I’ve got to admit that my concerns about “Medicare for All” are different from those of Robert Gebelhoff as expressed in his piece in the Washington Post:
When proponents of Medicare-for-all are asked how they plan to pay for their vastly expanded entitlement program, they typically stress that such a system would save hundreds of billions of dollars because it cuts out the administrative services and profits in the private health-care industry. The government would also be able to use the size of its customer base against drug companies, forcing them to lower prices: Overall, according to one generous estimate by the conservative-leaning Mercatus Center, such a reduction would lower national spending by $2 trillion over the next 10 years.
Of course, that’s not nearly enough for the government to cover the entire cost of health care. The Mercatus Center found that, even with those savings, a Medicare-for-all system would add some $32.6 trillion in spending over the course of 10 years. So how would we cover those costs under Medicare-for-all? Simple, its proponents argue: through taxes. Sure, this might be a huge raise in the average person’s payment to the government, but taxpayers would also be getting rid of other monthly payments in the form of health insurance premiums. The average consumer’s costs would stay about the same, the system would be more efficient and it wouldn’t add any more debt to the government because taxpayers are covering it.
But this poses a whole other round of questions that are rarely asked of progressives. If health-care costs continue to rise — as they have for decades in every country regardless of the structure of its health-care system — how are we supposed to structure our tax collection to pay for a single-payer system? Will we automatically keep raising taxes to match health-care costs? How do we guarantee that lawmakers regularly update what will inevitably be an unpopular tax burden so that health-care spending doesn’t result in massive deficits in our federal budget?
I worry about other things. For example, what’s the evidence that M4A would reduce the costs of administration at all? Proponents need to ask themselves a few questions. Most education in the U. S. is public education. Why is our cost per pupil of education so much higher than anywhere else in the world? Most of those costs are administrative costs. Most road and bridge construction in the U. S. is done by governments at various levels. Why are our costs per foot of road or bridge so much higher than anywhere else in the world? Why is our military spending so much higher? Occam’s Razor leads to the conclusion that our costs for everything done by government are much higher than anywhere else in the world. What happens if M4A does not merely fail to realize savings in administrative costs but actually costs more?
I’m glad that Mr. Gebelhoff is thinking about the ongoing costs of health care but merely wondering about how the proponents of M4A plan to continually raise taxes to meet the escalating costs isn’t nearly enough. What about the distortions in the economy that will inevitably be created by a program at the scale of M4A that doesn’t control costs?
But what should concern us most is the blithe lack of concern about any of the details that proponents of M4A exhibit. As in any other edifice it is simply not true that the details will take care of themselves.
Ask proponents of M4A if they also support open borders. Bet they do.
“Occams Razor leads to the conclusion that our costs for everything done by government are much higher than anywhere else in the world.”
Because the goodie add-ons are irresistible, and government incentives, vs private sector incentives. An open question to this entire community: can you show me a material government program that performs at superior service or cost to the private sector? Are there any? 1? 2?
“But what should concern us most is the blithe lack of concern about any of the details that proponents of M4A exhibit.”
My biggest big picture concern is that through inattentiveness or panic the general population succumbs to simplistic nostrums such as unthoughtful universal income or M4A. Its one thing to do stupid things in 1965, its another to do them today when debt levels are astronomical.
“For example, what’s the evidence that M4A would reduce the costs of administration at all?”
Because current Medicare costs are lower.
“Occam’s Razor leads to the conclusion that our costs for everything done by government are much higher than anywhere else in the world.”
Since I think Occam’s razor is really just looking for the simplest explanation, I think Occam would look at current Medicare and think the simplest assumption is that just having Medicare cover more people would mean admin costs stating at the same rate. In fact, if M$A covers younger, therefore healthier, patients, then its costs might even be lower.
All that said, while M4A likely, as those liberal Mercatus guys calculated (LOL), costs less initially than our current combined Medicare/private sector spending, in the long run costs lily go up, just like they do now. Whether we have M4A or any other plan we still need to address costs. (BTW, you do know that per capita health care spending is way down?)
Steve
That proves exactly nothing. There is no proof that the administrative costs are inherently scalable linearly. We simply do not know and we can’t even conduct an experiment. We’re either all in or not.
Is that true? Or is the rate of increase of per capita health care spending down? My understanding is that spending in 2018 was higher than in 2017 which was higher than in 2016, etc. For per capita health care spending to be “way down” it would need to decrease from year to year.
