Bernie Sanders is determined to change the way the American healthcare system works. This alone is reasonable enough, as there are very few who think it doesn’t need some reform, after all.
It’s just that Sanders’ latest plan is a little odd: He seems to think that no one will ever need to pay a medical bill ever again. The candidate’s plan to eliminate medical debt will also have the effect of removing one of the major incentives to buy health insurance.
“Last year alone, 8 million people were pushed into poverty due to medical expenses,” @BernieSanders said.
Now the 2020 Dem has released a plan to forgive all $81 billion of US Medical Debt.https://t.co/iLqnstyAe3
— Washington Examiner (@dcexaminer) September 21, 2019
Sanders’ main complaint is that unpaid medical bills are, well, unpaid. They hang around the necks of those who haven’t paid them and obviously have a negative effect on their credit score.
To address this, Sanders’ plan features two main parts.
First, the government is going to negotiate unpaid bills with the people they’re owed to. This negotiation will lead to some nice number that will then be paid by Uncle Sam, that being you and me in our role as taxpayers. That’s right, we get to pay everyone else’s medical bills.
Sanders’ second suggestion is that if you don’t pay your bills, then your credit rating should not be cut. So, medical bills won’t count against your credit score any more. Sadly, Sanders is ignoring what this does to our incentives.
Right now if you don’t pay, your credit score suffers, so then your mortgage, your credit card, your life insurance maybe, possibly your rent, cost you more. There is a cost to not paying your bills. Under Sanders’ plan there won’t be, so no doubt fewer people will pay their bills — and then what’s left is paid by Uncle Sam. Why would anyone pay their medical bills in such a situation? In fact, why would anyone even bother to buy medical insurance?
Sure, many would prefer to purchase health insurance or pay their bills anyway, but there will obviously be some who take the deal Sanders is offering. That’s going to cost us taxpayers quite a lot.
So far this is all just bad policy, it’s what comes next which is truly heinous. Sanders goes on to suggest that it should be the government who determines your credit rating.
That it won’t work very well is obvious. There’s a reason the private credit rating agencies track all bills paid or not — because it’s a good guide to whether or not future ones will get paid. And that’s what people who lend money, rent buildings, sell insurance, lease cars, and so on want to know: How likely am I to get my money paid back? Past behavior is, after all, a pretty good guide to the future. So, if Sanders’ public credit score doesn’t include strong predictors — like whether or not someone pays their medical debt — then the public option won’t work well at all.
It gets even worse.
Imagine, for a moment, what it’s going to be like if Uncle Sam really controls your credit rating. Misgender someone on Twitter and that’s 10 points off, why not? Oppose gun control? That’s minus 50 points. And how could anyone argue against a 100 point fine for the heinous crime of donating to a Republican? We are, after all, already seeing consumer boycotts of companies owned by people who do so.
Just kidding! Yes, obviously, that will never happen. Except, it is already happening in China, where the government really does control the “social credit rating.” Perhaps we shouldn’t copy that Chinese system, eh?
Still, there is actually a simpler point to make in favor of credit ratings.
Whatever their faults, they are in fact objective. These people pay their bills, these over here don’t. We might like that information, we might not, but it is objective. The moment we start to exclude or include certain information based on political grounds, we’ve destroyed the very usefulness of the number itself.
And neither side should want their political opponents to be determining of their credit score, whether it’s Alexandria Ocasio-Cortez or President Trump. Sanders ought to remember the most useful guide to protecting freedom and liberty: Never give government a power you wouldn’t want your enemy to have over you.
Tim Worstall (@worstall) is a contributor to the Washington Examiner‘s Beltway Confidential blog. He is a senior fellow at the Adam Smith Institute. You can read all his pieces at The Continental Telegraph.
