The Warren Healthcare Plan

 

Senator Elizabeth Warren has a “plan” for everything. Recently she released her healthcare plan with enough details to analyze it and render an opinion. The response even from liberal commentators has been harsh, to put it mildly.

Warren has embraced Senator Bernie Sanders’ Medicare for All plan, but with her own ideas on funding. By her own mathematics, her plan will cost a cool $52 Trillion over the next ten years. That’s $20 Trillion more than the conservative estimate of the Mercado Institute at George Mason University.   

The Wall Street Journal editorial board gives her credit for ambition – but not much else.

“You certainly can’t criticize the new Iowa Democratic caucus front-runner for lack of ambition, Despite criticism from fellow Democrats, she is sticking to her plan for a government takeover of American health care, including the elimination of private insurance that 170 million or so Americans now have. She continues to claim that this will cost “not one penny in middle-class tax increases. She walks on water, too.”

Liberal columnist William A. Galston describes her plan as “Elizabeth Warren’s Health-Care Hara-Kiri”, a suicide pact for her political future. Here’s how he describes the plan:

“She has zoomed past the last off-ramp and is now fully committed to a plan that would revolutionize the way health care is financed and delivered in the U.S. She can’t run on this plan in the primaries and then shift to something more modest in the general election, even if she wants to. If Ms. Warren is the nominee, Medicare for All is what she’ll take to the country. Given the centrality of health care in our political debate, this plan will be much of the basis on which she is judged.”

Galston correctly points out that more than 218 million Americans now are covered by private insurance plans, of which 179 million are employer-provided. Many of these plans are the result of tough negotiations in which employees have given up wage increases for more generous health insurance benefits. Asking these workers to give up these hard won gains in return for a promise of what they’ll get from the government is a hard sell.

Economists and mathematicians will argue about the numbers to pay for Warren’s plan, or the Sanders plan, but health insurance analyst Robert Laszewski has another important point of view. He notes the current healthcare system is largely financed by the private insurance market. Current Medicare and Medicaid rates are often below providers’ costs but these are supplemented by higher rates for private insurance. If the entire private insurance system is shut down, as Warren and Sanders propose, providers reimbursement rates will suddenly be cut in half. (See the chart below.)

Laszewski poses the relevant questions: What would happen to your local hospital if suddenly the nation went to a single-payer Medicare for all system and 177 million out of a total of 298 million people had their hospital payments cut almost in half? Or what would happen to your doctor’s practice if suddenly your doctor had their reimbursement for about 60% of their patients cut by an average of 22%?

When you consider these crucial questions, it becomes obvious that the real issue is not whether or not you can raise enough money to pay for Medicare for All through higher taxation, but rather what will be left of the healthcare system providers when you cut their payments across the board to Medicare rates? As a healthcare provider, I can assure you the current doctor shortage will go from serious to catastrophic overnight.

 

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