What to make of Medicare for All
03/04/19 Filed in: Healthcare
Reader feedback at end
Americans generally like their healthcare system, but they don’t necessarily want to pay for it. And small wonder, when total healthcare expenditures have risen from 5% of Gross Domestic Product in 1960 to 18% of GDP currently. This trend developed, by the way, while government-directed healthcare programs (Medicare, Medicaid, CHIP and finally GovCare) were being introduced with the goal of making healthcare more widely available and affordable. Statista.com, accessed 2/28/19.
Also, the basis for applicable charges is often unclear, which tends to further erode confidence in the system Overcharged: Why Americans pay too much for healthcare, David Hyman & Charles Silver, Cato Institute, 2018.
Why is the American healthcare system so dysfunctional and expensive? Why does the EpiPen, containing $1 worth of medicine, cost $600? Why do hospitalized patients receive bills laden with inflated and surprise charges that come out of the blue from out-of-network providers, or that demand payment for services that weren't delivered? Why is more than $1 trillion―one out of every three dollars that passes through the system―lost to fraud, wasted on services that don't help patients, or misspent? What are the causes of spiraling costs, mediocre quality, and limited access?
Here’s an admittedly dramatic example, where a North Carolina man got bitten by a copperhead snake while taking out the trash and wound up being billed $89K for treatment at the hospital, including $81K for “pharmaceuticals.” The anti-venom in question could have been purchased for about $3K on-line. Mr. Ferguson’s insurance company negotiated a $20K payment, of which he wound up bearing $5K, but without healthcare insurance (HCI) things would have been far worse. Mr. Ferguson goes to Washington, cato.org, video (2:30), 1/23/19.
The theory of Overcharged is that government intervention in the healthcare market has vastly inflated healthcare prices by breaking the normal link between consumption and payment, thereby leading to vast disparities in the amounts paid by individual patients for the same goods and services. Little hope is seen for improving the situation unless the consumption/payment link is restored, and few if any of our political leaders are working along these lines.
•Republicans didn’t seem to realize that the healthcare system was riddled with pathologies long before GovCare was enacted. Having tried and failed to “repeal and replace” this legislation, most of them appear to be out of ideas for the time being.
One exception is Rep. Bruce Westerman (R-AR), who is working on a legislative fix. His Fair Care Act would leave GovCare in place, but add a high risk pool and more subsidies to make it run better. New Republican bill would retain and retool Obamacare, Kimberly Leonard, Washington Examiner, 2/25/19.
•Democrats supported GovCare, according to Overcharged, because it provided “more of everything that gave us a dysfunctional healthcare system,” i.e., more insurance, more Medicaid, more tax exemptions and subsidies, and more political control.
Now the party is divided as to whether its next goal should be enhancements to GovCare, which might entail working with Republicans to enact some legislation in this session of Congress, or a more radical approach such as Medicare for All (MFA). Centrist focus on merely fixing Obamacare exposes split among Democrats, Kimberly Leonard, Washington Examiner, 2/27/19.
About half of the Democratic caucus in the House is supporting the MFA bill, which would position healthcare policy as a top issue (perhaps the top issue) for the 2020 elections. More than 100 House Democrats rally behind Medicare for All, Kimberly Leonard, Washington Examiner, 2/26/19.
Some party leaders favor the pursuit of more limited objectives, however, such as shoring up the preexisting conditions ban and lowering prescription drug prices. Also, the number of MFA co-sponsors is down from 2018 despite a Democratic pickup in House seats. The split is apparently over timing, with universal healthcare continuing to represent the ultimate objective. House Democratic sponsorship of “Medicare for All” has fallen, Kimberly Leonard, Washington Examiner, 2/28/19.
Rep. Zoe Lofgren (D-CA): “I'm for 'Medicare for All. But I think that bill is not the best way to achieve the goal. I think the two-year time frame is unrealistic.”
