On Politics: Shortfall of Medicare for all (opinion)
The leftward tilt of the Democratic Party gained momentum in the 2016 election when Sen. Bernie Sanders, a self-described socialist, almost snagged the Democratic presidential nomination from favorite Hillary Clinton.
Sanders’ campaign proposed “Medicare for all” and “free tuition for all.” The 2018 Democratic primary elections have produced Sanders think-alikes Alexandria Ocasio-Cortez (New York congressional candidate) and Andrew Gillum (Florida gubernatorial candidate) who have adopted Sanders’ proposals and added: “abolish ICE,” “$15 minimum wage” and “raise taxes.”
But even if these fringe candidates were to succeed and turn the Democratic Party into the “Democratic Socialist Party of America” subsequent election of a fiscally responsible president and Congress could undo all their mischief … except one: Medicare for All (M4A in the jargon of the Washington swamp).
Labour Parliaments in both Britain and Canada instituted socialized medicine and subsequent conservative governments have been unable to undo it.
The Libertarian Koch Brothers agreed to fund an independent, university study of the financial impact of M4A (a bill actually introduced in the Senate by Sanders but stalled by the GOP majority). George Mason University produced the study which came up with a finding that M4A “would, under conservative estimates, increase federal budget commitments by approximately $32.6 trillion during its first 10 years.”
The study went on to state that even doubling all “currently projected federal individual and corporate income tax collections would be insufficient to finance the added federal costs of the plan.”
Sanders response to the study was that of course M4A would increase government health care spending, but total U.S. spending on health care would actually go down under his bill. How could that be? Because Sanders’ bill provides that doctors, hospitals and other medical service providers will be “reimbursed at Medicare payment rates.” These are, on average, approximately 40 percent lower than rates paid by private insurers which, of course, would cease to exist under M4A.
According to the Centers for Medicare and Medicaid Services, Medicare accounts for 20 percent of national health expenditures, Medicaid for 17 percent, private insurers 34 percent and out of pocket 11 percent; others include dental, non-professional, drugs, etc.
So Sanders’ M4A bill would take 45 percent of market rate revenues now earned by physicians and hospitals and mandate a reduction by 40 percent because Sanders wants everyone on Medicare (with Medicaid for the poor).
If you do the math that works out to an 18 percent reduction in gross revenues for doctors and hospitals with no reduction in costs (well … they wouldn’t have to pay medical insurance for their staffs because that coverage would no longer exist).
In a gross understatement, the author of the George Mason University study said: “It is not precisely predictable how hospitals, physicians and other healthcare providers would respond to a dramatic reduction in their reimbursements under M4A, well below costs of care.”
This is a curious statement by an economist who would have learned early in his studies that when revenues are less than costs enterprises go out of business. Simply stated: doctors would rather flip burgers than be forced to operate at a loss. A reduction of medical practitioners would exacerbate the shortage of doctors just as M4A would be drastically increasing demand by adding the uninsured to Medicare.
The big winners would be the lawyers since hospitals would be declaring bankruptcy right and left.
A month ago in this Tribune column, I wrote that Sanders and his disciples were not true socialists because socialism involves state ownership of the means of production and “Democratic Socialists” just want to reorient priorities and spending while maintaining our constitutional democracy.
I now retract that opinion. Legislation that mandates medical service providers lose free market reimbursement sources and accept government imposed reimbursement rates is the equivalent of state ownership of medicine.
Jim Clark is president of Republican Advocates. He has served on the Washoe County and Nevada State GOP Central committees. He can be reached at firstname.lastname@example.org.