Happy More Taxes Day, Thanks to Medicare-for-All

By April 15, 2019 Commentary

Bernie Sanders’ has released his version of Medicare-for-All.  Everyone should read this so they understand what it actually proposes.   (Bill)  I have pointed out before the usual misrepresentations and slights of hand used to promote big government spending, as was certainly the case with the ACA.  This bill is even worse, although I give Bernie credit for at least acknowledging that it would require a huge increase in taxes and he really doesn’t know where that will come from.  He is also fairly honest because he admits that this is massive net increase in total national health spending, because the rich benefits will cause a leap in inappropriate treatments and excessive utilization, that far outweighs any supposed savings from reduced provider payments and the usual nonsense about reducing administrative expense, which won’t happen.  Bernie wants to eliminate private insurers–do you have any idea how many very well-paying jobs are connected to the insurance industry?  Are those people all going to suddenly become government employees and be happy about it?  Not if we are supposedly saving on administrative expenses.  The bill would eliminate Medicare Advantage as well, do you think the 35% of beneficiaries currently in MA are going to want that?  If enacted, massive disruption would ensue, affecting the entire economy.

And most important of all, understand that this bill would pay providers at Medicare rates for all patients.  For hospitals that is simply not sustainable, every reasonable analysis indicates that most hospitals would go bankrupt if they were reimbursed like that, or they would have to significantly reduce costs, which would impact quality and access.  And for most doctors, it would result in a 30% to 40% drop in income.  As I have asked before, do you really think that won’t influence the quality of clinicians we have available or the quality of care they provide.  And the bill says the government will negotiate, i.e. dictate, pricing on drugs, devices and equipment.  While I think pricing is reprehensible on many of these products, that is due to market distortions created by the patent system.  And there is a level at which prices are too low to encourage innovation and it is innovation which holds out the promise of curing chronic diseases and expensive conditions like cancer, and that is the best long-term way to reduce health spending.  I am firmly convinced that Medicare-for-All would lead to a truly low-quality health system, with limited access and poorer outcomes.  We may have an expensive system, but at least now on a risk-adjusted basis we have excellent outcomes.

Don’t be delusional about the taxes to pay for this coming from rich people.  All taxes are ultimately paid by all of us not just as taxpayers but as consumers.  Businesses pass tax costs along to consumers in the former of higher prices and to employees in the form of lower wages.  The wealthy control most of those businesses and they just pass their tax increases on through those businesses.  So don’t think that the rich are going to pay for this–you are.  And the general economic effect will be devastating, wreaking havoc on 20% of the economy and upsetting investment and employment decisions.  When is the world going to learn, when are we going to learn that big government and big government programs inevitably destroy a nation’s economy and its citizens’ standard of living.  How many Venezuelas do we have to watch.  There are other ways to make health care more affordable, without sacrificing quality, tactics that eliminate existing market distortions and give individuals more control and more responsibility for their health behaviors and health spending.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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