The Weekly Sift

The U.S. spends far more on healthcare than any other country.

Bernie Sanders’ Medicare-for-All bill gets a different response this time.

The most frustrating thing about the national discussion prior to passing the Affordable Care Act in 2010 was that single-payer was out of the picture from the beginning. Some Democrats (I remember hearing presidential candidate John Edwards make this case explicitly during the 2008 campaign; at the time he and Obama and Clinton had very similar healthcare proposals) held out the hope that a public option would out-compete all the private plans in the exchanges, and so would evolve into a de facto single-payer program. But then the final version of the ACA didn’t include a public option, so even that straw of hope was gone.

Leaving single-payer out of the debate is particularly bizarre when you consider that most of the rest of the industrialized world organizes its healthcare that way, and gets better results than we do (i.e., longer life expectancy at lower per-capita cost — it’s hard to make out, but that tall bar at the far left of the graph at the top of the page represents the U.S.). When you find yourself struggling to keep up with the Joneses, you ought to at least consider doing what the Joneses do. We didn’t.

The Sanders bill. For years, Bernie Sanders has been a voice-in-the-wilderness on single payer. He introduced a single-payer bill in the Senate in 2009, and it got zero cosponsors. Again in 2011, he got zero cosponsors in the Senate, but a companion bill in the House had 12 sponsors. Both of Sanders’ bills died in committee and never reached the Senate floor.

This time it’s different. The New Yorker‘s John Cassidy explains:

In the end, there were sixteen co-sponsors. They included Tammy Baldwin, of Wisconsin; Cory Booker, of New Jersey; Al Franken, of Minnesota; Kirsten Gillibrand, of New York; Kamala Harris, of California; Jeff Merkley, of Oregon; Brian Schatz, of Hawaii; and Elizabeth Warren, of Massachusetts.

One thing all these politicians have in common is that they have been mentioned, with varying degrees of plausibility, as possible Presidential candidates in 2020. (So has Sanders himself.)

Six years ago, single-payer was something an ambitious Democrat wouldn’t want to be associated with. Now, an ambitious Democrat can’t afford not to be associated with it. But Democratic Senate leader Chuck Schumer and House leader Nancy Pelosi have been more cautious, neither endorsing or opposing it. The WaPo’s Aaron Blake quotes Pelosi:

“I don’t think it’s a litmus test,” she said. “I think to support the idea that it captures is that we want to have as many people as possible, everybody, covered, and I think that’s something that we all embrace.” She said she’s focused on protecting the Affordable Care Act.

He also explains her motives: She wants to be Speaker again, not President. That focuses her on a different audience.

If Democrats are going to retake the House (or even the Senate), they need to win in red territory where government-funded health care is a much, much tougher sell than in a Democratic presidential primary.

Gerrymandering is a factor in Pelosi’s thinking. Democrats can’t win control of the House just by getting the most votes. (They did that in 2012, and it didn’t work.) House districts have been drawn so that the majority of them lean Republican. So if Democrats can’t win in red districts, Paul Ryan keeps the Speakership.

What the Medicare for All Act of 2017 does and doesn’t do. Over a four-year phase-in period, the bill would extend something resembling Medicare to everybody: Children would be covered immediately, and the eligibility age for Medicare would drop each year: from 65 to 55 to 45 to 35 and then 0. During the transition, the ineligible could buy into Medicare as a public option on the ObamaCare exchanges.

But the plan would be more than just Medicare as we currently know it: Premiums and co-pays would be gone, and its coverage would be far more complete. It would, for example, pay for dental care, glasses, and hearing aids. The Secretary of HHS would have the option of including whatever “alternative and complementary medicine” seemed appropriate.

How serious is it? That depends on what you mean by serious. It is a real bill, and if it somehow got through the Republican-controlled Congress and President Trump signed it, it would be a real law. Four years later, everyone would be covered by something sort of like Medicare.

At the same time, the bill leaves out a lot of essential details. How it slims down to 96 pages (compared to the thousands in the Affordable Care Act) is that vast numbers of decisions are delegated to the Secretary of Health and Human Services and the Administrator of the Center for Medicare and Medicaid. The phrase “the Secretary” appears 88 times, in contexts like:

the Secretary shall establish a national health budget, which specifies the total expenditures to be made for covered health care services under this Act.

