You think Obamacare is bad? Get a load of the new health care reform proposal by Senator Bernie Sanders.
The self-proclaimed socialist and Democratic Party presidential aspirant on Sunday released his plan, called “Medicare for All,” to replace the entire private health insurance industry with a government-run single-payer system.
“Bernie’s plan will provide all Americans with the sense of freedom and peace of mind that comes from knowing you always have access to the health care you need,” a campaign press release stated.
But the plan has several big problems.
Though “Medicare for All” may give Americans the “freedom” from choosing who provides their health insurance, that also means they have no freedom to choose a different option if the service doesn’t work for them. If the government-provided health insurance is a disaster, no other companies exist to offer relief.
The Sanders plan relies on the faulty assumption that the government will be able to negotiate lower prices from pharmaceutical companies and medical care providers by its new position of being the only insurance provider. But if this were such an easy solution, why wouldn’t the government just pass a price control law today on treatments and drugs deemed to be too expensive?
Because history and basic economics have taught us that price controls don’t work. If you don’t allow the market to reach the true equilibrium price, you will experience a shortage.
We are already experiencing a massive shortage of doctors. If the government arbitrarily cuts compensation for these industries, the problem will only get worse. Obamacare has served to make medicine a less attractive field by increasing the paperwork burden for doctors — does Sanders really think cutting their pay will make more people want to be doctors?
There’s also no indication that single-payer would actually lead to great savings. John Goodman, a healthcare expert writing at Forbes, demonstrates example after example of governments privatizing their health insurance plans in order to save money.
The Sanders plan also would be disastrous for the federal budget. Though liberal economist Gerald Friedman paints a rosy picture of how much Sanders’ single-payer system could save, the tax-and-spending increases would still be enormous.
Prominent healthcare expert and Manhattan Institute scholar Avik Roy offers more details at Forbes. “Even by Friedman’s own optimistic projections about what single-payer health care could save, Berniecare would increase federal spending by $28.3 trillion over 10 years,” wrote Roy. “If Friedman is wrong, and the plan fails to reduce the growth of health care spending, it would result in $32.7 trillion in new federal spending.”Even Ezra Klein of the left-leaning Vox said the Sanders plan was overly optimistic. Sanders “promises his health-care system will cover pretty much everything while costing the average American almost nothing.”
Because the Sanders plan covers more than Medicare and eliminates co-pays and deductibles, people will become far less price-conscious. Americans would go to the doctor far more often then they otherwise might if they had to pay something. This, too, will contribute to the shortage of medical care — and eventually to government rationing — as there are not enough doctors for the ever-increasing demand of medical services.
Of course, Sanders proposes to cover some of the cost of his new plan with higher taxes. The plan would institute a 6.2 percent income-based health care premium paid by all employers, a 2.2 percent income-based tax on households, as well as higher tax rates on income, capital gains and estate taxes.
Even with the higher taxes, Roy estimates the plan would still add anywhere from $15-20 trillion to the federal deficit — meaning taxes would have to increase even more in the future.
Aaron Hedlund, an economics professor at the University of Missouri, said the plan is “based on pure mathematical and economic fantasy.” It relies on buzzwords and nice-sounding promises without any legitimate improvements. “The system could use some thorough structural reforms, but what Sanders is calling for is pure pixie dust,” said Hedlund.