'Medicare for All' will never work

Americans are fed up with skyrocketing health-care costs and it’s still one the most important issue among voters. Due to the increasing costs and frustration there has been increased support among Democrats for "Medicare for All.”

Clearly this policy proposal has momentum, but is it workable and it right?

Democrats have been falling over themselves to endorse Bernie Sanders' government takeover of health care. Maybe they should have taken a closer look at his "Medicare for All" plan before signing up.

The gargantuan price tag is just one of its many terrible flaws. Do they have any idea what they're endorsing?

A study from George Mason University's Mercatus Center finds that Sanders plan would add $32.6 trillion to federal spending in its first 10 years, with costs steadily rising from there. That closely matches other studies — including one by the liberal Urban Institute — that looked at Sanders' plan.

Underestimating 'Medicare for All' Costs

To put this in perspective, "Medicare for All" would nearly double the size of the already bloated federal government. Doubling corporate and individual income taxes wouldn't cover the costs.

Even this is wildly optimistic. To get to this number, author Charles Blahous had to make several completely unrealistic assumptions about savings under Sanders' hugely disruptive plan.

The first is a massive cut in payments to providers. Sanders wants to apply Medicare's below-market rates across the board, which would amount to a roughly 40% cut in payments to doctors and hospitals. Blahous figures this will save hundreds of billions of dollars a year.

But cuts of that magnitude would drive doctors out of medicine and hospitals out of business, since the only way providers can afford Medicare's cut-rate reimbursements today is by charging private payers more.

The study also assumes that shoving everyone into a government health care plan would cut administrative costs by $1.6 trillion over the next decade and prescription drug costs by $846 billion. Neither of those are likely, and wouldn't make much of a difference in overall spending anyway. Private insurance overhead accounts for about 6% of national health spending, and drugs less than 10%.

There's also the fact that every other federal health program has seen costs explode "unexpectedly" after they were enacted. The per-enrollee cost of ObamaCare's Medicaid expansion, for example, is almost 49% higher than expected. Medicare itself cost nearly 10 times as much as projected in its first 25 years.

A Truly Radical Plan

Democrats are also apparently unaware that "Medicare for All" would be a more expansive than anything that exists anywhere else in the world, with the possible exception of Cuba.

Sanders' plan would eliminate all out-of-pocket expenses for medical, dental and vision care. The only exception would be a small copay for brand-name drugs.

There is no industrialized country in the world that does this. Even in Sanders' beloved Nordic socialist paradises, people pay as much as 30% of their nations' health costs out-of-pocket. In Communist China, almost a third of health spending is out-of-pocket.

Shortages, Long Waits And Waste

Because Sanders would eliminate prices entirely from health care, the only way to control health spending would be to slap stiff price controls on doctors, hospitals and drugs, or ration care.

Here's what health care in the U.S. would look like as a result:

There would be chronic shortages of doctors nationwide. Hospital overcrowding would be epidemic. Waits for everything from hip replacements to cataract surgery to cancer treatments would be extensive. Drug innovation would come to a virtual standstill. And there would be endless fights over the size of the government's health budget, along with massive amounts of waste, fraud and abuse.

How do we know this? Because this is precisely what's happened in countries that have already gone down the "Medicare for All" road.

In Canada, the average wait time for a hip replacement is nearly two years in some provinces. Patients with cataracts can end up waiting a year for surgery. The UK has fewer doctors, nurses and hospital beds per capita than any other industrialized nation, and is in a state of almost constant crisis.

Here at home, the Veterans Health Administration — once touted by the left as a model of socialized medicine — has seen deadly delays and massive corruption, even as its budget ballooned in size.

Almost 10% of Medicare spending today is for what the government euphemistically calls "improper payments," but anyone else would label it waste. Extend this across the entire health care system and Sanders' "Medicare for all" would result in some $400 billion a year in "improper payments."

Central Planning's Failures

But the biggest problem with "Medicare for All" — and any plan to socialize medicine — is its underlying assumption. Namely, that a handful of government central planners can manage trillions of dollars' worth of resources better than hundreds of millions of people making trillions of decisions every day in the free market. They can't.

We already know central planning never works, since it has miserably failed where it's been tried. It didn't work in the Soviet Union. It doesn't work in North Korea or Cuba, and it's causing untold misery in Venezuela.

"Medicare for All" isn't just wishful thinking. It's a dangerous delusion. Republicans, independents and any remaining sensible Democrats should fight against it with every ounce of energy.

For these reasons, Medicare for all legislation has failed wherever it's been tried, including recently in Vermont, Colorado and California. For instance, in Vermont, "Green Mountain Care," passed in 2011. It would have doubled the size of the state budget, necessitating payroll tax increases of 11.5 percentage points and income tax increases of up to nine percentage points.

If Medicare for all can't work in Vermont, one of the wealthiest, healthiest and smallest states in the union, it can't work nationally.

There is a better alternative to cut health-care costs. Policymakers must take a scythe to the labyrinthine bureaucracy that is holding back health care, while at the same time pursuing transparency reforms that would allow the system to work more productively and efficiently.

Consider: The number of health-care administrators — many drawing salaries well into the six figures — has risen by 3,200 percent between 1975 and 2010. (The number of physicians grew by 150 percent over the same timeframe.) This bureaucratic bloat diverts precious resources away from treating patients and inflates the cost of care. Reversing this administrative growth to all but the most critical positions could allow for a dollar-for-dollar offset in health-care costs.

Meanwhile, the clerical burden on doctors continues to grow. Doctors now report spending two-thirds of their time on paperwork. If this administrative burden could even be halved, doctors would have twice as much time to see patients, making the system far more productive and cheaper as a result.

Simple transparency reforms such as the widespread publication of prices for health services from X-Rays to blood-work would also bring down prices because it would encourage competition, economization and more efficient resource allocation.

The best part? These reforms are easy to understand, bipartisan and can be implemented without the disruption associated with wide-scale health-care reform.

We just need the political will. For that, voters must educate themselves on the real issues holding back American health care while ignoring the siren song of single-payer.

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