What’s Wrong With Medicare for All? – Part III

(This post was originally posted 3/4/19.)

 

(Author’s note: As we enter the last few weeks of the presidential campaign, there are several campaign issues which have been previously addressed in this blog. These include Medicare for All, single-payer healthcare, socialism, school choice and others. In the next few weeks I will be re-posting many of my previous posts on these issues as a review for voters. For this limited time I will be posting six days a week instead of the usual twice a week. These earlier posts will be intermingled with new posts on current topics.)

 

In Part I of this series, we talked about the Democratic claims for a new healthcare system called Medicare for All, introduced by Senator Bernie Sanders. All of the following claims have been made about this idea:

  • Universal access to healthcare
  • Elimination of insurance company approvals for treatment
  • Increased taxes will be no more than current expenses for healthcare
  • Lowered healthcare costs for patients and the government
  • Improved healthcare quality for all Americans
  • Americans will love this “free healthcare”

 

Part I began a discussion of the impact of Medicare for All on access to healthcare.

As I discussed in Part I, having insurance coverage does not necessarily mean having increased access to healthcare. If you can’t get into a doctor’s office for treatment because your coverage doesn’t pay the doctor enough to cover his expenses, you still don’t have access to healthcare. This is often the case with those currently enrolled on Medicaid. Even though they have “coverage” by the expansion of Medicaid, their accessto healthcare has not improved.

In Part II I continued the discussion of access to healthcare and showed how eliminating private health insurance, as Medicare for All would do, will not eliminate the need for government approval for all healthcare treatments. In fact, it will surely lead to healthcare rationing, to control costs, as every other country with similar single-payer healthcare has experienced.

Increased Taxes

Everyone concedes that Medicare for All will require a massive tax increase. But supporters of this idea rationalize this increase in several ways:

  • They believe the rich will pay for most of the tax increases
  • They believe the overall cost of increased taxes will be offset by lower overall healthcare expenses
  • They believe low-income Americans will be unaffected

 

Economist Charles Blahous of the Mercatus Center has estimated the cost of Medicare for All at $32.6 Trillion over the first ten years. That’s a cost of $3.26 Trillion each year. To put that number into perspective, the current cost of our military for defense each year is only about $681 Billion ($0.68 Trillion) or about 20% of the estimated cost of Medicare for All. The current expense of Medicare is $579 Billion and for Medicaid is $350 Billion or a combined $829 Billion ($0.82 Trillion). So we’re talking about four times current Medicare and Medicaid spendingand nearly five times current defense spending.

Economist John C. Goodman says this would necessitate a minimum of a 25% payroll tax – but only if it is assumed doctors and hospitals provide the same amount of care they provide today. Since Medicare rates are 40% or more below private rates, a realistic assumption is that doctors and hospitals would increase the amount of care to make up the difference. This would then require at least a 30% payroll tax.

Don’t confuse payroll taxes with income taxes. Payroll taxes are taken out of your paycheck before you ever receive your pay and are paid by every worker. Just as every worker must pay social security and Medicare taxes up to certain income limits, every workerwould be required to pay this increased Medicare for All payroll tax. It wouldn’t be paid for “by the rich” as supporters claim.

Higher Costs for Patients and the Government

It gets worse. Blahous also estimates that the administrative cost of private insurance is 13%, more than twice the 6% it costs to administer Medicare. Single-payer advocates often use this administrative cost comparison to argue that universal Medicare would reduce healthcare costs. But this estimate ignores the hidden costs Medicare shifts to the providers of care, doctors and hospitals, including the enormous amount of paperwork required in order to get paid.

The Obama administration forced doctors and hospitals to implement electronic medical record systems – a costly change that appears to have failed to deliver promised increases in quality or reduction in costs or medical errors. In fact, it has made it easier for doctors to “up code” and bill the government for more money. Also to be considered are the costs of collecting more taxes to fund Medicare. Some estimates put these costs as high as 25 cents on every dollar.