Bearing in mind that MFA would effectively scrap all existing arrangements for private healthcare insurance (HCI) in this country, consolidate most government healthcare programs (VA would be an exception) into one omnibus program, and create huge funding problems that remain to be reviewed, one might well wonder whether this proposal makes any sense. House Democrats unveil plan to bring total government control over American healthcare, Robert Moffit, dailysignal.com, 2/28/19.
Could it be that Democrats have lost their bearings on MFA and other issues and are effectively adopting a “socialist” agenda? Americans should recoil as Democrats go crazy-left, Quin Hilyer, Washington Examiner, 2/21/19.
On issue after issue, leading Democrats now openly promote positions that liberal Democrats just 10 or 15 years ago once strongly rejected as being too extremely left-wing. This is true in at least six issue areas: abortion/infanticide, healthcare, environmental edicts, taxation, socialism, and anti-Semitism.
Or are conservatives simply lagging behind the times, at least when it comes to healthcare policy? Discussion follows.
A. Policy – To the extent that a logical case has been made for MFA (aka single payer), it seems to be based on the success of healthcare systems in other countries, which arguably deliver equivalent or better results (wellness statistics, life expectancy, etc.) than the US healthcare system at lower cost. Americans can’t do healthcare like Europe, Meagan McArdle, News Journal, 2/26/19.
It’s the killer argument, the coup de grace that every advocate for universal healthcare coverage eventually delivers: “Other countries have better outcomes than we do at half the cost.” And since Democrats seem to be gearing up to make another big push for healthcare reform, you can expect to hear it over and over for the next few years.
One point in this argument is definitely solid, namely the overall level of US healthcare costs is second to none in comparable (developed) countries. And the difference is primarily accounted for by private (out of pocket) expenditures, which are far higher in the US than elsewhere. How does health[care] spending in the US compare to other countries? Peterson-Kaiser healthsystemtracker.org, 12/7/18.
Quality of medical care comparisons vary, but even here the US is lagging in a number of areas. Peterson-Kaiser healthsystemtracker.org, 8/22/17.
The OECD has compiled data on dozens of outcomes and process measures. Across a number of these measures, the U.S. lags behind similarly wealthy OECD countries (those that are similarly large and wealthy based on GDP and GDP per capita). In some cases, such as the rates of all-cause mortality, premature death, death amenable to all-cause mortality, premature death, death amenable to healthcare, and disease burden, the US is also not improving as quickly as other countries, which means the gap is growing.
Conservatives tend to rationalize the high US healthcare costs on grounds that other countries have held down their costs by de facto rationing of healthcare services, and this claim doubtless has some validity. The typical mechanism is not outright denial of services, but rather a two-track healthcare system, quick and slow, based on ability to pay. And similar practices are growing in the US, as shown by lengthy insurance company reviews of major procedures, under-reimbursement of Medicaid (and to a lesser extent Medicare) services, and rising healthcare insurance deductibles. Why healthcare rationing is a growing reality for Americans, Robert Pearl, MD, forbes.com, 2/2/17.
Query, if the expansion of government-directed healthcare services has had a host of unintended consequences, why not consider some other approach – such as moving more power and accountability back to patients and doctors (as suggested by the authors of Overcharged, supra) instead of moving relentlessly in the other direction? Perhaps conservatives should be making that case versus meekly acceding to giving ever more power to government bureaucrats.
B. Funding – MFA critics have claimed that this proposal (as initially introduced by Senator Bernie Sanders) would cost trillions of dollars per year, with substantial tax hikes (not just on the wealthy) needed to pay the tab. Like your money? You’ll keep a lot less under “Medicare for All,” Robert Moffitt, heritage.org., 2/14/19.
•The liberal Urban Institute and the conservative Mercatus Center both independently estimate the 10-year cost of Sanders’ proposal at $32 trillion.
