The Ugly Consequences of Single-Payer Health Care

COMMENTARY Health Care Reform

The Ugly Consequences of Single-Payer Health Care

Nov 1, 2017 7 min read
Robert E. Moffit, PhD

Senior Research Fellow, Center for Health and Welfare Policy

Moffit specializes in health care and entitlement programs, especially Medicare.
There are just not enough rich people to pay for socialized medicine. Mark J Sullivan/ZUMA Press/Newscom

The late, great Nobel Laureate economist Milton Friedman said it best: “There’s no such thing as a free lunch.”

Friedman’s pithy proverb reminds us that there is also no “free health care.” It’s a timely reminder, as Sen. Bernie Sanders, I-Vt., is making a public push for his “Medicare for All” bill.

While liberals have long advocated “single-payer” systems for health care, what’s new this time is that they are coalescing around a plan. Sixteen Senate Democrats are co-sponsoring Sanders’ bill, and 120 Democrats in the House have signed on to a similar approach.

Free Care?

This latest push for “single-payer” features the provision of “free health care” at the point of service from doctors, hospitals, and all other medical institutions.

The Sanders bill provides a comprehensive set of medical benefits and services, combined with “first dollar” coverage and outlaws all patient “cost sharing,” meaning no deductibles, no co-insurance, no copayments of any kind. Zero.

Sounds great, right? Well, P.J. O’Rourke, a prominent political humorist, improves on Friedman: “If you think health care is expensive now, wait until you see what it costs when it’s free.”

Make no mistake: If Americans were ever foolish enough to take Sanders’ “single-payer” prescription, they would suffer a fiscal fever the likes of which they have never even imagined.

>>> Read the full Heritage Foundation analysis of Sen. Sanders’ bill.

Last year, two separate analyses—one from the Urban Institute and another from Professor Kenneth Thorpe at Emory University—outlined in dreadful detail the fiscal consequences of Sanders’ 2016 proposal.

Though the analysts differed on their assumptions and calculated conclusions based on different models, they both came to the same conclusion: The Sanders “single-payer” bill is going to cost the American people far more than the senator and his academic and congressional allies claim, and the taxes to finance this massive enterprise are going to be huge.

Last year, Sanders estimated that over 10 years (2017 to 2026), new federal spending for his “Medicare for All” proposal would amount to $13.8 trillion.

By getting rid of all private insurance, including the unnecessary marketing and administrative costs and simplifying the system by junking today’s public-private mélange of payment and delivery, ordinary Americans would see big savings compared to their current health care spending.

Well, not quite. Thorpe, a former policy advisor to President Bill Clinton, projected that the full, 10-year cost of the plan would be $24.7 trillion.

Scholars at the Urban Institute, a prominent liberal think tank, estimated a stunning 10-year cost of $32 trillion. According to the Urban analysts, the Sanders plan would come up $16.6 trillion short of the revenues necessary to full pay for it. Socialism is expensive.

‘Feeling the Bern?’

While the Urban analysts did not model the tax impact of Sanders’ 2016 proposal, Thorpe did. He concluded that the senator’s 6.2 percent payroll tax, plus a 2.2 percent income-based premium tax, plus a whole series of special taxes on investments, dividends, “wealth,” and the hated “rich,” would not be sufficient pay for the program.

There are just not enough rich people to pay for socialized medicine.

Taxes would have to be higher—much higher. So Thorpe concluded that to fully finance Sanders’ plan, as the senator outlined it in 2016, would require a combination of higher payroll and income based premium taxes, amounting to a 20 percent tax on income.

As for the promised savings for ordinary Americans? Forget it. Taxes on working families would be substantial.

To fully fund Sanders’ single-payer plan, Thorpe estimated, 71 percent of working families would end up paying more than what they pay now under current law.

Loss of Freedom

There are other costs beyond the dollars and cents. As we have noted in a recent Heritage analysis of Sanders’ updated version of his bill, Americans would lose big chunks of their personal and economic freedom.

Recall that when former President Barack Obama was campaigning relentlessly for Obamacare, he promised—falsely—that, “If you like you like your health plan, you will be able to keep your health plan.”

In fact, under Obamacare, you never really had the freedom to keep what you liked. In 2013, on the eve of the very first year of Obamacare’s full implementation, 4.7 million health insurance policies were cancelled across 30 states, whether enrollees liked them or not.

Over the last three years, Obamacare’s health insurance costs exploded while personal choice and market competition collapsed. By 2016, Americans in 70 percent of U.S. counties were left with only one or two options.

Sanders and his 16 Senate Democratic colleagues deserve applause for their refreshing honesty. They make no pretense whatsoever that you can keep your health plan, regardless of your personal wants, needs, or preferences. You don’t count.

Under the Sanders bill, almost all private health insurance would be outlawed, including your employment-based health coverage. Today, nearly 60 percent of working-age Americans get their health insurance through private, employer-based plans.

Likewise, persons enrolled in existing government health programs—Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP)—would be absorbed into the new government health plan.

The Sanders bill not only abolishes private plans in the Obamacare exchanges, but kills off the popular and successful Federal Employees Health Benefits Program which provides benefits to over 8 million current and former federal employees. For military dependents, TRICARE would also be gone.

Curiously, the scandal-ridden Veterans Administration program and the troubled Indian Health Services would remain. Of course, both are ideologically correct: They are “single-payer” systems.

The Sanders bill would concentrate enormous power in the health and human services secretary, far beyond the already expansive administrative discretion that the secretary exercises today under Obamacare.

The secretary’s power would extend to the establishment of a national health care budget for all health care spending, provider payment, standards for provider participation, and the quality of care delivery.

Taxpayer funding of abortion, among other things, would be compulsory, and, at least from the language of the text, it appears that there would be no traditional conscience protections for doctors and patients opposed to unethical or immoral medical procedures.

The bill would allow for very limited private contracting between doctors and patients for medical care outside of the government system.

If a doctor and a patient wanted to contract privately for medical services, the doctor would have to give up treating all other patients enrolled in the government health plan and receiving reimbursement from the government for one full year.

Curiously, such an absurd restriction on personal freedom does not even exist in Britain’s National Health Service, the granddaddy of socialized medicine, where doctors freely practice in both the government program and the private sector.

Sanders and his colleagues have outlined a clear direction for America’s health policy: a government monopoly with centralized power over American health care financing and delivery; a massive increase in federal spending combined with promised savings that will not materialize; enormous tax increases that will reach deep down into the working class; new restrictions on personal and economic freedom; and, for patients who want or need something new and better, virtually no avenue of escape.

Sanders and his colleagues have put their vision—profoundly authoritarian—into legislative form. It is touted in the media and elsewhere as a viable alternative only in the wake of the Senate Republicans’ monumental failure to come together and enact an alternative to Obamacare.

Sen. John Barrasso, R-Wyo., has recently asked the Congressional Budget Office to score the cost of the latest version of Sanders’ plan.

Meanwhile, the president and the Congress should explain to the American people how a patient-centered, market-based set of reforms will reduce health insurance costs, improve access to quality care, and expand their personal freedom.

In short, they should outline their vision—and fight for it.

This piece originally appeared in The Daily Signal

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