Disquisition on Medicare for All

Medicare for all Americans is on the table now. Think about it. The not-in-our-lifetime utopian vision of every progressive liberal, complete with dancing rainbows and unicorns, is now within reach. Alternatively, the socialized medicine Trojan Horse that will turn these United States into a toilet-paper free Venezuela is now before Congress. There are over half a dozen bills in Congress, introduced by serious people with serious intentions, proposing some version of government administered universal health insurance in America.

Whichever ideological camp you’re in, it is a profound disgrace that in America today many people cannot afford basic medical care, as profound a disgrace as having veterans sleeping on sidewalks, as profound a disgrace as having one in five children living in poverty, as profound a disgrace as having Americans going to bed hungry. This was not supposed to happen in our “shining city upon a hill whose beacon light guides freedom-loving people everywhere”. It just wasn’t supposed to be this way in a country founded on the inalienable right to pursue happiness. Regardless of why it happened, whose fault it is, or how to “fix” it, America was not supposed to be this way. It just wasn’t.

"We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America."

Our union is as far removed from perfection as it was in the years leading to the events of April 12, 1861. Whether you obsess over political affairs or social issues, our justice system seems to be established on very shaky and uneven ground. Domestic tranquility must have been some sort of eighteenth century inside joke. Our welfare is anything but general, the much-admired blessings of liberty seem to accrue to the few who do very little to secure them, and things don’t look any better for our children and grandchildren. We can debate the fine legal points, the Articles and the Amendments, but there is no question in my mind that we are failing miserably in at least five out of the six stated goals of our Constitution.

What do all these polemics have to do with “fixing” health care, you may ask. Health care is not a standalone issue. It cannot be debated, let alone “fixed”, in a political, historical and moral vacuum. Our health care woes are one manifestation of a much larger systemic failure of American society. The “concentration of power” in fewer and fewer hands is a calamity that was foreseen by a bitter, desperate man as he lay dying, and promptly ignored by many generations since, including our own. John C. Calhoun stared into his self-inflicted perdition and we stared back at him from the flames.

“At this stage, principles and policy would lose all influence in the elections; and cunning, falsehood, deception, slander, fraud, and gross appeals to the appetites of the lowest and most worthless portions of the community, would take the place of sound reason and wise debate. After these have thoroughly debased and corrupted the community, and all the arts and devices of party have been exhausted, the government would vibrate between the two factions (for such will parties have become) at each successive election … These vibrations would continue until confusion, corruption, disorder, and anarchy, would lead to an appeal to force”.

The tragedy at this point is that we, as an “E Pluribus Unum”, cannot rationally analyze, let alone agree on, either the nature or the cause for our failure to thrive, and as long as that remains the case, we will not be able to “fix” health care, or anything else for that matter. But perhaps there is still some room for discussion at the edges of Armageddon…

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One glaring commonality between all Medicare for All proposals is that they are neither Medicare nor for all. Nobody is proposing to make Medicare available to all Americans, which is rather strange if you think about it. The battle cries of Medicare for All, the ubiquitous #Medicare4All hashtags, are pure propaganda. The proposed plans range from letting a few more poor people buy into Medicaid (not Medicare) to the Cadillac plans of Bernie Sanders, John Conyers and the brand new bill introduced by Pramila Jayapal, including prescription drugs, dental, vision and long-term care, with no premiums, no deductibles and no copays, given free to all citizens, regardless of financial status. In addition to the official bills introduced in Congress, there are lengthy proposals from policy groups touting their superiority and/or soundness compared to all other Medicare for All arrangements. The opposing faction is peculiarly devoid of grand ideas.

The problem with grand ideas though is that, by definition, they must rest on a multitude of assumptions and some assumptions are better than others. You can assume for example, that breaking an egg on a hot surface will get you breakfast. It’s been done trillions of times and therefore one can say that this is a pretty safe assumption, maybe even a fact. You can then be tempted to assume that putting a hot rod through an egg will yield the same results, since the egg is broken and in contact with a hot surface. Now obviously, the hot rod is just a first step, and after extensive tinkering you have a brand-new type of frying pan with an electronic egg breaker embedded in the middle. It costs ten times as much as the frying pan you trashed and it’s only good for eggs, but it does break the eggs, something you never knew was a problem. Oh, and it only makes scrambled eggs, so you save time on complex cognitive tasks.

