If there’s one thing Republicans can agree on when it comes to healthcare, it’s that they are opposed to “Medicare for all.” Alternatively known as “socialized medicine” or “single-payer healthcare,” “Medicare for all” is a polite way of saying that the government will take over the healthcare sector and control it from top to bottom.
Support for “Medicare for all” collapses when people learn what it entails: the loss of private sector health insurance plans they mostly like, massive tax increases, and the government rationing drugs and doctor visits. President Trump will be running against “Medicare for all” no matter who the Democrats nominate against him in 2020.
There’s one problem, though. In case after case, President Trump and congressional Republicans are paving the way for “Medicare for all” by endorsing one of its central pillars: the government setting price controls on providers.
Most of the time these days, price control ideas have as their target drug manufacturers, but they are not alone. Doctors, ambulance services, and hospitals have also been proposed as targets of government price-fixing. The form price controls take varies, but the end result is always the same: a price set by the government and not the market. A price control might look like an average of other price controls from socialized medicine countries, or binding arbitration with a stick, or an inflation adjusted price cap. It’s all just means to the same end.
Some conservatives like price controls, because the Congressional Budget Office will score them as lowering government spending in the short run. If the government is spending $1 for a widget because that’s what it costs in the market but then imposes a price control of 60 cents, CBO will of course say that taxpayers save 40 cents per widget. But that’s like saying cutting off your leg will help you lose weight. It’s true, but it misses a much larger point.
Price controls are bad because they lead to scarcity. If a healthcare provider is forced to accept a below-market price by the government, they are not going to go out of their way to make their product or service available. We see that in other countries with price controls, where people are forced to endure long waits for doctor visits, surgical procedures, and breakthrough medicines.
Scarcity then creates a demand for action, so winners and losers have to be picked. This is also known as rationing. Who gets to decide who can go to the doctor today and who has to wait six months? The government, of course.
In a nutshell, there you have “Medicare for all.” The government seizes control of the healthcare buying and selling process, lowballs the providers, creates a system of scarcity where people cannot get the care they need, and then becomes the dispenser of healthcare as it sees fit. From soup to nuts, it’s a government industry.
There’s one other player here not mentioned: insurance companies. Too often, Big Insurance has been whispering in Republicans’ ears, urging them to impose price controls on healthcare providers. They do this so that they have to pay those providers less, of course, and can keep more of the premiums we pay insurance companies as profit instead. Implied in this is the threat that if the government doesn’t impose price controls, Big Insurance will jack up premiums and blame the politicians.
The irony is that the first industry to go under if “Medicare for all” is imposed is private sector health insurance, since the government would (sooner or later) become everyone’s insurance company.
The latest example of helping the Democrats impose “Medicare for all” price controls came last week. The Department of Health and Human Services announced a plan to allow states to apply for importation of drugs from Canada and other countries. Medicines in Canada are price controlled by the socialist Canadian healthcare system, and therefore cost less than the same drug sold here.
Is this free trade? No. We don’t have a supply problem in the United States. There are plentiful amounts of every drug available for patients here already. Importation of drugs are not really about bringing drugs across the border; the drugs are already here. Rather, importation is about importing the price control on that drug along with the drug itself.
The Canadians, however, have a problem with this. Unlike us, they have price controlled their entire drug market. As a result, they have a scarcity of drugs and the government has to ration them for their population. They don’t have the spare drugs to ship out. “The Canadian medicine supply is not sufficient to support both Canadian and U.S. consumers,” the Canadian Medical Association and 14 other groups representing patients, healthcare professionals, pharmacists, and hospitals wrote last week to Health Minister Ginette Petitpas Taylor. “The supply simply does not, and will not, exist within Canada to meet such demands.”
The reason Canada doesn’t have the drugs to spare is that they have committed fully to the price controls-scarcity-rationing domino effect. If the United States wants to go down the same road, we would start with price controls. The Democrats want to do that with “Medicare for all.” They have seen how this play ends and they like it. Why Republicans are cooperating with them while ostensibly opposing the “Medicare for all” system that price controls lead to remains a mystery.
Ryan Ellis (@RyanLEllis) is president of the Center for a Free Economy.