•Funding wasn’t covered in the Sanders bill, although he separately outlined “financing options” including a new 7.5% payroll premium tax; a 4% household income tax; the repeal of tax breaks for job-based health insurance; and an array of new taxes on upper incomes, including capital gains and dividends, estate, wealth, and corporate income taxes.
Americans would be relieved of healthcare outlays (insurance premiums, deductibles, co-pays, etc.) that they currently cover, i.e., the government would assume full responsibility. Barring extensively offsetting healthcare rationing, however, most Americans would probably wind up paying a good deal more on healthcare than they do at present. Americans can’t do healthcare like Europe, op cit.
To shed more light on the situation, MFA advocates should spell out the details of the proposed funding for their legislation and have the Congressional Budget Office “score” the bills that are introduced. Such a dialog has been proposed by Rep. John Yarmuth (D-KY), who chairs the House Budget Committee. House Democratic sponsorship of “Medicare for All” has fallen, Kimberly Leonard, Washington Examiner, 2/28/19.
Yarmuth has asked the CBO to analyze the effects of shifting all healthcare costs onto the federal government, a first step toward the "Medicare for all" legislation sought by progressives. "Members of Congress developing proposals seeking to establish a single-payer system will face many important decisions that could have major implications for federal spending, national healthcare spending, and access to care," he said in a letter to Keith Hall, the director of the CBO.
By the way, let’s hope the CBO will come up with more realistic cost estimates for MFA than they did for GovCare repeal. 9 years after Obamacare passed, agency finds numbers were wildly off, Jarrett Stepman, dailysignal.com, 2/22/19.
. . . during the height of the 2017 debate over [GovCare] repeal, progressives touted a leaked number from the Congressional Budget Office claiming that 22 million people would “lose” their insurance if Congress repealed the law. [But a] far smaller number of Americans appear to be opting out of insurance since the individual mandate’s repeal. Only 2.5 million more people are expected to go without insurance in 2019 due to [this change in the law], according to the latest report, and that number is expected to decline in the years ahead.
C. Politics - In the end, MFA will only carry the day if there is widespread political support. Are Democrats soundly evaluating the state of public opinion, or are they being misled by ideological convictions that aren’t widely shared outside their core liberal base?
Recent polling indicates that the support for proposed changes in healthcare may be conditional, namely contingent on an assumption that the changes would either lower healthcare costs or, at a minimum, not increase them.
Thus, there is widespread agreement that prescription drug prices are too high and receptivity to proposals that would reduce them (government agency negotiations with pharmaceutical companies, drug imports from licensed Canadian pharmacies, etc.). Poll: Huge majorities favor government action to lower drug prices, Cassidy Morrison, Washington Examiner, 3/1/19.
In a recent MFA poll, however, the results were distinctly mixed. Respondents favored congressional action to reduce healthcare costs, but they expressed less enthusiasm about government-directed healthcare per se let alone the imposition of new taxes to support such a system. See selected responses in the table below. Medicare for all: Voter poll, uschamber.com, 2/21/19 (download PDF).
Based on these results, it strikes us that conservatives should be in a good position to push for a market-based approach to healthcare reform – not just because MFA (on top of already projected government deficits) would necessitate major tax increases that Americans don’t want to pay, but also because a market-based approach would work better than an increasingly government-run system.
Some details of SAFE’s healthcare reform proposals are out-of-date, but the general thrust continues to seem OK. Check them out.
#We all know “Medicare for All” is not free. It will be paid for by taxing the “rich,” who, after all, do not deserve what they worked for. – SAFE member (DE)
#Re the comment that conservatives would be well advised to offer some healthcare reform ideas of their own instead of simply playing defense, here’s mine: “Make healthcare no fault and get the lawyers out of the business.” - SAFE director
Comment: No fault recovery might be a bridge too far, but item 7 in the 2009 SAFE plan provided as follows: “Cap punitive damage awards for medical malpractice, which are driving up insurance premiums and inducing doctors to order every medical test known to man whether needed or not.”