Monday, October 2, 2017

Another "Medicare for All" Bill From Bernie Sanders, Another Attempt at Single-Payer Failure

Insanity is doing the same thing over and over and expecting different results. That quote is commonly attributed to Albert Einstein, but today, I would like to apply the content of the quote to Bernie Sanders. Sanders loves clinging to the failed idea of socialism. He wants to provide free college. He thinks that breaking up big banks will help (it won't). He even mistakenly believes that Denmark is socialist when in fact it is even more of a free-market nation than the United States. But there is one idea of his that doesn't want to die: single-payer healthcare. Last week, Sanders introduced the Medicare for All Act of 2017. Unlike his failed attempt to introduce a single-payer healthcare bill back in 2013, this Act received the backing of 15 Democratic Senators. Single-payer healthcare is gaining traction in this country, and seeing how the fight over Obamacare has gone, it is not difficult to see why. Plus, there are those on the Left who think that if we centralize the buying power into the federal government, we can bring healthcare costs down and improve the quality of healthcare.

This should be a shorter blog entry because this is not the first time I covered the topic of single-payer healthcare. In 2013, I looked at single-payer through an economic theory lens and it wasn't flattering. In November 2016, I examined Colorado's referendum for a statewide single-payer healthcare system, and it was as unflattering as it was costly. Most relevantly, I wrote a piece back in January 2016 that not only analyzed the three most prominent cases of single-payer healthcare (and even these countries feature some role for private insurance), but also scrutinized the "Medicare for All" plan that Sanders proposed while on the presidential campaign trail. Although I was staunchly opposed to his "Medicare for All" bill in 2016, there is still a theoretical possibility that Sanders worked out the kinks. Let's take a brief look.

While single payer comes off as alluring, the biggest concern is that of cost. Sanders doesn't have a clear idea of how this will exactly be funded, which should be a red flag right there. However, he has a list of options of how to finance "Medicare for All," which primarily consists of a list of taxes on the rich that we can increase. Since he is unsure as to how exactly he is going to fund it, I am going to avoid (at least for the time being) comparing his financing options currently versus who he proposed back in 2016. What I can say is that if Sanders, by some miracle, were able to pass all the proposed policy alternatives, it would generate $16.2 trillion in tax revenue. All of this assumes, of course, we take Sanders' estimates at face value, which is not something I would do given how he was so off base back in 2016. Since we don't know how Sanders would finance "Medicaid for All" yet, it is premature to officially say whether his bill is fiscal insolvency. However, if estimates from his 2016 proposal are any indication, this bill is insolvent. According to the Left-leaning Urban Institute, Sanders' 2016 proposal would have cost $32 trillion, which would potentially be a shortfall of over $15 trillion!

Let's think of the cost in another way. Medicare's cost curve is already unacceptable (Steurele, 2015). The Centers for Medicare and Medicaid Services (CMS) project that the trust fund for Medicare is to be depleted by 2029. Looking at other countries, implementing single-payer did not keep costs down, but rather expanded the cost curve. Colorado and California had similar issues when trying to implement single-payer healthcare. Sanders' home state of Vermont could not pass a single-payer bill because, "surprise, surprise," single-payer healthcare does not contain costs in theory or in practice. Increasing the aggregate demand for healthcare without working on increasing the supply would actually increase prices: who would have thought? The Bernie Sanders of 1987 surely understood that concept (see below). What happened to him in the past 30 years with regards to healthcare reform is beyond me.


This is more an exercise of one Jew kvetching about another Jew's incapability of understanding the basics of economics than it is anything else. However, I do worry, not because I think this bill will pass. Given the Republican majority in both chambers of Congress, I'm not worried about that. Plus, the recent Obamacare debates show that the American people are leery of drastic changes to the healthcare system. Sanders' bill could be positioning the Democratic Party for whenever it gets itself back into power. What is scariest about this bill, though, is how far to the Left the Democratic Party is moving. My liberal friends often complain about how far to the Right the Republicans have moved, but they should also take a look at the party they are most likely to be sympathetic towards. This is scary because the government has botched up Obamacare so badly, not to mention single-payer systems such as the Veterans Affairs (VA) or Indian Health Affairs (IHA). Why should I trust the government with more power over healthcare when it has proven its incapacity to run healthcare exchanges or adequately provide health under the VA or the IHA?

If it does gain enough traction one day, that is what is scary. According to the Peterson Institute for International Economics, the United States is the only major economy facing a sizable increase in public debt burden. The bipartisan Committee for a Responsible Federal Budget illustrates how Sanders' plan would increase the debt-to-GDP ratio nearly 60 points over the next decade (see below). As previously mentioned, we already have issues with affording Medicare, and turning it into a single-payer system would merely exacerbate our debt issues. It is not just an issue of cost. Since Medicare pays doctors far less than private insurers (and therefore are less likely to see Medicare patients), there is also legitimate concern that doctors would refuse to participate in "Medicare for All." As observed with Obamacare, the technical and administrative transitions would be horrendous. However, that is not going to stop the Democrats on pushing something like this.



The truth of the matter is that the Democrats are much more unified on healthcare than the Republicans are. For those of us who want less government involved in the healthcare marketplace, this needs to be a wake-up call. It might be tempting to dismiss single-payer outright since the Democrats don't have a workable plan. That is why alternatives to reform the system are vital. As but one example, the centrist Brookings Institution suggests, in response to Sanders, universal catastrophic coverage. Brookings asserts that it would combine the Left's dream of universal access and the Right's dream of using market forces to best efficient and cost-effective. In any case, if proponents of limited government or a freer healthcare market don't come up with something, we could wake up in an America that not only has healthcare completely controlled by government, but ends up being more bloated and inefficient than it ever has been before.

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