Those advocating moving all Americans onto a single government plan under the banner “Medicare for all” are creating a lot more work for themselves if the goal is actually to guarantee all Americans are able to obtain affordable health coverage.
I’m not arguing this from a 2020 election outcome perspective, but from a purely policy perspective.
In what may prove the most significant moment of Wednesday night’s Democratic debate, Sen, Elizabeth Warren gave an unequivocal endorsement of eliminating private insurance that currently covers nearly 180 million people.
I noted the potential political risks of the strategy, as did traditional liberal Jonathan Chait, who wrote, “Warren ventured boldly, perhaps foolishly, onto a shaky limb. She may have just filmed the most effective attack ad against herself.” Crooked’s Brian Beutler, who is more sympathetic with the resurgent Left’s view on this, countered that Republicans “will run ads insisting the Democratic agenda will cause everyone to lose their plans, homes freedoms no matter what it is.”
It may surprise people, but I actually get where Beutler is coming from. During the Obamacare repeal debate, I made a structurally similar argument that Democrats would portray Republicans as ripping away healthcare from people no matter what, so they may as well defend actual free market solutions that would bring down costs. So I get that impulse, and to be perfectly honest, I also am not convinced that Warren’s draconian position will be fatal to her presidential ambitions. Given President Trump’s unpopularity, any Democrat starts out with a decent chance of winning a general election against him. Add in his uncharacteristic style, and it’s also unclear what the general election would actually be about. If Warren is the nominee, we could be spending next year debating Pocahontas memes.
Whether or not Warren survives the election, however, is different from what she’d be able to do as president. Granted, I come to this from the perspective of somebody who supports scaling back government involvement with health insurance. Looking at things from a pure policy making and implementation perspective, however, it seems absurd to insist on forcing everybody onto a new government plan within four years. It would require so much extra heavy lifting for the “healthcare for all” crowd.
Start with the accounting.
Currently, there are 150 million people who obtain insurance through their employers that they’re more or less happy with. The cost of that coverage is shared between workers and their companies, and already reflected in the Congressional Budget Office baseline given the tax exempt status of employer plans.
However, once policy makers decide, as in the Sanders plan that Warren supports, to get rid of private employer coverage, the cost of covering that massive population suddenly shifts exclusively to the federal government. Instead of talking about a few trillion dollars to expand insurance, you end up with absurd estimates such as $32 trillion. At that point, broad based tax increases to the middle-class become unavoidable.
Put another way, under the scheme that Warren and Sanders support, they end up spending tens of trillion dollars on providing insurance to people who already have coverage before they increase the number of people with insurance by one person. All because they’d be absorbing costs currently paid by the private sector.
For much less money and much less hassle, they could instead focus on the remaining 28 million who are uninsured. For a few trillion dollars over a decade they could create some sort of optional government-run plan or Medicare buy-in for the under 65 crowd and make Obamacare subsidies more generous. Such a plan could probably be paid for primarily by taxes on those with upper incomes.
On top of the accounting issues, there are the massive implementation challenges. Obamacare ended up covering about 20 million people through a Medicaid program that already existed and insurance policies administered by companies already in the insurance business. Despite this infrastructure, and having nearly four years to prepare between the passage of the law in March 2010 and when benefits became available on January 2014, the rollout was a complete disaster. And it took another five years of tumult before the new market became remotely stabilized, if we can even describe it as stable now.
The Sanders-Warren plan would require creating a new government-run plan from scratch, and then shifting over 300 million Americans onto it within four years — many of them kicking and screaming and loudly protesting. Yes, though the plan is called “Medicare for all,” even that is a bit of a misnomer. The plan doesn’t mean that all Americans would be brought into the existing Medicare system. Instead, the government would create a new plan, and it would shift everybody — including those currently on Medicare — onto that new plan. The new plan would also be called “Medicare” and it promises even more generous benefits, but as a technical matter, people on Medicare would be required to change plans.
Should there be administrative problems with the new plan, it won’t be isolated to a few million people. It would be a massive crisis that would disrupt the care of every American. That’s an incredible burden to put on the backs of federal administrators. Creating some sort of government option for people who wanted one that they could ease into over time would be much more feasible.
This also doesn’t get into the massive job losses that would result from simply eliminating a major industry.
The reasons to insist on eliminating private insurance and putting everybody on the same government plan seem to me to be driven more by ideology than a desire to simply see everybody covered. There are multiple paths to basically put health coverage within reach of everybody who wants it without kicking every American off of their insurance.
Of course, Sanders and his supporters would argue that getting private insurers out of the healthcare business would allow the government to use its bargaining power to wring out savings from private medical providers, thus containing costs. But the harder the government pushes in limiting payment rates, the more disruption it will cause, as doctors and hospitals would stop accepting government insurance or close up shop, thus limiting access to care.
No doubt, I would be arguing strongly against the adoption of either approach, as I continue to support free market solutions. But arguing against the Sanders-Warren plan to eliminate private insurance would make my job a heck of a lot easier.