“That proves exactly nothing. There is no proof that the administrative costs are inherently scalable linearly.”
True, we cannot know for sure. There really isn’t much that we can know for sure. Since you invoked Occam’s Razor, I think the likeliest outcome is that costs, per person, stay about the same. In theory they should be lower since it would be adding a healthier population, but I am willing to concede that might not happen.
We also dont know for sure if costs will go up as you predict, but I am not sure that costs in education or bridge building have much relation to medical care. Since we have a known model which is essentially identical to the proposed model, I would suggest using the known model.
As to the decrease, I misremembered. It is only Employer health care spending.
https://www.motherjones.com/kevin-drum/2018/09/happy-labor-day-2/
Steve
M4A can’t get to square one, which is initial funding. There’s simply no way to sell that to the American public. It would require about 1.8 trillion in additional revenue PER YEAR. If we increased the effective taxes on the top 10% to their historical highs in the 1940’s and 1950’s that could, potentially, raise $280 billion a year. That only leaves $1.5 trillion left. Let’s be super-duper generous and say we can cut 1/3 of that through administrative and other savings. That still leaves a trillion dollars a year.
Should be easy!
There’s a reason none of the proponents of M4A ever include the funding mechanism and just hand-wave when asked. Things will be much different when it comes to having to actually vote for something.
Since per capita health care spending has increased every year for the last half century a substantial decrease would have been big news if true. Health care spending by employers per employee decreasing is bad news. In the presence of increasing per capita health care spending, it suggests that employers are able to offload more of their expenses to employees, something only possible in a slack labor market.
I might add that the persistence of increases in per capita spending support my supposition that such spending will continue to increase. IIRC for the last decade it’s increased at about three times the non-health care rate of inflation. That’s better than five time but still.
“M4A can’t get to square one, which is initial funding.”
Same problem with making SS privately managed. We would actually spend 2 Trillion less over 10 years in total health care spending according to Mercatus, but how do we make the transition? It will be very difficult to take all of those private health care dollars and instantly turn them over to Medicare. I think you could probably have a phased in transition and make it work, but it wouldn’t be easy.
Steve
That’s not quite what Mercatus said. They said you get the savings if the assumptions given by those who support M4A are true. That’s an enormous “if”.
It did strike me that you were unaware that spending has decreased in several areas and times, but then health care doesn’t get that much coverage other than very broad stuff.
“In 2010, the government predicted that Medicare costs would rise 20 percent in just five years. That’s from $12,376 per beneficiary in 2014 to $14,913 by 2019. Instead, analysts were shocked to find out spending had dropped by $1,000 per person, to $11,328 by 2014. It happened due to four specific reasons:
The ACA reduced payments to Medicare Advantage providers. The providers’ costs for administering Parts A and B were rising much faster than the government’s costs. The providers’ couldn’t justify the higher prices. Instead, it appeared as though they were overcharging the government.
Medicare began rolling out accountable care organizations, bundled payments , and value-based payments. Spending on hospital care has stayed the same since 2011. Part of the reason for this is that hospital readmissions dropped by 150,000 a year in 2012 and 2013. That’s one of the areas hospitals get penalized if they exceed standards. It resulted in increased efficiency and quality of patient care.
High-income earners paid more in Medicare payroll taxes and Part B and D premiums. It meant that the Medicare Part B premium charged to everyone else could remain at its current rate of $104.90 per month. For more, see Obamacare taxes.
In 2013, sequestration lowered Medicare payments by 2 percent to providers and plans.”
Inflation increased about 2.1% in 2017. Total health spending increased 3.9%. I am pretty negative about a lot of things that need changing, and changing health care is difficult. (To quote a famous politician, “nobody knew that health care could be so complicated”.) But, I actually find the trend kind of encouraging. I know firsthand that at least in some health care systems costs are now taken pretty seriously.
Steve
Health care is presently about 18.2% of the total economy. If 18.2% increased by 3.9% and inflation across the economy grew at 2.1%, by what percent did the NON-health care portion grow? My back-of-the-envelope calculation says that health care inflation is about three times the non-health care inflation rate.
When health care was 5% of the economy as was the case when Medicare/Medicaid were enacted, health care inflation was considerably less important than now.