The Administrator (ten times) determines more-or-less everything about the buy-in provision, such as how much it costs.

The biggest hole, though, is how it would all be paid for. If you total up Medicare, Medicaid, the Veterans Administration, ObamaCare, the Children’s Health Insurance Program, and health insurance for federal employees — all of which would be subsumed — the government already spends well over a trillion dollars each year on healthcare, maybe as much as a two trillion. But that’s still not nearly as much money as would be needed.

There would undoubtedly be some cost savings: Medicare already has far lower overhead than private insurance, the enlarged Medicare would have enormous leverage for negotiating drug prices, and so on. There are, after all, reasons that other countries can spend less than we do without compromising care. But one important cost difference is that doctors in the U.S. make far more money than doctors in other countries. Nobody is proposing a Physician Pay Cut Act of 2017, so that probably won’t change. Other savings would take years to kick in. (Countries with a universal healthcare system do a better job of preventive care, and public health in general. In the long run that pays off, but maybe not in the short run.)

But there would also be cost increases: more people covered for more procedures with no co-pays. Also: What happens to the money states currently spend on Medicaid? The federal government can’t automatically sweep it into the new program, but there will be no reason for states to keep spending it once the federal government takes responsibility for all healthcare.

So even if you’re optimistic, you still need to come up with a large amount of new federal revenue, which would happen in a separate bill. Sanders admitted as much to the WaPo’s David Weigel.

Rather than give a detailed proposal about how we’re going to raise $3 trillion a year, we’d rather give the American people options. The truth is, embarrassingly, that on this enormously important issue, there has not been the kind of research and study that we need. You’ve got think tanks, in many cases funded by the drug companies and the insurance companies, telling us how terribly expensive it’s going to be. We have economists looking at it who are coming up with different numbers.

So in that sense, Sanders’ bill isn’t serious: He doesn’t have a proposal to raise the money to pay for it, or even a precise estimate of how much needs to be raised. Democrats are actually counting on Republicans not to pass this, because they’re not actually ready to implement it.

Given that it won’t pass, it’s not clear how seriously Sanders’ cosponsors are taking the bill. Senator Franken of Minnesota described it like this:

Establishing a single-payer system would be one way to achieve universal coverage, and Senator Sanders’ “Medicare for All” bill lays down an important marker to help us reach that goal. This bill is aspirational, and I’m hopeful that it can serve as a starting point for where we need to go as a country.

That’s a long way from “This is what we’re going to do.”

Revenue options. What Sanders does have are some suggestions about revenue: an increased payroll tax, paid either by employers or employees; eliminating the now-obsolete business deduction for employee health insurance (which the bill makes illegal: “Beginning on the effective date described in section 106(a), it shall be unlawful for a private health insurer to sell health insurance coverage that duplicates the benefits provided under this Act.”); significantly higher tax rates for people making more than $250K per year; dividends and capital gains taxed at the same rate as other income; limited tax deductions in the upper-income brackets; a higher estate tax; a wealth tax on households worth more than $21 million; taxes on corporate profits held offshore; a fee charged to large financial institutions; and a few others.

Sanders presents this as a menu of choices. But if you add up his numbers, you get $16.192 trillion over ten years, so we might need to do all of them to come up with money needed. (During the primary campaign, the Urban Institute estimated that a similar Sanders proposal would require an additional $32 trillion over ten years, but Sanders’ supporters called that analysis “ridiculous“.)

I also don’t trust Sanders’ numbers. Not that he’s being dishonest, but when it comes to taxes, the rich are always a moving target. New proposals to tax them always inspire new methods of evasion. It’s not that plutocrats and multinational corporations are impossible to tax, but proposals seldom raise quite as much revenue as their authors expect.

Public opinion. Polling on Medicare for All is highly variable. The phrase itself is popular, but as you give people more details their support starts to waver. In particular, when you tell them that their own taxes will go up, they begin to have doubts. (Kaiser didn’t poll the objection that you’d have to give up the employer-based health insurance that more than half the country has now, but I’ll bet it changes minds also. If you’re satisfied with how your health insurance is working, you may look skeptically on a proposal to change it.)

