This is the fifth in a five-part series that gives economic reasons to oppose a single-payer healthcare system such as that proposed by Senator Bernie Sanders called The Medicare For All Act.
Chris Conover, Duke University economist, has given us four reasons, hidden costs, thus far:
- $625 Billion to $1.1 Trillion in deadweight losses from new taxes (Part I)
- $453 to $626 Billion in additional waste (Part II)
- $152 to $914 Billion in costs resulting from rationing (Part III)
- $23 to $152 Billion in social losses from reduced innovation (Part IV)
- Thus the hidden costs of Sanders’ plan are $1.24 Trillion to $2.8 Trillion per year ($3,800 to $8,500 per U.S. resident)
This should be plenty of reasons to oppose the Sanders Medicare For All plan. But even if someone should try to refute these numbers, as someone certainly will, Conover gives us a fifth reason we cannot dismiss – our nation cannot afford it.
What will the Sanders Plan actually cost?
The Sanders campaign of 2016 used the projections of Gerard Friedman, economist at The University of Massachusetts – Amherst, to claim his plan would actually reduce healthcare expenditures by $6.3 Trillion over ten years (13.3%). These numbers have been challenged by other economists, including the liberal think-tank, The Urban Institute.
- Ken Thorpe, Emory University economist and advisor to the Clinton health plan, estimates the Sanders plan would cost $24.7 Trillion over a decade and add a budget shortfall of greater than $1 Trillion per year.
- The Urban Institute calculated the Sanders plan would increase federal spending by $32 Trillion over a decade (232.7%), an increase in healthcare spending of $6.6 Trillion (26%).
- Conover has critiqued the Friedman report and found he underestimated the cost by $16.6 Trillion by failure to calculate deadweight losses and the cost of moral hazards.
- Avik Roy, Manhattan Institute economist, critiqued the Friedman report and found the Sanders plan would increase the federal deficit between $14.4 Trillion and $19 Trillion.
Current Unfunded Liabilities
In 2015, the U.S. had a fiscal gap of $210 Trillion. Economists calculate this number by taking the sum of the current federal debt plus the present value of all future tax revenues minus all future federal program costs. When that number is a negative one, there is a fiscal gap or unfunded liability.
Federal debt + future tax revenues – future federal programs expenses = fiscal gap
Present value means it is the additional amount Americans need to have in the bank today earning interest at the U.S. Treasury bill rate in order to finance all our future promises. Health programs such as Medicare, Medicaid and ObamaCare are huge sources of such enormous unfunded liabilities (55% in 2012).
- State and local governments add $38 Trillion to this number
- $210 Trillion amounts to $644,000 per U.S. resident
- $210 Trillion is more than 11 times the GDP in 2016
- The total wealth in all U.S. households is only about $94.8 Trillion
- To close this gap would have required raising all federal taxes by 58.5% or cutting federal spending by 37.7%.
These numbers are staggering to behold, too much for our comprehension. Therefore it is no wonder that politicians have been “kicking the can down the road”, avoiding the harsh reality of dealing with these deficits. But what they are really doing is stealing from their children and grandchildren who will be forced to pay for their reckless spending.
It’s time to stop the madness. Here is the reality this generation must face. If the Urban Institute calculations are correct, and they are certainly a liberal think-tank unlikely to oppose liberal policies, the Sanders Medicare For All Act would only make this situation worse. It would increase the fiscal gap by a minimum of $61 Trillion!
The Bottom Line
- The Sanders plan will impose hidden costs ranging from $1.25 Trillion to as much as $2.8 Trillion per year.
- The Sanders plan will increase the fiscal gap by a minimum of $61 Trillion
- America cannot afford this expensive new entitlement.
- No amount of “taxing the rich” will pay for this.
- This will require us to steal from our children and grandchildren – which is morally unacceptable!