Obamacare sounded pretty good before it morphed into a pugilistic contest between bureaucracies. Berniecare, sounds pretty good too. I mean what’s there not to like? All health care is free, and we don’t have to pay more than we are paying now for health care. We may even need to pay less, in aggregate. And the payments will be more justly distributed across the population. And every single person, no matter how privileged, will have the same exact glorious health care. Heck I’ve been arguing for a system like that myself. For those interested, I am also arguing for peace on Earth, prosperity, health and happiness to you and your loved ones.

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Despite what hot-headed reformers are trying to tell you, American health care is not worse or scarcer than it is in other developed nations. It is better and more plentiful. The sole problem with health care in this country is that it is not affordable for most Americans. What does “not affordable” mean though? Does it mean that health care prices are too high? Does it mean that we don’t choose our care wisely? Or does it mean that people are too poor? The answer is of course yes and no on all counts. Furthermore, “fixing” any one of the above problems will likely exacerbate the others. Nobody knew health care could be so complicated, obviously, but it is.

Real GDP per household (2.2 persons) stands around $120,000. Median income per household is half as much. We currently spend on average $24,000 per household per year on health care. If every household got a fairer share of GDP, perhaps health care would be less “not affordable”, but even in the most egalitarian scenario, health care would still be a huge financial burden. Medicare for All seeks to shift the health care burden from individual households to the nation. When the nation is faced with burdens of this type, it either goes into debt or cuts budgets. Debt of this magnitude spells bankruptcy down the road, and budget cutting translates into Rationing. Pick your poison.

But maybe we can ration wisely. Maybe we can replace volume with value. Maybe. Either way, when volumes for one service line go down, another service line seems to miraculously become more popular. If we force all service lines to cut down on volume, prices per unit will inexplicably start soaring to keep the topline steady. Then how about combining nationalized health care financing with price controls, as all Medicare for All bills are suggesting? After all, this is working well for Medicare, no? Yes, it is working for Medicare, because hospitals and doctors can charge the difference to private insurers. If there are no private insurers, hospitals and doctors will need to cut their costs. How do most firms cut costs? By letting employees go and/or reducing their salaries.

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Over 16 million Americans are currently working in the health care industry. If you want to cut that mythical 30% that is presumably waste, I can guarantee in writing that before one wasted piece of paper is eliminated, 6 million people will be out of work. In all fairness, a couple of the more radical Medicare for All proposals include income replacement and “retraining” for a few hundred thousand health insurance industry workers envisioned to be displaced, which amounts to a few drops in the disaster bucket. Such massive unemployment will wipe out entire communities, not to mention the stock market, pensions, retirement savings, tax revenues, and safety net budgets. It may also deal the long overdue coup de grâce to the struggling American middle class.

In a service economy, which is what all progressive minds are glorifying now, if you cut spending on services, you shrink the economy, with all attendant consequences. And no, having more money in your pocket to buy more crap from China does not improve the situation one bit. The supreme irony is that when we add the resultant financial aid for those who will lose their health care jobs, and the many more affected by the ripples of our trimmer health care expenses, we will end up precisely where we started, if we’re lucky, which is not very likely. The point here is not to bash Medicare for All plans. The point is to highlight the magnitude of what is discussed. By comparison to Medicare for All bills, Obamacare was just minor tinkering, and look where it got us.

There are only four countries in the world, including our own, that have a GDP greater than our annual health care expenditure. Restructuring health care in America is like restructuring the entire economy of, say, France or the United Kingdom, and then some. The United States is the third most populous country after China and India and has the greatest influx of new immigrants each year. Pointing to how great the Singapore model is working, or how quickly Taiwan transformed its health care system is, forgive me, laughable. If we learn one thing from the Obamacare escapade, it should be that in health care, nothing, absolutely nothing, scales as predicted on paper.

Finally, as hard as it may be for you these days, please remember that smart people, with yards of skin in this game, may disagree with your preferred solution, not because they are greedy, not because they hate poor people, not because they can’t do the math, not because they are evil, and not because they are deplorable or crazed Marxists. So, please, get off your soapbox (I certainly did), look reality in the face without fear or prejudice, start listening to ideas that make you uncomfortable, and understand that pontificating about Medicare for All is as useful as bloviating about free-markets.