2020 Health Care
Health care is one of the “leading” issues for 2020 according to various political polling sources. But I think people and politicians have very different ideas when it comes to the subject of “health care”. For politicians the debate is over “Medicare for All” single payer versus the existing health care system with a few bells and whistles. So let’s contrast the two political views against one another.
Medicare for All
For those that favor Medicare for All, the argument is pretty simple. Medicare for All guarantees all Americans have health care coverage regardless of their income level or risk profile. Many people are drawn to this “guarantee”, but whenever the same people have been faced with its cost in the past, they have pulled back. The problem is Medicare for All is very expensive.
Those that think Medicare for All will be funded mainly by taxes on the rich are being misled. There are only two “tax” bases big enough to fund Medicare for All. The first is wages (payroll tax) and the second would be consumption (national sales tax). Other tax sources may “contribute” towards the cost of Medicare for All like higher income taxes on the rich, but in the end the amount of money needed means you need a huge base upon which to tax and that base is all or nearly all Americans and the two options that are easiest to tax are wages and purchases (income is easy to “shelter” so higher tax rates can lead to less income tax revenue as such it is not a “good base” to build a health care tax revenue system on). Previous attempts to introduce universal health care support this case.
The Bernie Sanders’ proposal is to fund the plan with a payroll tax on people and employers with the balance coming from the rich. I think his “tax on the rich” is a pipe dream. I don’t doubt that taxes on the rich will be raised someday in the future, I only doubt that the revenues from that tax will be used to fund health care given we have such a huge deficit and so many other programs that need propping up including Social Security.
Which raises another question, if the government can’t fund its current entitlements, what will happen to government funded health care when the deficits reach a point that the government needs to cut back on benefits. Do you trust the government won’t do “entitlement reform” soon after it takes control of the health care system and suddenly benefits you have will not be available in the future. This has happened in most single payer European countries in recent years. Will these missing benefits be covered by private “Medigap” policies today as they are in France? If so, then are you paying twice for health care, once through taxes and secondly through premiums?
Several liberal state proposals (I say liberal not to be derogatory, but rather to point out if “liberal” states shy away from the cost, hard to believe conservative ones would embrace it) give us a good idea of what a Medicare for All tax system is likely to look like. When Vermont considered a statewide Medicare for All entitlement, it included a huge tax on wages earned by individuals and wages paid by employers.
When California looked at Medicare for All at the state level, its solution was also a massive increase in payroll taxes (about a 15% tax on wages) to cover the cost of the plan. So while politicians when running for office talk about “taxing the rich” to pay for your health care, every proposal so far has ended with a “tax on wages” as the primary funding source. Expecting something different is foolish, unless it is a national sales like the VAT taxes in Europe.
So do not be deceived, if you support Medicare for All, you will pay for it and not some rich guy. Which is okay as long as you go into it with that in mind. Figure if they target wages that around 15% more of your wages will be withheld to pay for “Medicare for All” and that does not include the premiums you will pay out of pocket for Medigap policies to cover those things “Medicare for All” does not pay for.
The Other Option
Unlike “Medicare for All”, the other option leaves in place the current system but addresses two issues in the health care system today. The first issue is how best to provide coverage for those with “pre existing conditions”.
Practically speaking most advocates of modifying the current system support reestablishing high risk pools for those with pre-existing conditions. How this would work varies by proposal and truthfully, this is the best option for those with pre existing conditions that preclude them from “standard” health insurance coverage. The issue is to insure that the risk pools are properly funded today and in the future. Medicare for All avoids this issue by incorporating everyone into the same “plan”.
On the other hand, Medicare for All is a far worse option for those with pre-existing conditions, then a health care plan with strong medical management expertise including disease management. Having trained medical experts monitoring your care when you have a serious health care condition can do a lot to improve health care outcomes over time.
Another gap in the current system is coverage for those that cannot afford health insurance. By isolating those with pre-existing conditions in a separate health care pool, the cost of health insurance should go down dramatically making it far more affordable to those that cannot afford it today.
But there will still be people than cannot afford health insurance. Like those with pre-existing conditions, they will need government subsidies or access to the Medicaid system in most states. The ACA tried to address this group, but the inclusion of people with pre-existing conditions into the standard risk pools made private health insurance rates skyrocket and created a whole new group of people that could not afford health care.
So by simply removing those with pre-existing conditions from the general health care pool and preserving the subsidies of the ACA, the health care system should become more affordable without a major overhaul for the short term. Not a perfect system, but far more affordable at a time the government is already running nearly $1 trillion dollar deficits.
Conclusion
“Medicare for All” is one form of universal health care. It is neither the best or the cheapest option. While it is easy to grasp as a concept, the average American does not fully comprehend what it will cost. If they did, they might back away from it as a solution.
In contrast, a system which leaves those parts of the health care system that are working in place and focuses on fixing some of the emerging problems associated with people with pre-existing conditions or those that simply cannot afford health care will be more affordable short term then Medicare for all and so might be the best option in the near future.
Those studies that show Medicare for All is no more expensive than what we are paying for today are misleading and do not represent an apples to apples comparison. The cost savings in those proposals represent cost savings that could be realized with or without Medicare for All and so if the government believes they are real, they should pass the laws necessary to make them real now and not wait. If they can’t pass the laws now, they need to explain why they will be able to in the future.
Even so, if you have read some of my other articles on health care you will realize that neither “Medicare for All” or tinkering with the current system will work for more than a few years. Eventually, we will be forced to address the prices for the underlying health care products and services (rather than coming up with more and more creative ways to pay higher prices) and the unnecessary use of health care resources where they do not extend the length of life or improve the quality of life.