Sanders’ counter-argument, which I believe, is that public health insurance is just more efficient than private health insurance, so most people would pay far less in new taxes than they currently pay to insurance companies. But that relies on trusting various experts to do some fairly sophisticated calculations. I’m skeptical that the public will maintain the needed level of trust when insurance and drug companies start funding massive doubt-raising advertising campaigns (like the one that killed HillaryCare in the 1990s), or Republicans start spreading outright lies (like the death panels supposedly established by the Affordable Care Act).

In general, I think many of us maintain a too-flattering image of swing voters: We picture them as judicious people who weigh their options and make up their minds slowly, rather than blindly following a party or an ideology. In reality, I believe most of them have no party or ideology because they just don’t think about politics or public issues very much or very deeply. Many are low-information voters whose choices can depend on a turn of phrase or who they talked to last. It’s not that hard for a slick campaign to scare them enough that they want to keep what they have rather than leap to something new.

The repeal-and-replace parallel. Several pundits (Josh Barro, for one) have noted the resemblance to Republican calls to repeal-and-replace ObamaCare. Like “Medicare for All”, the “repeal-and-replace” slogan is much more popular (especially within the base of one party) than any specific plan to carry it out. The Republican problem is that they let the phrase stay “aspirational”, to use Senator Franken’s word, for too long. When they suddenly had the power to implement it, they didn’t have an implementable plan.

Barro describes a more evolutionary approach to the goal of universal coverage, something closer to the public-option-wins-out vision of 2008: Medicare Available to All. Rather than one big change that asks Americans to pay higher taxes and trust that a big government program will meet their needs better than whatever they’re doing now, Barro pictures a more gradual change:

There is a version of “Medicare for All” that Democrats could operationalize effectively and popularly: opening a version of Medicare or Medicaid up to any individual who wants to buy coverage under it, and to any employer who wants to buy coverage for its employees under it.

Such a program could build on the existing system of subsidies and exchanges created by Obamacare, as well as the existing system of tax-preferred employer-provided health insurance. It could reduce costs for consumers by using the government’s bargaining power to bring down the prices paid for drugs and medical services.

… In practice, the cost advantage of the Medicare or Medicaid system might lead most individuals and most employers to decide they’d rather buy the public plan than a private one. But that would be a voluntary change — one that consumers would welcome because of the cost savings — not a mandatory one.

… The big political advantage of a public-option approach is it makes it possible to take on providers and drug companies directly, on the issue of costs, without simultaneously fighting on many other fronts. With a public option, you don’t need to simultaneously convince doctors to take a pay cut and convince workers and employers to accept a tax increase and convince consumers to give up their existing insurance plans.

In Barro’s vision, features like better subsidies to the less-well-off and a better benefit package could be added over time, ultimately resulting in a plan not that different from what Sanders pictures.

Complementarity. I think it would be a mistake if Democrats got into an either/or battle between better-coverage-for-more-people and great-coverage-for-everybody. It’s important to have goals well beyond the things that you know how to achieve today or tomorrow. But it’s also important to go into the battle you face today with a plan you can implement today. There is no inherent contradiction between those two ambitions.

Republicans seem to understand this. It’s totally within the Republican mainstream for a presidential candidate to announce that he’d like to eliminate the IRS or pay off the national debt, even if he has no credible plan to do so. In the meantime, just about everybody will be happy if he manages to cut taxes or propose a balanced budget. Republicans understand that having a big dream keeps you marching in the right direction, even if you don’t actually get wherever you say you’re going.

But Democrats responded to their landslide losses in 1972, 1980, 1984, and 1988 by cutting their dreams down to size. Smarting under the Reagan-era charge that they were too liberal, they played it cautious: I don’t want to turn America into Sweden, I just want to do this one little thing.

What the popularity of the Medicare-for-All slogan indicates is that it’s time for the one-little-thing era to be over. One-little-thing didn’t just limit Democrats’ horizons, it made us sound untrustworthy. If we wouldn’t say where we wanted to go in the long run, our enemies could say it for us.

A political party that actually means something has to want Big Things, things that might take decades to achieve, like racial justice, gender equality, an end to a constant state of war, the elimination of poverty, a sustainable relationship with the rest of the biosphere — and healthcare for everybody. At the same time, wanting Big Things someday can’t be enough. We need to be achieving something today that takes us closer to those Big Things.

There’s no contradiction between envisioning a journey of a thousand miles and taking a single step. They’re part of the same whole.