A Milliman  & Robertson study estimates that when all these costs are included, Medicare and Medicaid spend two-thirds moreon administration than private insurance spends. Using the most conservative estimate of the social cost of collecting taxes, economist Benjamin Zycher calculates that the excess burden of a universal Medicare program would be twice as highas the administrative costs of universal private coverage. That means the administrative cost of Medicare for All would be about 26 percent!

To off-set these higher administrative costs, the government would either raise taxes even higher or lower payments to providers even lower or increase rationing of healthcare even more than expected. The first solution would further decrease take-home pay. Both of the latter solutions would restrict access to healthcare  – even more! This was supposed to improve access, not make it worse.

Supporters of Medicare for All are delusional to think the cost of this legislation would not increase overall spending for healthcare for consumers. And the tax increases necessary would affect everyone. It is unaffordable.

 

(More on Medicare for All in Part IV of this series.)

What’s Wrong With Medicare for All? – Part II

(This post was originally posted 2/25/19.)

 

(Author’s note: As we enter the last few weeks of the presidential campaign, there are several campaign issues which have been previously addressed in this blog. These include Medicare for All, single-payer healthcare, socialism, school choice and others. In the next few weeks I will be re-posting many of my previous posts on these issues as a review for voters. For this limited time I will be posting six days a week instead of the usual twice a week. These earlier posts will be intermingled with new posts on current topics.)

 

In Part I of this series, we talked about the Democratic claims for a new healthcare system called Medicare for All, introduced by Senator Bernie Sanders. All of the following claims have been made about this idea:

  • Universal access to healthcare
  • Elimination of insurance company approvals for treatment
  • Increased taxes will be no more than current expenses for healthcare
  • Lowered healthcare costs for patients and the government
  • Improved healthcare quality for all Americans
  • Americans will love this “free healthcare”

 

Part I began a discussion of the impact of Medicare for All on access to healthcare. Supporters of this bill believe it will increase access to healthcare because more people will have insurance coverage. Currently about 90% of Americans have some form of healthcare insurance coverage. Supporters of Medicare for All believe this bill will provide 100% coverage for all Americans.

However, as I discussed in Part I, having insurance coverage does not necessarily mean having increased access to healthcare. If you can’t get into a doctor’s office for treatment because your coverage doesn’t pay the doctor enough to cover his expenses, you still don’t have access to healthcare. This is often the case with those currently enrolled on Medicaid. Even though they have “coverage” by the expansion of Medicaid, their accessto healthcare has not improved.

Will Medicare for All increase access to healthcare?

To be sure, Medicare for All is a misnomer. It will not be Medicare expanded to cover everyone. It will mean the eliminationof private healthcare insurance, which currently provides healthcare coverage for about 200 million Americans, including those with Medicare supplement plans or Medicare Advantage plans.

Medicare for All is a clever but misleading catchphrase that polls better than describing it as single-payer healthcare– which is exactly what it is. A single-payer healthcare system means the government is the only payer – provider of healthcare. All doctors and hospitals must submit their bills to the government for approval and payment. The government controls the prices, the approvals, and the payments. Nothing gets done without government approval and no one gets paid more than the government allows.

Simply put, this is socialized medicine.Democrats don’t call it that because they know the word “socialized medicine” doesn’t poll well; just like the phrase “pro-abortion” doesn’t poll as well as “pro-choice.”

In every socialized medicine system in the world, including Canada, United Kingdom, Sweden, Denmark, etc., costs are controlled by reducing payments to providers (which reduces providers) and rationing care. This means long waits to see a doctor, government control of approvals, elimination of certain costly treatment options (especially for the elderly), and reduced medical innovation.

Elimination of insurance company approvals

Senator Kamala Harris recently announced her candidacy for president and declared her support for Medicare for All. When asked if her plan would eliminate private healthcare insurers, she agreed it would. She argued, who would miss them? “Who of us has not had that situation where you’ve got to wait for approval and the doctor says, “Well, I don’t know if your insurance company is going to cover this’? Let’s eliminate all of that, let’s move on.”

