Elizabeth Warren took a pounding in the recent Democratic debate for her lack of candor on “Medicare for All.” Asked whether it would require the middle class to pay more in taxes, she was a study in wriggly evasion. But that was no surprise. The selling of “Medicare for All” depends on a large amount of deception.
The name itself is deeply misleading. The “for all” part may be accurate, but the “Medicare” is not.
It would be hugely ambitious to take the existing program and expand it to include everyone, not just seniors. But Bernie Sanders’ proposal, which Warren co-sponsored, is to Medicare what a tiger is to a housecat. They have obvious similarities, but it would be dangerous to confuse the two.
To begin with, their plan is extravagantly generous. In his vision, Sanders boasted in the debate: “Premiums are gone. Co-payments are gone. Deductibles are gone. All out-of-pocket expenses are gone.” Medicare, by contrast, has those features, which serve to restrain not only federal spending on health care but all spending on health care. “Medicare for All” would also cover things that Medicare doesn’t — vision care, dental care, hearing aids and long-term care.
These are major changes that would greatly increase the cost of providing universal coverage. The government would have to start paying expenses that patients previously had to pay — not only the patients who would gain coverage but also those already on Medicare.
Right now, a study by the Mercatus Center at George Mason University noted, “40% of national dental care expenses are paid out of pocket,” with Medicare paying almost none. Under “Medicare for All,” the government would cover them all.
The second consequence would be to stimulate consumption of medical care. If the cost of seeing a doctor, getting an X-ray or trying some mildly promising therapy is zero, the demand for such services will jump. That would lead to yet another effect: longer wait times for appointments — because the immediate supply of doctors and dentists would remain the same.
A recent study by the Urban Institute and the Commonwealth Fund estimated that a single-payer program providing the same benefits as the Affordable Care Act would boost federal outlays by $1.52 trillion in 2020. But expanding benefits and eliminating premiums, co-payments and deductibles, as Sanders and Warren propose, would carry a price tag of $2.8 trillion.
The sponsors claim that their plan will lower overall health care costs. But the savings would not come without pain. Medicare reimburses hospitals for about 87% of the cost of the patients it covers — a burden hospitals can bear because private insurance reimburses them for about 145% of the cost of its patients. A knee replacement covered by Medicare might bring in $17,000, while a private insurer would pay $37,000.
If Sanders and Warren have their way, though, private insurance will go the way of the passenger pigeon. So hospitals would face a sharp reduction in revenue — as much as 16%, according to Stanford medical school economist Kevin Schulman. Some, and perhaps many, would get the equivalent of a do-not-resuscitate order.
The expected savings, however, would not offset the likely costs. “Increased consumption of health care, a result of more generous benefits and no out-of-pocket costs, is greater than the savings from lower provider payments and administrative costs,” the Urban Institute/Commonwealth Fund study concluded.
Sanders, unlike Warren, has laid out tax increases to finance the expansion — but inadequate ones. The Committee for a Responsible Federal Budget, a bipartisan fiscal watchdog group, says his plan would cover less than half of the federal government’s outlays. “That would leave a $14 trillion dollar ‘hole’ to be filled,” it says. Warren has yet to demonstrate that she can do better.
Medicare, of course, didn’t abolish private insurance, as Warren and Sanders want to do. Making such a massive change is a recipe for disruption and turmoil. “We’re talking about changing flows of money on just a huge scale,” Princeton sociologist Paul Starr told The New York Times. “There’s no precedent in American history that compares to this.”
When criticized, the two act as though they offer the only way to achieve universal coverage. What they omit is that plenty of countries have gotten there without adopting a single-payer system.
Demanding “Medicare for All” may work well at a campaign event, advertising an uncompromising commitment to ensuring that everyone has medical insurance. But what makes a good slogan would make a bad policy.