Devil Is in Details of Sanders’ Single Payer Proposal

Bernie Sanders health careDouble-digit premium increases have left Obamacare reeling. Despite this clear failure of central planning, some lawmakers think that the answer is for the government to take over the provision of all health care. This would be a mistake.

Senator Bernie Sanders (I-VT), a longstanding advocate of taxpayer-funded medicine, has finally released his single-payer bill to much fanfare from liberal supporters. The rabid show of support by the grassroots left shows that old ideas die hard.

During the 2016 Democratic primaries, experts from across the ideological spectrum criticized the Senator’s plan as too costly and unworkable in practice. With large required payment cuts to hospitals and physicians and tax hikes on the working class, it’s little wonder why support cannot and will not expand beyond Sanders’ base.

The problem with single-payer goes beyond the gargantuan price tag. If the federal government were to become the sole national insurer, medical reimbursement rates would likely be slashed in order to cut costs. Faced with severe salary and revenue cuts, many practices would need to close and “insured” individuals would be left with far fewer options.

A similar dynamic has already taken place in the Medicaid program, where low federal reimbursement rates mean low patient acceptance rates by physicians. This, along with several other unsavory features of federal insurance, leaves Medicaid patients in no better health than before obtaining insurance.

Compared to the wholesale destruction of the American health care industry, the plan’s cost is only one of many problems. Unsurprisingly, Sanders has not come close to finding a way to fund his “Medicare for all” monstrosity.

To understand just how far this plan falls short, taxpayers can take a look at the inconspicuous-sounding “Options to Finance Medicare For All” companion document to the plan itself. Never mind that none of the funding ideas were included in the bill itself; tax hikes on the middle class don’t make for great legislation.

Take, for example, the “4 percent income-based premium paid by households” (pg. 2) that is billed as raising $3.5 trillion over ten years. To make the proposed tax sound more “progressive,” the companion document states that “families of four making less than $29,000 a year would not pay this premium.”

But since only 60 percent or more of households with children make over $29,000, it’s hard to see this tax as anything but regressive. This can only be billed as a “savings” for working families by comparing the tax expense with the current amount of health care premiums paid out by the typical family (stated as $5,277).

But this is a misleading comparison, because it assumes that families will not have to pay for supplemental private coverage once the single payer system goes into effect. Many will choose to do so.

Senator Sanders attempts to wave away this problem by prohibiting “duplicate coverage” under Section 107 of the bill. This language, already incorporated into existing federal insurance programs, exists to keep insurers from selling superfluous plans to customers unaware of the generosity of federal benefits.

But the bill’s architects, likely aware of political problems associated with eliminating private financing, allow for direct private contracting with providers (Sec. 303), so long as the provider agrees not to bill the government for these expenses.

While “physician by subscription” services are rare now, Medicare for All would likely cause these services to proliferate by axing private insurance. In exchange for payment better than the federal reimbursement rate, physicians could allow patients to “skip the queue” and get more immediate medical attention.

We see these kinds of programs emerging in Western European health care systems, where private plans cover basic gaps in public services. Sweden, often hailed as the poster child for government-funded care, has seen a surge in private arrangements in recent years in response to yearlong waits to get cancer treatment.

Britain’s National Health Service (NHS) has an unreliable track record with subspecialty care, prompting patients to use private plans. In addition, the French often pay to get the doctor of their choice and to avoid waiting for treatment.

Given what we already know about Medicaid health care outcomes, there will surely be a lot of gaps in care. Any plan that seeks credibility needs to account for these less-than-stellar scenarios, and also take into account the long history of government cost overrunsthat have come with health care delivery.

In the past hundred years or so, single-payer proposals for the United States have been a dime a dozen. But the devil is in the details, as architects have been unable to avoid regressive tax hikes and dramatic reimbursement cuts.

While Sanders and other single-payer supporters see tax increases as a necessary means to bring about universal coverage, they fail to take into account likely consequences. Americans will likely respond to any gaps in government coverage visa private contracting, forcing large expenditures in addition to higher taxes

But America needs not choose between the failed status quo and an ill-conceived single-payer plan. Multiple other plans have the potential to control costs by eliminating unnecessary mandates, increased competition, and nixing costly barriers to entry. This, not federal controls and pitchfork populism, is the solution to the health-care woes facing America..

From - Economics21.org - by Ross Marchand

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