So yesterday, Bernie Sanders introduced his “Medicare for All” proposal. Single payer has suddenly become chic in Democratic circles with all of the 2020 hopefuls jumping on board. Because, apparently, the lesson they learned from 2016 was that they weren’t socialist enough.
I’m not going to get into the debate over single payer … ah, who am I kidding? I’ve written about it many times. Years ago, I wrote a post detailing why the claims that single payer would be more efficient were nonsense. It’s actually gotten worse since then. Medicare has tried to institute quality controls which have imposed billions in compliance costs on hospitals. Meanwhile, Medicare and Medicaid pay 80 cents and 60 cents on the dollar of what private insurers do. Switching to that would mean a lot of providers leaving the field. Which means fewer services and longer waits. It would also slow the pace of innovation, which I’ve previously identified as my biggest fear with regard to socialized medicine. I worry about the cures and miracle treatments we won’t get because our government controls the purse strings.
It would also put Congress in charge of deciding which medical procedures get covered and which don’t. This would not be based on any scientific evaluation but on politics. We’ve seen this already. Research has repeatedly shown that the guideline used for mammograms — every year or two after age 40 — is outdated. The new recommendation is that women get them every other year after age 50. The main reason is that mammography for low-risk women is more likely to result in unnecessary surgery than finding a cancer that wouldn’t be detected by other means. Congress, however, under intense pressure from women’s groups and mammography providers, overrode that decision. And this is not the first time they’ve done that.
Anyway, I don’t want to get too far into the weeds here because, in those two paragraphs above, I’ve already invested more thought into this than the Democrats have. Suderman
To call it a plan is, in some sense, too generous: Although it envisions a sweeping and generous system that would make government the primary payer for nearly all health care in the United States and virtually wipe out employer health coverage in the space of just a few years, it is not really a plan. Instead, it is a legislative fantasy built on a combination of wild overconfidence in government and an almost comical refusal to grapple with costs or trade-offs.
The likely outcome of such a transition would be massive, sustained chaos across the health care sector. Even if the chaos were somehow manageable, the easy access that Sanders promises would be swiftly undermined by service disruptions and other complications stemming from the changeover. In making his case, Sanders tends to ignore all of this. His plan exists in an imaginary world without economic tradeoffs or consequences.
Nowhere is this more obvious than in its promise of benefits. Sanders frequently argues that his preferred system would merely put the United States in line with other developed nations. On the contrary, it would go far beyond what other countries with single payer systems offer. The Sanders plan would offer a far greater array of benefits than Australia, the Netherlands, or Canada—a country that Sanders often uses as a comparison with the U.S., but where the majority of the population relies on supplementary private insurance to cover the gaps left by the government system. Many international single-payer systems also require some form of copayment from the individual seeking service; the Sanders plan would make all of its benefits available without any individual contribution.
Instead, it would be paid for entirely through tax increases. Which tax increases would those be? On who, and for how much? On these questions, the Sanders plan is silent.
This is the real tell in Sanders’ pitch. Although it is willing to imagine long lists of benefits in great detail, but it has essentially nothing to say about how to pay for them. It is a fantastical sales pitch for a luxury product with no price tag attached.
One can support universal healthcare. I’m somewhat neutral on it. But one has to acknowledge that it’s going to be expensive. You can not insure million of currently uninsured people and save money. We’ve been down this road before. For example, we were told that Obamacare would save money because people wouldn’t need to go the ER as often. But ER visits actually rose under Obamacare, as anyone with two brain cells to rub together could have predicted. When healthcare is cheap, people use more of it. As P.J. O’Rourke famously quipped, if you think healthcare is expensive now, just wait to see how much it costs when it’s free.
The Democratic “plan” doesn’t grapple with this at all. It says nothing about controlling costs or how to pay for all this. It’s just a collection of vague promises. In this sense, it’s way worse than the Trumpcare fiasco which, for all its massive flaws, at least acknowledged the tradeoffs.
To be fair to Sanders, specifically, he actually does have a plan to pay for this. He just couldn’t get any of his fellow Democrats to sign on if it was included. And it’s easy to see why. Here are the details on it. It includes an 11.5% payroll tax, the elimination of tax breaks for insurance, an income tax rate as high as 52%, capital gains taxed at income rates, a massive estate tax, a wealth tax, etc., etc. All told, the wealthiest Americans would be facing marginal tax rates of 82% — just for federal. With state and local taxes, marginal rates could exceed 100%.
Yeah, we once had 97% marginal tax rates. Very few, if any, people ever paid those rates. Bernie is almost certainly massively overestimating the revenue he’ll raise. Even with his rosy assumptions, analysts in 2016 estimated that he was many trillions of dollars short in paying for Medicare for all. In the end, as I’ve said many times, you can only pay for a welfare state with heavy taxes on the middle class. That’s how the European welfare states do it; that’s what we would have to do.
One last thing. The slogan of Bernie’s circus and of the Medicare-for-all movement is that healthcare is a “right”. This is straight garbage. You can not have a right to things. You can not have a right to people’s labor. Real rights — like freedom of speech — are unlimited. When I exercise my right to free speech, that does not preclude you from exercising yours. But if I exercise my right to healthcare, that may take it away from someone else. Doctors can only treat so many patients. There are only so many organs to go around. Yes, our healthcare system grows. But at any one moment, those resources are limited. If there’s only one heart available for transplant, which patient gets it? Who has the “right” to it?
That’s not necessarily an argument against universal healthcare. No one has a “right” to food, but we can make sure people don’t starve because we are a wealthy and generous nation. No one has a “right” to housing, but we can keep people off the streets because we are a wealthy and generous nation. That may sound like hair splitting, but it’s an important hair to split. Because the minute you decide people have a “right” to healthcare, you change the shape of the debate. It suddenly becomes a race to give away as much as possible and an effort to keep the hated evil rich from getting care that’s too good.
So apart from the Democrats having unveiled a comically incomplete plan that makes no hard choices and promises to plunge us into a bureaucratic nightmare and an orgy of spending while destroying a major industry … how did you like the play?