The Fallacy of "Medicare For All"

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The Democrat candidates (most of them) have come out in support of what is euphemistically called Medicare for All (M4A), or universal health care.  Whatever the moniker, it would eliminate the current system of public and private insurance and replace it with one run by the government.  When they talk of these proposals, they show their economic ignorance not to mention that virtually every government welfare program has been an expensive bust.  Their ignorance is predicated on their belief that the government can provide a service better than the private sector.

First, there are costs to consider.  It has been estimated that over the first ten years of an M4A program, it would cost the federal government somewhere between $30 and $40 TRILLION over the first ten years.  Other cost estimates place the price tag higher, above $55 trillion.  Even if the government were to double corporate and individual taxes, there would be a serious shortfall in revenue to finance such a scheme.

Most of this additional spending is because the federal government would take on spending currently done by the private sector (through private plans and out-of-pocket payments).  What the proponents leave out is that the federal government would also take on obligations financed at the state and local levels.  But because another government entity does it does not mean the federal government would be any better and that costs would be lower, let alone have the revenues to do it.  M4A would likely leave poorer Americans even poorer.

Many proponents claim that there would be built-in savings offsetting those costs through the elimination of costly administrative overhead such as that which exists in the private sector.  That suggestion is laughable.  Not only is the federal government a notoriously terrible administrator, but the alleged savings would be offset by a generous and expanded public health insurance scheme.  The CBO has stated:

Existing evidence indicates that people use more care when their cost is lower, so little or no cost sharing in a single-payer system would tend to increase the use of services and lead to additional (national) health care spending, as well as more government spending.

Besides previously uninsured people receiving the care they need, the previously-insured would demand more services regardless of the need, quality or efficacy of those services.  To remove inefficiency in the current health care system, the government would introduce a new inefficiency, thus offsetting any mythical “savings.”

These proposals would also likely cut provider payments lower than those currently received in private insurance plans.  Again, the CBO has stepped in where others fail to go:

Setting payment rates equal to Medicare FFS rates under a single-payer system would reduce the average payment rates most providers receive—often substantially. Such a reduction in provider payment rates would probably reduce the amount of care supplied and could also reduce the quality of care.

Although coverage would be universal, the quality of that coverage would be a likely casualty, along with the number of providers.  That is just the short-term effect.

The long-term effect would result in a decrease in the number of people entering the medical profession due to lower payments.  If there are fewer doctors, there are also fewer hospitals, clinics, nurses, and support staff.  If there are fewer of these, access to health care suffers along with the quality of that care.

There would be winners and losers in any M4A scheme.  Health providers would suffer the greatest up-front costs because they would bear the brunt of payment cuts coupled with expanded and more generous coverage.  In short, they would be required to do more for less.  Second, after providers, would be those most in need of medical care.  Because the supply of providers would decrease relative to demand, the needed services become less available.  And, ironically, this would place upward pressure on prices.

An M4A system would hurt those with income limitations the most.  Federal resources would not target those of modest income.  Instead, most proposals would provide first-dollar coverage of all American health services from the most routine to the most urgent, from the rich to the poor, from the least expensive to the most expensive.  Competition for access to urgently needed health care needs would go through the roof.

There is no denying our current health insurance system is imperfect.  But a perfectly functioning M4A system is an idealized fantasy where everyone gets more for less.  That is not how the real world works.  The losers far outnumber the winners.  The winners would be state governments and those that currently pay for routine health care needs out-of-pocket.  The losers would be federal taxpayers forking over more money for fewer services, hospitals, doctors, nurses, and patients most in need of swift access to health care.

Obamacare threw a monkey wrench into the healthcare insurance system and created more problems than it solved.  Any M4A program would be the equivalent of Obamacare on steroids.  The socialists on the Democrat campaign trail, except a couple (maybe), have no understanding of economic realities.  Instead, they prefer to ignore these realities and stick their heads further up their butts and propose an unachievable healthcare Utopia.

There are ways to decrease health care costs by attacking the problem at its roots, not remaking the entire system.  Unfortunately, special interest lobbies are the greatest impediment to those ideas ad that is where Congress must stand up and do their job for the American people- not the insurance companies, not the medical profession, not the medical suppliers, and not pharmaceutical companies.  Instead of looking abroad and trying to make American healthcare “Australian,” or “Danish,” perhaps they should look at what works domestically.