration care (“No more fighting with insurance companies”) then there will be absolutely no incentive to consumer less services. As Avik Roy writes for National Review, “As anyone who has been to an open bar knows, when you make the apparent cost of a service “free,” the nearly certain outcome is more consumption, not less.”
And speaking of bars…after all of this economic nonsense, I need a drink.