Thursday, November 7, 2019

Medicare For All Can Work, But We Shouldn't Pursue It

Debating the logistics of recent healthcare proposal is futile since they all would work if implemented and would be vastly better than our current system; however, that doesn't mean we should definitely pursue one of these plans, Medicare For All. 

What are the best Arguments Against Single-payer Healthcare?

1) It's electorally damaging. The public option polls around the 70% range for voters. This is a very high percentage, particularly considering the current level of polarization in U.S. politics. There's virtually no other salient topic that is this popular with Americans. M4A, on the other hand, polls in the 40% region. A cut of 30% in popularity will make people less likely to vote for you. It wouldn't cause a collapse of the Democrats, but marginal races, like the presidency, or counties that moderates fought so hard to get in 2018, would be in jeopardy. 

2) It's politically untenable. Any healthcare bill proposed would need some amount of support from Republican Senators. This is simply a reality of the Senate with its current make up. Going back to the polls, the public option polls in the mid 40% range among Republicans, whereas M4A is around 15%. This means that Republican senators in the purplish-red states could be incentivized to support a public option or face backlash. Opposing M4A would not only help them among their base, but with independents as well, and would be a smart political move. Before you claim that Republicans wouldn't vote for a public option anyways, the topic of healthcare is very salient. Republicans could have repealed Obamacare, but thanks to moderate Republicans, like McCain, their efforts were thwarted. Healthcare is one of the few topics both sides may be able to come together on.

3) It is expensive. MFA is more expensive than a public option. Estimates suggest that M4A would cost about $2.5 trillion per year, and federal expenditures would increase by $32.0 trillion over the next ten years. To put this into perspective, the Iraq War cost us about 2 trillion a year and the annual cost of M4A is roughly 62% of the size of the annual budget for 2017, and 75% of current annual revenues. 

But, other countries, like Canada and the United Kingdom, have a singleplayer system. If they can find a way to pay for it, so can we, right? Not quite, not only is it inaccurate to equate single-payer and universal healthcare, but it is also disingenuous to equate Bernie Sanders' healthcare plan with single-payer plans across the world. M4A would cover hospital visits, primary care, medical devices, lab services, maternity care, and prescription drugs as well as vision and dental benefits. By contrast, the Canadian system doesn't cover vision and dental care, prescription drugs, and rehabilitative and home services. Two-thirds of Canadians take out private insurance plans in order to cover these costs. You seem similar things in Northern European countries or countries like Taiwan and Australia. Furthermore, M4A gets rid of out-of-pocket spending, excluding prescription drugs. This means that there would be no costs of going to the doctor and no copayments when you go to the emergency room. Most international single-payer systems require some form of payment for most services, at a low cost. For example, in Australia, people pay 15 percent of the cost of visiting a doctor. 

The money will have to come from increases in taxes, and it will be difficult to not raise taxes on the middle class. Elizabeth Warren just released a plan that comes close to not doing so, but it's unclear if she will actually raise enough revenue. Also, due to the incidence of payroll taxes, it may cause a tax increase for the middle class anyways. As most labour economists will tell you, labour supply is very inelastic. If a new payroll tax is introduced, decreasing workers' wages, most workers will simply continue to work the same amount of hours or only work slightly less. This means that this is an efficient revenue source... but the tax incidence falls almost entirely on workers.

Healthcare costs will always outpace GDP because of the Baumol effect. While a lot of progressive policies are fine on there own, collectively they can be very damaging. Countries like Sweden and the UK tried to implement these extensive policies in the 20th century and it failed. Things like transaction fees destroyed the Swedish stock exchange in the 80s and that was before high-frequency trading was really a thing. It took extensive neoliberal market reforms to get these countries back on track to being the desirable welfare states we know today.

4) M4A is no better than a public option. It could be argued that these downsides would be worth it if M4A was truly the best option we have, but this is clearly not the case. Multi-payer system, such as in Germany and Switzerland, routinely meet and exceed the performance of single-payer systems, such as the UK and Canada. 

M4A is simply not worth it, politically, fiscally, or electorally.

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  3. In those multi-payer systems prices are pretty much set across the board after negotiating with hospitals and there is extensive mandatory cross subsidization between insurance pools. They essentially simulate a single payer scenario without doing "single payer. This is fine (I haven't seen anyone in the US propose that) but it seems simpler to just do single payer (or better yet do a Beveridge style nationalization so that doctors can be allocated to different geographical areas based on need not profit)

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