The naiveté of Senator Harris in this statement is appalling. Even the liberal Washington Post editorial board had to chastise her thinking when they responded, “Actually, no one can really eliminate “all of that” – not Ms. Harris and not possible 2020 candidate Senator Bernie Sanders. Even if the United States adopted Medicare for All or some other version of national health insurance, Americans would not get everything they want whenever they want it. No one, in any country, does.”

Every socialized healthcare system on the planet controls costs by rationing – by decreasing access to healthcare. The Washington Post editors agree. They write, “But what Medicare for All could not do – and what Ms. Harris and others who may tout the idea during the coming campaign cannot claim honestly, – is end healthcare rationing.”

How has this impacted access to healthcare in other socialized medicine countries?

Here is a sample of waiting time in two countries with similar socialized medicine.

United Kingdom

  • 2 million patients on the NHS waiting lists
  • 362,600 patients waited longer than four monthsfor hospital treatment as of March last year
  • 95,252 patients waited longer than six months
  • 4,300 patients were on the waiting list more than a yearby July
  • 19%of patients wait 2 months or longer to begin their first “urgent” cancer treatment
  • 17% wait more than 4 months for brain surgery

 

Canada

  • The median waiting time between seeing a general practitioner and a specialist was 10.2 weeks.
  • 5 months between seeing a doctor and beginning treatment
  • 3 months to see an ophthalmologist
  • 4 months to see an orthopedist
  • 10 months for orthopedic hip or knee replacement
  • 5 months to see a neurosurgeon
  • 8 months for neurosurgery
  • 3 months for initialtreatment of heart disease

 

These excessive waiting times are not only for seeing doctors but also for obtaining diagnostic studies like CT Scans, MRI scans, and heart catheterizations, as well as to obtain the newest drugs for cancer and other serious diseases. Aside from transplants, the Organization for Economic Cooperation and Development (OECD), which compares other countries, states, “waiting lists are not a feature in the United States.”

Of course, these excessive waiting times lead to poorer healthcare outcomes. Single-payer systems have proved inferior to the U.S. in outcomes for almost all serious diseases, including cancer, diabetes, high blood pressure, stroke and heart disease.

While America is considering implementing a single-payer system like Medicare for All, those countries that currently have such a system are backing away from it with increased spending on private care.

  • Sweden has increased its spending on private care for the elderly by 50% in the last decade, abolished its government’s monopoly over pharmacies, and made other reforms.
  • The United Kingdom last year spent more than $1 Billion on private care according to the Financial Times.
  • In Denmark patients can now choose a private hospital or a hospital outside the country if their wait time exceeds one month.
  • Canada is also feeling the pressure on excessive waiting times and is increasing spending on private care for relief.

 

Scott W. Atlas, senior fellow at Stanford’s Hoover Institution recently wrote in The Wall Street Journal:“A single-payer “guarantee” is no promise of access to quality medical care. If brought to the U.S., the only reliable promises of single-payer would be worse health care for Americans and higher taxes. America’s poor and middle class would suffer the most from a turn to single-payer because only they would be unable to circumvent the system.”

 

(This series will be continued in the next post – Part III.)

What’s Wrong With Medicare for All? – Part I

(This post was originally posted 2/18/19.)

 

(Author’s note: As we enter the last few weeks of the presidential campaign, there are several campaign issues which have been previously addressed in this blog. These include Medicare for All, single-payer healthcare, socialism, school choice and others. In the next few weeks I will be re-posting many of my previous posts on these issues as a review for voters. For this limited time I will be posting six days a week instead of the usual twice a week. These earlier posts will be intermingled with new posts on current topics.)

 

There’s a lot of talk these days about Medicare for All. Already it is shaping up to be the hottest topic of the 2020 Presidential Campaign. What does it mean and is it good for the American people?

