In a tweet with more than 64,000 likes and 23,000 retweets, Rep.-elect Alexandria Ocasio-Cortez, D-N.Y., shared some extremely bad math and economics over the weekend.
“$21 TRILLION of Pentagon financial transactions ‘could not be traced, documented, or explained.’ $21T in Pentagon accounting errors. Medicare for All costs ~$32T. That means 66 percent of Medicare for All could have been funded already by the Pentagon. And that’s before our premiums,” wrote Ocasio-Cortez, citing a report in The Nation about waste at the Pentagon.
Ocasio-Cortez’s interpretation of the report is faulty at best and outright dishonest at worst.
For one thing, the entire budget of the Pentagon from 1789 to now has been a grand total of $18 trillion, a full $3 trillion fewer than the “accounting errors” cited by Ocasio-Cortez. It’s impossible for a department’s waste in 17 years to exceed the budget of its entire existence.
As noted by Senior Fellow at the Manhattan Institute Brian Riedl, the $21 trillion figure reported by the Nation “refers to transfers back-and-forth between accounts. So the same [dollar] can be counted 1000’s of times.” Moreover, even if the Pentagon is guilty of legendary inefficiency and mismanagement, it cannot possibly be wasting an amount trillions of dollars higher than our annual GDP.
Furthermore, even if the government could clean up trillions of dollars of waste to reallocate it for socialized healthcare – a hopeless dream to begin with – it could not remotely fulfill the funding requirements for “Medicare for all.”
The $21 trillion figure represents unaccounted or unexplained Pentagon financial transactions over a 17-year period. The most thorough study of the economics of Bernie Sanders-style “Medicare for all,” published by George Mason University’s Mercatus Center, found that the plan would add $32.6 trillion to the federal budget in ten years, assuming the plan is implemented by 2022. So even this mythical $21 trillion “saved” over the course of nearly two decades could only fund about one-third of “Medicare for all” in the same amount of time, assuming that the following decade of “Medicare for all” would cost as much as the first decade. Which, by the way, is an unrealistic assumption, because healthcare spending will nearly double in the next decade according to the best projections.
Furthermore, the $32.6 trillion figure is vast underestimate to begin with, one which assumed that “Medicare for all” “achieves its sponsors’ goals of dramatically reducing payments to health providers, in addition to substantially reducing drug prices and administrative costs.”
That is, physicians and hospitals would have to be happy with a reimbursement rate 40 percent lower than today’s average reimbursement rate. Given the immense costs and barriers to entry to become a physician or healthcare provider, this would cause a mass exodus of providers from the market in the long run, leaving the government forced to increase prices or let the American people face massive healthcare shortages.
Finally, and perhaps most importantly, if the Pentagon really is so badly mismanaged that it burns through trillions of dollars of waste, why would we expect the same federal government to manage single payer healthcare any more efficiently? Medicare already wastes around 10 percent of its total budget, or some $60 billion of taxpayer funds, each year. An expansion of the program is unlikely to improve that number.
There are certainly lessons to be gleaned from the Pentagon report. That the government needs more money and more control is not one of them.
