The Dream and the Nightmare

Medicare for All could be the death of the Dems

“Health care is a right”—so the price tag is irrelevant

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One hardy perennial of contemporary journalism is the op-ed piece lecturing Democrats that what they really need to do is press forward with a “bold progressive agenda.” Well, Napoleon advised that one ought never to interrupt the enemy while he’s making a mistake, so probably conservatives should just keep quiet and let the Democratic Party go there.

The centerpiece of any such bold progressive agenda would of course be a single-payer healthcare system: “Medicare for All,” as Senator Bernie Sanders has dubbed it. As it happens, two such bills are on the table in Congress: one from Sanders and one from Representative Pramila Jayapal, Democrat of Washington, the leader of the Congressional Progressive Caucus. Both proposals would abolish private health insurance, putting the federal government in control of the entire US healthcare system. Both promise lavish benefits for all Americans at no cost. But as Brian Riedl pointed out in a recent article for National Review, neither bill addresses the hard realities of such large-scale healthcare “reform”—of which the math is no great friend.

Progressives tout the claim that Medicare for All would make healthcare “free at the point of delivery,” which sounds great. But all it means is that the bill would come due at some earlier point. Sanders, for instance, would levy higher taxes on the rich, and slap new taxes on such nebulous activities as “speculation.” Could such taxes cover the bill? In a word, no. Medicare for All would require the federal government to shoulder the burden of the estimated $25 billion over ten years that would otherwise be spent on healthcare by state governments and the private sector—this on top of its current healthcare spending. Sanders’ tax proposals, sketchy as they are, would raise no more than $14 trillion over ten years. Where the other $11 trillion might be found is anybody’s guess.

Proponents of Medicare for All wave away the cost conundrum, falling back on assurances that a single-payer system would be cheaper than the current, admittedly expensive system. This seems dubious. The administrative costs alone of a government healthcare system covering all 330,000,000 Americans would be astronomical. Either a whole new bureaucracy would have to be created or, more likely, the job would be farmed out to private companies—who’d expect to be paid for their services. So though Medicare for All would abolish the private health insurance industry, it would replace it with a vastly expanded medical services industry. As Jay Cost has pointed out, this kind of private-public partnership has been tried many times before and has a vexed history. Flush with cash, the huge new medical services industry would be in a prime position to lobby and influence the government. Sanders & Co. claim that Medicare for All would put the federal government in the driver’s seat, with power to negotiate better healthcare deals for Americans. More likely, though, the system would come to be administered in the interests of those who operate it. 

Then there’s the claim that Medicare for all would not only be cheaper but more cost-efficient than the current private-public system. But as the Washington Post (in a rare spasm of sanity) has noted, there’s much less to this assertion than meets the eye. On a per-capita basis current US government healthcare systems like Medicare and the VA spend more than Canada, Australia and Britain spend on their entire healthcare systems. In other words, the US spends more per head to cover a portion of the US population than those other countries spend per head to cover their whole populations. Expanding Medicare to cover everybody wouldn’t automatically change that. Something else would have to give. 

This brings us to the claim that a single-payer system would empower the government to control costs, e.g. by setting reimbursement rates and prices. The more closely one examines this claim, however, the more dubious it looks. Through programs like Medicare and Medicaid, the government already wields a big stick in the healthcare sector of the economy. Its influence, however, is tempered by certain economic and political realities. Obviously, there are limits to the power of price controls. Set prices too low and the supply of goods and services that constitute the healthcare system would shrink. Only large medical conglomerates, able to achieve economies of scale, would thrive in such a system. Small medical practices, clinics, laboratories and hospitals would be driven out of business. And this brings us to the real reason why the federal government’s leverage over healthcare costs is less than total: the extreme political perils of taking a hard line on healthcare spending. As the WP put it: 

Doctors and hospitals have effectively resisted efforts to scale back the reimbursements they get from federal health programs. Small-town America does not want to give up expensive medical facilities that serve relatively few people in rural areas. A tax on medical device makers has been under bipartisan attack ever since it passed, as has the “Cadillac tax” on expensive health-insurance plans. When experts find that a treatment is too costly relative to the health benefits it provides, patients accustomed to receiving that treatment and medical organizations with a stake in the status quo rise up to demand it continue to be paid for. 

That’s the reality of Medicare for All: every economic incentive would be for cost control while every political incentive would be against cost control. It’s a circle that can’t be squared. Once the government takes control of the entire healthcare system, it will be held entirely responsible for every physician forced into early retirement, every hospital and clinic closed, every treatment denied. Since politicians are careerists, desirous of being reelected, they would naturally shrink from the rigors of a hard-nosed cost-control regime. 

Still, progressives think they have an ace up the sleeve. Ah, they say, the American people support the idea of Medicare for All—just look at the polls! Yes, of course, but the level of support expressed depends on how the question is put. Ask Mr. & Ms. Average American if they want free government-provided healthcare and they’ll probably answer yes. But ask them if they’d be willing to pay substantially higher taxes to fund Medicare for All, or if they’re willing to accept some one-size-fits-all healthcare plan in place of their current coverage, and you’ll get a different answer. The truth is that most Americans are fairly well satisfied with the healthcare insurance they have now. Why, for instance, would a family of four with decent employer-provided coverage welcome the prospect of paying higher taxes for Medicare for All? The costs being revealed, the details being spelled out, the cries of outrage, woe and anguish would soon drown out the bandwagon music of the single-payer circus. 

Finally, proponents of Medicare for All have so far failed to explain something very important: How would the transition from the current system to Medicare for All be managed? How long would it take? What are the startup costs? How disruptive would the transition be? What about the economic fallout? The US healthcare system constitutes one-sixth of the national economy. It’s a mechanism of astonishing breadth and vast complexity. The idea that it can neatly be pivoted onto a new axis at the behest of some dim old codger and his congressional colleagues is, in a word, ridiculous. Remember Obamacare’s inaugural pratfall? How about Joe Biden’s disorderly Afghanistan skedaddle? Expand those debacles by five or six orders of magnitude and you’ll get some idea of the chaos that would surely accompany any attempt to implement Medicate for All. 

As a conservative I fervently hope that its progressive wing strong-arms the Democratic Party into making Medicare for All the keystone of its political platform. Let the Dems spend the next couple of years embattled against the heartless, unforgiving math that will forever prevent their dream from becoming reality. Since they won’t listen to reason, let them crash and burn.