Medicare For All

Medicare for All (MFA), a proposal for a single-payer system for universal health care without any premiums, along with no deductibles or co-pays, has been introduced by Bernie Sanders as well as Elizabeth Warren, two of the Democratic front runners for the 2020 presidential election.  The program would be fully funded through taxation of the citizens of the USA, as well as newly arrived (legal) immigrants who would also be eligible for coverage.  This would finally bring about the long fought for “single-payer system” that has been proposed by every left of center political organization from the Clintons on.  Hillary Care did not succeed because it was too much too fast and a very effective PR campaign, “Harry and Luise” that emphasized government control over all of health care. Obama Care (the ACA of 2010), although an attempt to cover more of the population, is a significantly watered-down version that still does not cover everyone and is funded by premiums paid by the enrollees, nowhere near what MFA (over) promises. 

What would such a system cost? And what would such a system look like? 

Taking cost first, let’s look at the Urban Institute, an organization founded by Lyndon B. Johnson, to be a “non-partisan” independent economic think tank that studies the economic problems of our society.  Their take on the cost of a single-payer system puts the increase in spending of MFA to between 32 and 40 trillion dollars over ten years, depending on if it included long term care.   The Federal government now spends 1.1 trillion a year for health care (22% of the total budget). So, over 10 years that comes to 11 trillion, now add another 39 trillion (my rounding the numbers) making it a grand total of 50 trillion (50,000,000,000,000).  If you stacked up $100 bills it would be a stack that would be 31,550 miles high, or nearly one and a quarter times around the circumference of our earth.  The US budget spends almost 5 trillion dollars a year. If nothing changed, the new health care spending would consume nearly all the budget just for health care of all the population,  nothing for debt reduction, military, social security, education, housing and urban development, infrastructure, etc.  From where would that money come?  The proponents of MFA claim that it would not be as much as the Urban Institute claims as through the economy of scale, comprehensive payment reform (translated into English- cutting reimbursement and services), bundled payments (which has not worked under ACA) and bargaining power from being a monopoly, which forces hospitals and providers to accept the only game in town payments, the cost would come down.  Of course, the filthy rich would be called upon to pay “their fair share” of taxes. The corporate tax rate would have to go back up to 35%, along with the marginal tax rate, as in England and the Scandinavian countries.  Sweden, for example, has a marginal tax rate of 70% for any income over $98,000, and an even higher rate for the millionaires.  This tends to discourage an income above that amount and encourages moving to countries that don’t soak the rich quite as much. Elizabeth has promised a new annual tax on future (unrealized) capital gains for assets you have not sold yet. The death taxes have crept up to $11,000,000 which are due to sunset in 2025, back to pre-2018 levels, another way to thwart small businesses and farms to pass on their assets to their offspring. We are better off having large impersonal corporations and mega-farms anyway!  They are much more empathetic to the working people, and if the evil corporations get fed up with the taxes they move to Ireland, Mexico, or some other places that want to attract companies that provide jobs for their citizens.

There is always the Weimar Republic’s answer to money problems, PRINT MORE OF IT!!  After World War I, Woodrow Wilson, Georges Clemenceau of France, David Lloyd George of the United Kingdom, and Victor Emanuele Orlando of Italy cleverly crafted the Versailles Treaty that decimated Germany and Austro-Hungary economically, which ultimately was responsible for the rise of Adolf Hitler according to many historians.  The French and English even sent in troops when Germany fell behind in the war reparations to force payment.  Hindenburg, the then German chancellor, ordered the printing of more money to pay off those debts.  I remember, as a child, those banknotes were still around even after World War II, used as play money by us children.  The banknotes were pretty and fun to play with, because it looked like real money because it used to be real money.  People used that money to wallpaper their houses and the price of a loaf of bread was 50 million marks.  Money became worthless.  People did not want to work for worthless paper, and didn’t accept it for goods, services, or food.  Printing more money, in the long run, does not pay off; additionally, you need a wheelbarrow to go shopping to replace your wallet. 

What about the structure of the new single-payer system as far as the impact on the consumer and providers of health care?  Hospitals run on a very tight budget because the profit margin is squeezed from all sides.  The average profit margin has reached 1.7% in 2018.  The payors are angling to pay hospitals less.  The workforce, nurses, physicians, respiratory therapists, etc. want a better salary. Vendors are looking to make a profit, and surgical equipment, CT scanners, even hospital beds are constantly costing more to buy.  The basic hospital bed now costs $50,000, more than most cars.  How the government is going to squeeze any more blood out of the proverbial turnip (hospitals) is still held a closely guarded secret by  Bernie and Elizabeth.

Physicians are also a target.  20% of health care costs go to physicians. Practice costs are on average half the physician’s gross income, and steadily growing with employees’ salaries, malpractice, rent, equipment, etc. all continually increasing. This does not even consider paying off student loans which are higher in the US, as schools are not tuition-free as in many European countries. The average medical school debt was $196,520 in 2018 according to the Association of American Medical Colleges. This is because the training period has grown to multiple years now: pre-med college is 4 years, medical school is 4 years, an internship has grown to 2 years in some states, and residency 3 to 6 years, and a fellowship 1 to 3 years. The individual cannot start paying their loan off sometimes for a decade, as the interest keeps accumulating at compound interest rates. Half of one’s earning life can be taken up by training.  A bright individual who can get into medical school will think twice before embarking on a long educational road with now increasingly questionable financial benefit.  He or she can do better, not only financially, but in lifestyle as well in other lesser demanding occupations that allow starting a family sooner, earning a living wage right away, no night call, and no constant legal, and governmental scrutiny.

The single-payer system would alter our economy.  Health care is currently one-fifth of our economy.  That would grow significantly.  If nothing changed in terms of taxes and spending, it would become 100% of the economy!  Obviously, that could not happen, but the economy would shift dramatically with health care occupying a larger slice of the pie and the increased taxes that would be necessary to cover the cost of all the non-discretionary spending the government is obligated to pay to keep the doors open.  Of course, military spending would be a logical place to “borrow” some of those funds that are spent in purchasing $500 hammers and such.  I am sure that ISIS, Boko Haram, and other terrorist organizations with less to fear from a weaker US force would take the opportunity and cut back their budgets accordingly; don’t you think!

Now, what about the consumers. Would there also be a shift in the quality of care? With less money going to hospitals and doctors on the horizon, the dictum of “You get what you pay for!” looms dangerously in the background. Other countries that have government-sponsored health care can be used as examples of what that could mean in terms of what is or is not covered, what you may or may not get for treatment of rare or not so rare diseases, and what surgical procedures are approved. Total joint prosthesis and artificial heart valves last way too long anyway.  It would be more economical to use the less expensive ones and just replace them if the individual lasts long enough to wear them out. There is a reason why every country in the world that has government-run health care uses rationing to control costs, as directly quoted from the Wall Street Journal Nov.3, 2019.  How expensive drugs would be paid for, and how long before you get your procedure, appointment, or test approved would you wait?  A friend of mine living in Canada developed headaches and wanted a brain CT scan.  He was put on the waiting list for a year.  He complained that if he had a brain tumor it would be too late in a year.  He was informed that in that case, he wouldn’t be needing the scan after all, and it would be canceled.  In England, for example, dialysis for kidney failure is not approved for the old.  And who are the old?  Anyone over 50 years of age.  It does remind you of the “Death Panels” that got Sarah Palin into such hot water.  Be careful what you wish for; you might just get it!