Medicare for All is a catchphrase and a legislative bill, both introduced by Vermont Senator Bernie Sanders. Sanders, an avowed socialist, who is promoting a government-run, single-payer healthcare system. He promoted this cause in his unsuccessful 2016 bid for the presidency.

The idea has gained traction since then with other Democratic presidential hopefuls. Recently announced Democratic presidential candidates Kamala Harris, Elizabeth Warren, Kirsten Gillibrand and Corey Booker are all supporters of Medicare for All. It is likely to become a platform plank for Democrats in the 2020 election. Therefore, understanding what it means and the impact it will have on healthcare and the nation’s economy is paramount.

Democratic Claims

There are many claims being made about the benefits of Medicare for All. I have heard all of the following:

  • Universal access to healthcare
  • Elimination of insurance company approvals for treatment
  • Increased taxes will be no more than current expenses for healthcare
  • Lowered healthcare costs for patients and the government
  • Improved healthcare quality for all Americans
  • Americans will love this “free healthcare”

 

All of these claims have been made by politicians or their supporters at one time or another. Sorting out the truth from the fiction is necessary if we’re going to make an intelligent conclusion about this new healthcare idea. Let’s analyze each of these statements one at a time.

Universal Access to Healthcare

Prior to ObamaCare about 84% of the population had healthcare insurance of one kind or another. Since ObamaCare it is now about 90%, mostly because of increased Medicaid eligibility and enrollment. That still leaves about 10% of Americans without healthcare insurance. That does not mean they are without healthcare.

Those 10% are mostly individuals who do not receive employer-provided insurance, are not eligible for Medicare or Medicaid and they have chosen not to purchase ObamaCare insurance because they do not receive a subsidy.

These people are not the poorest Americans. They make too much money to be eligible for Medicaid or ObamaCare subsidies. They may have the money to purchase insurance but they have elected to remain uninsured because it is not cost-effective. This may be a very responsible decision on their part, given the current cost of ObamaCare insurance without subsidies.

Medicare for All would increase the roles of those eligible for healthcare insurance provided by the government. It would also eliminatethe private health insurance industry that currently provides health insurance for about 155 million Americans through their employers, as well as all those with private insurance supplements for their Medicare gap insurance or Medicare Advantage plans. That means the current insurance system for about 200 million Americans would be eliminated!

Advocates of Medicare for All claim this would eliminate the 10% coverage gap and provide universal access to healthcare. Is this true? Would this really improve our healthcare system?

One of the most widely misunderstood words in the healthcare debate is access.Insurance coverage does not mean access. An insurance enrollment card does not increase your access to healthcare unless you can more readily see the doctor. When it comes to Medicaid, this is especially a problem.

In 2007 the State of Oregon was forced to begin an experiment with their Medicaid system because they had inadequate funding to cover everyone eligible. Therefore, they devised a lottery system that arbitrarily determined who would be eligible and who would not. This began what is now known as The Oregon Health Insurance Experiment. This ongoing study has drawn several important conclusions including:

  • Medicaid enrollees do not have better health than the uninsured– when comparing standard measurements of blood pressure, blood sugar, and cholesterol. Medicaid reduced observed rates of depression by 30% but increased the probability of depression. Medicaid increased the probability of being diagnosed with diabetes, but had no impacton lowering blood sugar.
  • Medicaid lowers access to healthcare– Medicaid enrollees were 40% more likely to use emergency rooms for care than the uninsured. This same finding was confirmed by the Colorado Hospital Association, which reported that emergency room use is higher in those states that expanded Medicaid (about 3 times higher). This is explained by the fact that the uninsured (that 10% who chose not to purchase insurance) can pay cash for discounted doctor visits but this is illegal for Medicaid patients. The Medicaid patients cannot get into doctors’ offices so they resort to using emergency rooms for primary care.

 

Government-run healthcare does not increase access to healthcare unless it can provide quality treatment withoutundue delay. In the Oregon study, access to healthcare was better without insurance! So access to healthcare has not improvedby Medicaid expansion. Will Medicare for All be any better?

(More on this topic next post in Part II of this series.)